SPECT myocardial perfusion imaging with technetium-99m (Tc99m) shows normal findings. Source: Daniel S. Berman, MD, director of cardiac imaging and nuclear cardiology at Cedars-Sinai Heart Institute

Covidien is planning to spin off its pharmaceuticals business into a standalone public company. The unit supplies generators used to produce technetium-99m, a medical isotope, and offers an integrated system of diagnostic contrast media in prefilled syringes and injectors.

The pharmaceuticals business, which produces acetaminophen, supplies opioid pain medications and generic pharmaceuticals manufactured in the U.S.

Since 2008, this business has received FDA approval for eight new products, including two branded pain products launched in 2010.

"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 CEO. 

The Dublin-based Covidien said its pharmaceuticals business currently generates approximately $2 billion in annual sales, with about two-thirds derived from the U.S. market.

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. The company currently expects that completion of the transaction could take up to 18 months.

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 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 directors.

"There can be no assurance regarding the ultimate timing of the proposed transaction or that the transaction will be completed," said the company. Covidien said it does not intend to provide regular updates on its progress regarding this separation, but will announce final approval of the separation by its board or completion of the transaction and will make such other disclosures as required by applicable law.