Covidien looks to sell pharma biz for up to $4B

Another pharma unit is on the block. Covidien ($COV) has hired JPMorgan Chase to handle the potential sale of its drugs business, and the deal could be worth up to $4 billion, Bloomberg reports. Shedding the pharma business would allow the company to focus more closely on medical devices, a strategy departing CEO Richard Meelia disclosed in March.

The Massachusetts-based company, which makes surgical products and medical supplies in addition to drugs, had been negotiating to sell the unit to another healthcare firm, but those talks fell apart, the news service reports. Other potential buyers are still kicking the tires, however. The unit brought in almost $2 billion in sales during the 12 months ended September 2010.

Selling off the drug business would be an extension of an ongoing trend at Covidien. The company has sold three units in less than two years, Bloomberg notes, including its U.S. radiopharmaceutical business, which went to a private equity firm in December 2009. Last year, Covidien divested two U.S. units to another investment firm.

Now is prime time for a pharma sale. M&A activity in the industry is high as drugmakers try to plug the holes in sales left by loss of patent protection on key products.

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