DUBLIN--(BUSINESS WIRE)--Dec. 15, 2011--
Covidien plc (NYSE: COV), a leading global provider of healthcare
products, today announced that it plans to spin off its pharmaceuticals
business into a standalone public company.
Covidien’s pharmaceuticals business is one of the world’s largest
producers of bulk acetaminophen, the largest United States supplier of
opioid pain medications and is among the top 10 generic pharmaceuticals
manufacturers in the U.S., based on prescriptions. Since 2008, this
business has received U.S. Food and Drug Administration approval for
eight new products, including two branded pain products launched in 2010.
In addition, Covidien’s pharmaceuticals business is one of the world’s
leading suppliers of generators used to produce technetium-99m, a
critical diagnostic medical isotope. It also is the only manufacturer
that offers a fully integrated system of diagnostic contrast media in
prefilled syringes and injectors.
“We’ve evaluated whether to separate these businesses for several years,
due to the major differences between the medical products and
pharmaceutical industries. We believe that now is the right time to do
so because we have significantly improved the operations, performance
and pipeline of our pharmaceuticals business,” said José E. Almeida,
President and Chief Executive Officer. “While both businesses hold
industry-leading positions, they have distinctly different business
models, sales channels, customers, capital requirements and talent
bases. In addition, their respective innovation pipelines differ
substantially in length, regulatory approval requirements, possible
risks and potential returns.
“This transaction, if completed, would give both businesses greater
flexibility to focus on and pursue their respective growth strategies,
while potentially providing shareholders with greater value over the
longer term,” added Almeida.
If a spin-off is executed, the resulting Covidien medical products
business would have annual sales of approximately $9.6 billion (based on
2011 reported sales), about evenly split between the U.S. and non-U.S.
markets. The Medical Devices business segment would represent about 80%
of the company’s sales, with Medical Supplies comprising the remainder.
The company would hold the number one or number two market positions in
categories representing approximately 90% of its sales1.
Covidien’s pharmaceuticals business currently generates approximately
$2.0 billion in annual sales, with about two-thirds derived from the
U.S. market. This concentration in the U.S., where the business holds
the significant leadership position noted above, would enable the new
company to compete more effectively in the growing pain management
category. The spin-off also would give the new company a better
opportunity to bring to market innovative products currently in its
pipeline and would give it the financial and strategic flexibility to
pursue its growth plans, including expansion outside the U.S.
Covidien anticipates that the transaction will be in the form of a
distribution that will be tax-free to U.S. shareholders of a new
publicly traded stock in the new pharmaceuticals company. Covidien
currently expects that completion of the transaction could take up to 18
Completion of the transaction is expected to be subject to certain
conditions, including, among others, receipt of regulatory approvals,
assurance as to the tax-free status of the spin-off of the
pharmaceuticals business to our U.S. shareholders, the effectiveness of
a Form 10 registration statement to be filed with the U.S. Securities
and Exchange Commission and final approval by the Company's Board of
There can be no assurance regarding the ultimate timing of the proposed
transaction or that the transaction will be completed. Covidien does not
intend to provide regular updates on its progress regarding this
separation, but will announce final approval of the separation by the
Covidien Board of Directors or completion of the transaction and will
make such other disclosures as required by applicable law.
Supporting materials are now available on the Investor Relations section
of Covidien’s website: http://investor.covidien.com
Conference Call and Webcast
The Company will hold a conference call for investors today, beginning
at 8:00 a.m. ET. This call can be accessed three ways:
At Covidien’s website: http://investor.covidien.com
By telephone: For both “listen-only” participants and those
participants who wish to take part in the question-and-answer portion
of the call, the telephone dial-in number in the U.S. is 800-510-9661.
For participants outside the U.S., the dial-in number is 617-614-3452.
The access code for all callers is 29488682.
Through an audio replay: A replay of the conference call will be
available beginning at 11:00 a.m. on December 15, 2011, and ending at
5:00 p.m. on December 22, 2011. The dial-in number for U.S.
participants is 888-286-8010. For participants outside the U.S., the
replay dial-in number is 617-801-6888. The replay access code for all
callers is 65354792.
1. Covidien market rank based on management estimates. Actual amounts
Covidien is a leading global healthcare products company that creates
innovative medical solutions for better patient outcomes and delivers
value through clinical leadership and excellence. Covidien manufactures,
distributes and services a diverse range of industry-leading product
lines in three segments: Medical Devices, Pharmaceuticals and Medical
Supplies. With 2011 revenue of $11.6 billion, Covidien has 41,000
employees worldwide in more than 65 countries, and its products are sold
in over 140 countries. Please visit http://www.covidien.com
to learn more about our business.
Any statements contained in this communication that do not describe
historical facts may constitute forward-looking statements as that term
is defined in the Private Securities Litigation Reform Act of 1995,
including the potential spin-off of the pharmaceuticals business and the
expected financial results of the two companies after the transaction.
Any forward-looking statements contained herein are based on our
management's current beliefs and expectations, but are subject to a
number of risks, uncertainties and changes in circumstances, which may
cause actual results or Company actions to differ materially from what
is expressed or implied by these statements. There is no assurance as to
the timing of the potential spin-off or whether it will be completed.
Economic, competitive, governmental, technological and other factors
that may affect Covidien's operations are discussed in our Annual Report
on Form 10-K for the fiscal year ended September 30, 2011, and in
subsequent filings with the SEC. We disclaim any obligation to update
these forward-looking statements other than as required by law.
Source: Covidien plc
Eric Kraus, 508-261-8305
Senior Vice President
Lannum, CFA, 508-452-4343