Covidien Plans $2B Drug Business Spin-Off

By Lori Clapper, Editor

Healthcare products company Covidien announced Thursday that it is splitting up its pharmaceutical and medical device businesses. As part of the plan, the company will spin off its $2 billion pharmaceutical division. Jose E. Almeida, president and CEO of Covidien, said this decision has been several years in the making, according to a company release. He added the split is "due to the major differences between the medical products and pharmaceutical industries. He added that their "respective innovation pipelines differ substantially in length, regulatory approval requirements, possible risks, and potential returns."

Reuters reports the transaction could take up to 18 months to complete. Covidien projects $9.6 billion in sales for the medical device company, which manufactures generators to produce technetium-99m, a diagnostic isotope.

The new pharmaceutical company will continue to grow its pain management drug pipeline. It is currently one of the largest suppliers of acetaminophen globally. The FDA has approved eight new Covidien pharmaceutical products since 2008, including two branded pain drugs that launched in 2010.