Pink Sheet is part of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC’s registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

This copy is for your personal, non-commercial use. For high-quality copies or electronic reprints for distribution to colleagues or customers, please call +44 (0) 20 3377 3183

Printed By



Executive Summary

Squibb's cash from its sale of Charles of the Ritz for over $600 mil. could be directed toward "other health care investments," Squibb Chairman Richard Furlaud said in a Nov. 18 press release announcing the divestiture. To be in line with the company's recent restructuring, those investments are likely to be in the pharmaceutical acquisition or licensing area. Commenting on what Squibb might do with the windfall from Charles of the Ritz, Furlaud said that the company "is evaluating various options for the cash proceeds from the sale, when received, including the repurchase of shares of its common stock and other health care investments." The sale of Charles of the Ritz is a major step in Squibb's five year effort to narrow its business focus to Rx and OTC pharmaceuticals. Beginning with Squibb's 1981 divestiture of Life Savers to Nabisco, the company has sold or spun off all its nonpharmaceutical business with the exception of Convatec, Edward Weck & Co. and the Weck Medical Instrument Group, which have been merged into the drug group. Given the company's restructuring effort away from device and diagnostic areas and toward pharmaceuticals, Squibb's choices for reinvestment are relatively limited -- primarily to the drugs and biologicals businesses. Pharmaceutical product licensing could be facilitated by Squibb's recent moves to build specialized groups -- Princeton Pharmaceuticals, which will market Corgard, Corzide, and Pronestyl; Squibb and Sons, which will market the company's other brandname Rx products focusing on Capoten and Capozide; and Squibb Mark, which will sell Rx generics and OTCs. Squibb's recent joint venture moves also indicate possibilities for future investment. In the last three years, Squibb has entered into joint ventures with Connaught covering vaccines, with Novo covering insulin, and with Marsam Pharmaceutical covering injectable generics. An easy health-care investment alternative could be repurchase of its own shares. The Ritz cosmetics and fragrance business, acquired in 1971, generated sales of $432.2 mil., up 8%, in 1985. Based on the group's operating earnings of $50.6 mil., up 9% last year, Yves St. Laurent is paying 12 times operating earnings. Charles of the Ritz sales have grown at a compounded annual growth rate of approximately 8.5% over the past five years, while operating earnings have grown at a 13% compounded annual rate since 1980. The group's product mix is a combination of department and drug store and specialty lines ranging from Bain de Soleil and the Forever Krystle fragrance to the Paris scent and Beaute cosmetics of Yves Saint Laurent. Calling Yves St. Laurent "an excellent partner" for Charles of the Ritz, Squibb Chairman Richard Furlaud noted that the sale "will reunite the Yves St. Laurent cosmetic and fragrance business, currently operated by Charles of the Ritz, with the rest of the Yves St. Laurent business." Squibb had reported in June that it was seeking a buyer for the cosmetics/personal care products business. The closing of the deal, Squibb said, is scheduled "for year end." Furlaud said that the sale will result in a one-time gain for Squibb. However, he added, the company's management "is reviewing the corporation's asset base with a view to further enhancing Squibb's return on assets and profitability in future years and that the results of this review, if approved by the board, might result in charges to income which could offset, in whole or in part, the gain from the sale." Squibb stock closed on Nov. 21 at 111, up 5-3/4 points for the week.

You may also be interested in...

Part D Discount Liability Coming Into Focus: CMS Releases Drug Cost Data

Newly released Medicare Part D data sheds light on the sales hit that branded pharmaceutical manufacturers will face when the coverage gap discount program gets under way in 2011

FDA Skin Infections Guidance Spurs Debate On Endpoint Relevance

FDA appears headed for a showdown with clinicians and the pharmaceutical industry over the proposed new clinical trial endpoints for acute bacterial skin and skin structure infections, the guidance's approach for justifying a non-inferiority margin and proposed changes in the types of patients that should be enrolled in trials

Shire Hopes To Sow Future Deals With $50M Venture Fund

Specialty drug maker Shire has quietly begun scouting deals with a brand-new $50 million venture fund, the latest of several in-house investment arms to launch with their parent company's pipelines, not profits, as the measure of their worth




Ask The Analyst

Please Note: You can also Click below Link for Ask the Analyst
Ask The Analyst

Your question has been successfully sent to the email address below and we will get back as soon as possible. my@email.address.

All fields are required.

Please make sure all fields are completed.

Please make sure you have filled out all fields

Please make sure you have filled out all fields

Please enter a valid e-mail address

Please enter a valid Phone Number

Ask your question to our analysts