Healthcare technology firm Covidien plans to spin off its pharmaceuticals business into a standalone public company in a deal that includes Covidien's activities in distributing the molybdenum-99 radioisotope, the firm announced on December 15.
Covidien's pharmaceuticals segment is one of the world's leading suppliers of generators used to convert molybdenum-99 to the medical isotope technetium-99m. Covidien also offers an integrated system of diagnostic contrast media in prefilled syringes and injectors.
Since 2008, the pharmaceuticals business has received clearance from the U.S. Food and Drug Administration (FDA) for eight new products, including two branded pain products launched in 2010.
Covidien last month reported that sales in its pharmaceuticals business segment declined 1% to $1.97 billion in fiscal year 2011 (end-September 30), compared with $1.99 billion a year ago. The company blamed the decrease on the divestiture of its U.S. nuclear pharmacies business in fiscal 2010.
José Almeida, Covidien's president and CEO, said the company has been evaluating for several years whether to separate its business units, due to the differences between the medical product and pharmaceutical industries. In a written statement, he added that Covidien "believe[s] that now is the right time to do so because we have significantly improved the operations, performance, and pipeline of our pharmaceuticals business."
Covidien anticipates that the spin-off could take as long as 18 months to complete. When finished, the company would be left with its medical devices business, which has annual sales of approximately $9.6 billion, approximately 80% of total company sales, evenly split between U.S. and international markets. Medical supplies would comprise the rest of Covidien's operations.
