Dublin-based Covidien plans to spin off its $2 billion-a-year pharmaceutical business in the hopes that the new company could use existing products and its future pipeline to compete more effectively in the U.S. pain-management industry, a company statement says.
Covidien to spin off pharmaceutical business
The company is already the largest supplier of opioid pain drugs in the U.S. and one of the world’s biggest suppliers of bulk acetaminophen, Covidien said. About two-thirds of its $2 billion in pharmaceutical revenue is from the U.S. The new company would be publicly traded under a name not yet announced.
Meanwhile, Covidien’s remaining business unit would concentrate on its $9.6 billion business lines in medical devices and products, for which the U.S. comprises half of its sales. Covidien share prices rose 4% to about $44 on the New York Stock Exchange on Thursday morning immediately following the announcement.
The spinoff, if completed, would result in distributions to existing shareholders of tax-free stock in the new pharmaceuticals company within about 18 months, Covidien said.
Earlier this year, Abbott Labs of Abbott Park, Ill., announced that it plans to spin off a new business focusing on proprietary pharmaceuticals and biologics, while the existing company could continue producing medical products including medical devices, diagnostic and nutritional equipment, and branded generic drugs.
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