Rumours grow over the fate of Reckitt’s drugs division

CONSUMER goods group Reckitt Benckiser, which employs around 1,200 staff in Hull, has enjoyed rising sales and expects to achieve further growth this year.

The company also named a new chairman for its declining pharmaceuticals business, who will help with a strategic review.

The company did not say what option it was leaning towards for the business, which centres on the opioid-dependence drug Suboxone.

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Some analysts took the appointment of drugs industry veteran Howard Pien as chairman as a sign it might be preparing for a sale.

“The appointment of a chairman of this business might be taken as implying a spin-out is a serious possibility,” analysts at Credit Suisse said in a research note.

CS values the pharmaceuticals business at about £1.5bn or just over 200p a share.

Shares in Reckitt rose yesterday, valuing the entire group at £35bn.

Reckitt’s wide range of household, health and personal brands include Lysol disinfectant and Durex condoms.

The company earlier reported that fourth-quarter like-for-like sales, excluding its drug business, rose four per cent. The consensus forecast from analysts in a company-supplied survey was for an increase of 4.2 per cent.

Including the impact of acquisitions, quarterly revenue excluding Suboxone, rose seven per cent to £2.32bn. This exceeded company targets, due to swift integration and cost-savings.

“Market conditions are more challenging now than at the beginning of last year, particularly in some emerging markets,” chief executive Rakesh Kapoor said in a statement. He said he was confident the company’s pipeline of new products and investments would deliver growth this year.

For 2014, Reckitt forecast revenue growth of another four to five per cent, with flat to moderate operating margin expansion, excluding Suboxone.

Reckitt said in October it was considering all options for the business, which is declining due to competition from cheaper generic versions. It said that the review was continuing and that it would update investors over the course of the year. Regarding acquisitions, Mr Kapoor said Reckitt would continue to be active in consumer healthcare, but declined to comment on a recent report that companies like Reckitt could be interested in buying US drugmaker Merck & Co’s consumer healthcare business.