Novo Nordisk has joined the ranks of pharma companies stripping out non-core businesses with a plan to spin-off its IT unit as a separate company.
The Danish pharma company confirmed this morning that it would seek an initial public offering (IPO) for its NNIT business – which provides IT and consultancy services – on Nasdaq Copenhagen.
At the moment details of the plan are sketchy and Novo Nordisk has not proposed a timeframe for the spin-out. The decision comes after several months of discussion about the future of the IT unit, which, like engineering subsidiary NNE Pharmaplan, operates as a fully demerged subsidiary of the parent group.
NNIT started out as a division of Novo Nordisk but after its de-merger started offering its services to other pharma companies and also across multiple industrial sectors, with a broad range of clients including financial institutions and even consumer goods companies, such as toymaker Lego
Around 50% of NNIT’s turnover comes from Novo Nordisk while a significant chunk of the remainder is derived from other pharma clients, providing services such as serialising medicine packs to meet forthcoming traceability regulations around the world. The business reported revenues of 2.4bn krone ($366m) in 2014 and profit of 265m krone.
A year ago Novo Nordisk said it was exploring the possibility of a separate listing for NNIT and soon after appointed Morgan Stanley to help explore the feasibility of going public. The transaction had been expected to close sooner but was reportedly delayed by a dip in enthusiasm among Danish investors for IPOs.
The IPO could raise between 5bn and 8bn krone, according to analysts cited in a Reuters report. It will provide NNIT “with improved access to the capital markets and stronger brand recognition, among other benefits,” said Novo Nordisk in a statement.
The decision to spin-out NNIT comes as Novo Nordisk is in the throes of new product launches expected to drive growth in its pharma business in the coming years, and the cash injection could help fund that effort.