Newspaper article St Louis Post-Dispatch (MO)

Delayed Spinoff Leaves Mallinckrodt Awash in Uncertainty

Newspaper article St Louis Post-Dispatch (MO)

Delayed Spinoff Leaves Mallinckrodt Awash in Uncertainty

Article excerpt

Mallinckrodt's St. Louis-area workforce has lived through its share of corporate drama, but uncertainty levels may have just hit a new high.

The spinoff of Mallinckrodt's generic drug business, which has its principal office in Webster Groves and a factory in north St. Louis, is on hold. Massive litigation over opioids casts a shadow over the business, and Mallinckrodt's stock price keeps hitting new lows.

Mallinckrodt also operates a corporate office in Hazelwood, but the outlook isn't exactly rosy for workers whose livelihood is tied to the branded side of the business. That unit, headquartered in New Jersey, faces pushback from insurers over the cost of its top-selling drug, Acthar, which is used to treat infant seizures and multiple sclerosis.

Chief Executive Mark Trudeau told analysts Aug. 6 that he still wanted to separate the two parts of the company "sooner rather than later" but couldn't do so right away because of unfavorable market conditions and the opioid litigation.

Trudeau added that he was "considering a whole range of options which would include not only spin but sale."

The generics business, which makes acetaminophen and other drugs in addition to the opioids hydrocodone and oxycodone, is the descendant of a chemical company that three Mallinckrodt brothers founded in St. Louis in 1867.

Mallinckrodt says it wants to split itself in two because the generic and branded drug businesses have little in common. That's true, Piper Jaffray analyst David Amsellem says, but he thinks Trudeau and his team mainly want to distance themselves from the opioid lawsuits.

"I think that's probably the overriding motivation here," Amsellem says.

State and local governments have sued Mallinckrodt and several other opioid manufacturers, alleging that they disregarded the risk of addiction and failed to report suspiciously large orders. …

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