Covidien planning pharma spin-off

Covidien plc (NYSE:COV) plans to spin off its pharmaceuticals business into a separate public company that Covidien says will compete more effectively in the pain management area. The business accounted for $2 billion, or 17%, of Covidien's $11.6 billion net sales in FY11, with 66% of pharma sales coming from the U.S. Its specialty products include oral pain drug Exalgo hydromorphone and topical NSAID Pennsaid diclofenac to treat signs and symptoms of osteoarthritis (OA) of the knee. The business also markets APIs, contrast products and radiopharmaceuticals. In June, Covidien had been rumored to be seeking a sale of the pharma business, according to media reports at the time.

Covidien said its pharma and medical products businesses have "distinctly different" business models, sales channels, customers, capital requirements and talent bases. The medical products business, which includes devices and medical supplies, had FY11 sales of $9.6 billion. Covidien said devices and supplies recorded a CAGR of 10.7% and 0.9% from 2007-11, respectively, compared to a 0% CAGR for pharmaceuticals during the same period. ...