The divestment would complete the company’s gradual shift away from its original focus on generic drugs and nuclear imaging toward branded specialty pharmaceuticals, which now comprise the bulk of its revenues.
Mallinckrodt, based in Staines-Upon-Thames, England, has hired investment bank Credit Suisse Group AG to run a sale process for the unit, the people said on Tuesday, asking not to be named because the deliberations are private.
There is no guarantee that the sale talks will lead to a deal, the people cautioned. Mallinckrodt and Credit Suisse declined to comment.
Mallinckrodt’s generics unit has been a drag on the rest of the company, in part because some of its products include opiate-based pain killers, which have fallen out of favor with doctors due to their addictive potential.
“We expect continued pressure on the segment from competitive entrants and market pricing in coming quarters,” chief financial officer Matthew Harbaugh said during Mallinckrodt’s first-quarter earnings call earlier this month.
Between 2015 and 2016, Mallinckrodt’s generic drug sales declined around 18 percent, to just over $1 billion. Sales of branded specialty drugs, on the other hand, jumped around 40 percent over the same period, to around $2.3 billion, partly reflecting acquisitions.
When Mallinckrodt was spun off from Covidien Plc in 2013, around 90 percent of its sales came from generics and nuclear imaging products.
Since then, it has built out its specialty pharmaceutical unit with several acquisitions, the largest of which was the $5.6 billion purchase of Questcor Pharmaceuticals in 2014.
The deal gave Mallinckrodt control of anti-inflammatory drug H.P. Acthar, which accounts for around a third of its revenue.
Acthar has been in the spotlight in recent years because of its high price tag of around $34,000, which was largely the result of price hikes by previous owner Questcor.
Earlier this year, Mallinckrodt completed a sale of its nuclear imaging business to IBA Molecular for around $690 million.
The sale process for Mallinckrodt’s generic drug business comes amid a wave of dealmaking in the sector. Last month, Fresenius SE & Co KGaA agreed to acquire generic drugmaker Akorn Inc for $4.3 billion.
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