Abbott Labs ($ABT) announced this morning that it is splitting into two publicly traded companies, one in diversified medical products and the other in research-based pharmaceuticals. The separation is expected to be complete by the end of next year.
The diversified medical products company, which will keep the Abbott name, will include its branded generic pharmaceutical, devices, diagnostic and nutritional businesses. The yet-to-be-named research-based pharmaceutical company will include the company's current portfolio of proprietary pharmaceuticals and biologics. Miles White (photo) will remain the CEO of Abbott, while Richard Gonzalez, who currently serves as the company's executive VP, Global Pharmaceuticals, will become chairman and CEO of the research-based pharmaceutical company.
Based on 2011 estimates, annual sales for the diversified medical products company will be about $22 billion. It will have products in more than 130 countries with nearly 40% of sales in emerging markets, according to a release. The company is looking for balanced success across the four businesses included in the new unit, but nutritionals will be the largest for now. However, global diagnostics should prove more important to earnings shortly, said White during a conference call.
"Abbott will be one of the largest and fastest-growing global diversified medical products companies, with a compelling portfolio of durable growth businesses in medical technology, branded generic pharmaceuticals and nutritionals," White said in a release. "We will continue to grow our product lines, market share and global presence, especially in emerging markets."
White sees the move as a very positive one for investors. There are different investor identities for each part of the company, White emphasized, and pharma had become so dominant. He further emphasized that the split had nothing to do with ongoing confidence about Humira.
When asked whether the company had or would consider a sale or merger of one of the two units, White said no, as it would take a long time and would not by a wise move, especially for investors.
White also discussed the possibility for further mergers and acquisitions. Although the company isn't actively seeking a large acquisition at this point, the company will remain opportunistic. If the right opportunity presents itself--and White thinks it will--the company will react.
Forbes notes Abbott is the latest company to announce a breakup this year. The split-mirrors theme has been seen in previous breakups in a number of industries, including those of ConocoPhillips and Kraft Foods.
Abbott will lay out the case for the split more fully on Friday.
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