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Reckitt Benckiser to spin off drugs arm

Cillit Bang-to-Vanish group Reckitt Benckiser is to spin off its drugs division in a move that could be worth at least £1 billion.

Slough-based Reckitt said its US-based RB Pharmaceuticals (RBP), which primarily makes the Suboxone heroin addiction treatment, would be floated on the London stock market within 12 months.

The move was announced as Reckitt, which sells Durex condoms, Lysol disinfectant and Nurofen painkilling tablets, reported better-than-expected half-year profits of £1.04 billion, a rise of 16% on a year earlier.

Reckitt posted a 4% improvement in first-half like-for-like sales, excluding its RBP unit, and said that it was on track to meet its full-year sales growth target of between 4% and 5%.

The group said that its Dettol disinfectant Power and Pure sub-brands had successful launches across a number of markets, although this was offset by strong competition in the US and a number of western markets.

Other new product launches included Harpic Power Plus toilet bowl cleaner, Vanish Gold stain remover and Air Wick Eternal Scents.

The business said its Durex, Nurofen and Scholl footcare brands had all performed well in the second quarter of its financial year.

The demerger of the pharma business ends months of speculation about the unit after a review started last October stemming from the impact of competition on Suboxone due to the recent launch of two generic rivals.

Analysts said Reckitt's RBP unit could be valued at between £1 billion and as much as £3 billion.

Reckitt chief executive Rakesh Kapoor said: "We believe that RB Pharmaceuticals has the potential to deliver significant long term value creation as a stand-alone business."

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