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Reckitt Benckiser to Create Separate Stand-alone Business from its Pharmaceutical Unit

Date:29-07-2014

Reckitt Benckiser, the British consumer goods company said that it would seek to spin off its pharmaceutical business to existing shareholders.

The spinoff, which is expected in the next 12 months, would allow Reckitt Benckiser which is the maker of Clearasil acne treatments and Lysol cleaning products, to focus on its core consumer hygiene and health businesses. The new shares would be listed in Britain.

Reckitt Benckiser, in October, reviewed its pharmaceutical business which in recent quarters has witnessed declining market share and sales. The bulk of the company’s drug sales come from Suboxone which is used to treating dependence on heroin and other opiates.

Reckitt Benckiser’s chief executive, Rakesh Kapoor said that they believe that RB Pharmaceuticals has the potential to deliver significant long-term value creation as a stand-alone business.

The company said that the revenue in its pharmaceuticals business in the second quarter, excluding the effect of exchange rates, was down 5 percent, at 174 million pounds, or around $295.3 million, from the period a year earlier. The company said that due to the competitive environment there has also been some pressure on pricing.

Reckitt Benckiser pharmaceutical business’s market share for addiction therapies fell to 63 percent in the second quarter from 64 percent in the first quarter.

The company said a stand-alone business will be best placed to create value for shareholders as it manages the challenges and seizes the opportunities within the field of addiction. They also believe that Reckitt Benckiser Pharmaceuticals will be a more attractive partner for business development opportunities as a stand- alone and separately managed entity.

In March, Reckitt Benckiser as part of its effort to focus on consumer hygiene and health brands had agreed to buy from Johnson & Johnson the K-Y brand of personal lubricants.

Reckitt Benckiser which also makes French’s mustard and Woolite detergents was founded in 1823. The company sells its products in nearly 200 countries and also employs over 35,000 people worldwide. The company in the first half of 2014 posted revenue of £4.32 billion.

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