Reckitt Benckiser raises profit forecast
Maker of Nurofen and Cillit Bang finds legacy drug still dominating US heroin substitute market
Reckitt Benckiser, the Anglo-Dutch household goods group behind Cillit Bang, Dettol and Nurofen, has raised its full-year profit growth forecast, suggesting that its legacy drugs business, which makes the prescription heroin substitute Suboxone, would finish the year much more strongly than previously anticipated.
The little talked-about heroin substitute division of Reckitt is a legacy of Reckitt & Colman's chemical research in the 1970s and investors had previously been warned that sales and profits from this "non-strategic" operation were expected to drop steeply once exclusivity licences expire – as happened in the US this month.
But today Reckitt pointed to the absence of any major copycat product in the US, suggesting this was likely to prolong Suboxone's market dominance at least until the end of the year. This unexpected piece of good fortune, combined with continued strong performance from leading brands such as Vanish, Calgon and Harpic, prompted the chief executive, Bart Becht, to increase his profit growth forecast by 20% to between 12% and 13%.
Raised profit expectations for 2009 come after the high-margin heroin substitute unit posted a 42% increase in revenues to £394m, predominantly driven by growing sales in the US. The company has warned that "up to 80% of revenues and profits of [this] business might be lost to generic competition in 2010, with the possibility of further erosion thereafter."
Becht was the highest-paid director of any FTSE-100 company last year, receiving a pay package of £36.8m in salary, bonuses, share incentive schemes and perks. His pay deals totalling more than £80m over the past three years.
guardian.co.uk, Tuesday 27 October 2009 16.25 GMT