Covidien announces spin-off plans for pharmaceuticals unit

Covidien has announced plans to spin off its pharmaceuticals business unit, in order to improve its central focus on the medical technology sector.

The company will be spinning out the pharmaceuticals division – which is one of the world's largest producers of bulk acetaminophen and a leading generics business – into a standalone public company, having made efforts to safeguard sustainable future success for the business.

Should this move be executed successfully, Covidien's industry-leading medical products would represent 80 percent of its sales capability, while the newly independent pharmaceuticals business would be able to compete more effectively.

Jose Almeida, president and chief executive officer of Covidien, said the differences between the two businesses make separating them a logical choice.

"While both businesses hold industry-leading positions, they have distinctly different business models, sales channels, customers, capital requirements and talent bases," he explained.

This comes after the company announced plans last month to acquire Barrx Medical, a specialist provider of treatments for Barrett's oesophagus syndrome.