3M considers selling branded pharmaceuticals division | VailDaily.com

3M considers selling branded pharmaceuticals division

MINNEAPOLIS – 3M Co., a maker of items ranging from adhesives to health and safety products, said on Tuesday it is considering selling its branded pharmaceuticals business. Its shares rose more than 2 percent in afternoon trading.”The best way for this business to grow is for it to be free to pursue separate strategies under the direction of a dedicated pharmaceutical industry company with a business model better suited to maximize its potential,” Brad Sauer, executive vice president of 3M Health Care, said in a news release.The pharmaceuticals unit develops, makes and markets branded drug products related to dermatology, women’s health, cardiology and respiratory medicine for the Maplewood-based company.Its brands include Aldara, Difflam, Duromine, Tambocor, Maxair, Metrogel-Vaginal and Minitran, and it employs 1,500 workers worldwide.Lehman Brothers analyst Bob Cornell predicted the sale could bring 3M about $3.5 billion, assuming the division had sales of $700 million a year and around $300 million in operating profit.”That prospect could focus the thinking on the use of proceeds,” he wrote in a research note. “A share buyback we think would be a potential positive, with a big acquisition a potential negative.”For all of 2005, 3M’s overall sales amounted to $21.2 billion.He wrote the sale may have been prompted by Wall Street’s concerns the drugs division wasn’t a good fit with the rest of the company and that 3M didn’t have the sales and marketing strength to maximize its value.Further, the company has seen disappointing growth from the Aldara skin cancer treatment, he wrote.Several analysts said 3M could get more value out of the division with a sale to a large pharmaceutical company that would be better able market its existing products and further develop 3M’s proprietary immune response modifier technology, which assists the immune system rather than target specific viruses or tumors.”We still feel that there is value to be unlocked in the IRM platform but that it’s best done at a bigger pharma shop,” UBS analyst Jeffrey Cianci wrote in a research note.3M said it has hired investment bank Goldman Sachs to advise it on alternatives for the unit.Its shares rose $1.58, or 2.1 percent, to $77.42 in afternoon trading on the New York Stock Exchange. Its shares have traded in a 52-week range of $69.71 to $85.62.—On the Net:3M Co.: http://www.3m.com/Vail, Colorado

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