Reckitt review to consider £2.5bn sale of drugs arm

Reckitt, which has operations in Hull, said it was considering “all options” for the drugs business, which is valued by some analysts at more than £2.5bn.

The pharmaceutical division is based in the United States and focuses on its Suboxone heroin addiction medicine – a treatment that is now facing competition after the recent launch of two generic rival tablets.

Revenues at the division stood at £191m in the third quarter, down 16 per cent on a constant currency basis.

Reckitt has previously said the launch of generic tablets would mark the right time to consider its options for the pharmaceutical business.

But it cautioned the review would “take some time” and plans to update shareholders in 2014.

Reckitt shares rose five per cent as investors welcomed a possible sale of the unit.

The group also made a marginal increase to its full-year net revenue outlook, pencilling in growth of at least six per cent from previous guidance of five per cent to six per cent, thanks to a boost from recent acquisitions in the third quarter.

It reported a four per cent rise in like-for-like revenues for the first nine months of its financial year, or up five per cent with the pharmaceutical business excluded.

Martin Deboo, analyst at Investec, said the pharmaceutical review signalled a “strong intent to sell”.

He said the business could be valued at between £2.5bn and £5.5bn.

Panmure Gordon experts added: “Whilst Suboxone has delivered tremendous profits and cashflow for the group, we think now is the right time to seek an exit.”

Reckitt said strong demand helped its cough and sinus congestion medicine Mucinex perform well in a long flu season, which helped comparative revenues in the health division rise by 12 per cent in the first nine months.

Hygiene product sales – such as Dettol and Harpic – rose seven per cent in the year to date, while home brands edged one per cent higher after air freshener Airwick was hit by competition and Vanish saw weak demand across Europe.

Reckitt’s inception dates back to the 19th century in Hull and Germany.

Industrial chemicals business Benckiser was founded by Johann A Benckiser in Germany in 1823. In 1840 Issac Reckitt rented, then bought, a starch mill in Hull.

Today, Hull is home to Reckitt Benckiser’s global centre of excellence for research and development of health and personal care products, and also houses the New Technology group, which develops longer-term new products.