Mallinckrodt suspends planned specialty generics spin-off

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Mallinckrodt suspends planned specialty generics spin-off

By Sandra Levy - 08/06/2019
Mallinckrodt is reportedly suspending the spin-off of its specialty generics business in the midst of a series of lawsuits related to opioid painkillers, according to a Bloomberg report.

The company is still considering several options for splitting off the business and hopes to separate it “sooner rather than later” through a spinoff or sale, CEO Mark Trudeau said on a call with investors.

Berenberg analyst Patrick Trucchio has estimated that generic drug makers may be responsible for 30% of opioid-related liabilities, with Mallinckrodt facing a potential hit of as much as $6.4 billion, according to the report.

Mallinckrodt and several other pharmaceutical companies and drug distributors are defendants in lawsuits by state and local governments that have been consolidated before a federal judge in Ohio. The company hasn’t established legal reserves to address the litigation.

“At this point, there is only litigation risk, no litigation liability,”  Trudeau said.

According to the report, Trudeau said the recently announced Mylan-Upjohn merger and other recent deal activity was “certainly less of a factor” in the decision to suspend the spin-off.

“We had always said that our plans to separate would somewhat depend on market conditions,” Trudeau said, in the report. “At the moment, market conditions are not favorable.”

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