Abbott will split into two separate publicly traded companies focused on diversified medical products and research-based pharmaceuticals, respectively. Retaining the Abbott name, the diversified medical products company will comprise the firm’s existing medical products portfolio, including branded generic pharmaceuticals, devices, diagnostics, and nutritional businesses, and start life with a portfolio valued at $22 billion in annual revenues. The firm will continue to focus on emerging markets, with some 40% of its current sales generated in high-growth emerging markets including India.
The research-based pharmaceutical company, yet to be named, will comprise Abbott’s existing portfolio of proprietary pharmaceuticals and biologics, including marketed products currently worth $18 billion in annual revenues. This business will continue to generate the majority of its revenues from developed markets, and focus on therapeutic fields including immunology, multiple sclerosis, chronic kidney disease, hepatitis C, women’s health, and oncology. The existing pipeline includes over 20 new compounds or expanded indications undergoing Phase II or III evaluation.
Miles D. White, current chairman and CEO, will head the new Abbott. Richard A. Gonzalez, currently Abbott’s executive vp of global pharmaceuticals, will be chairmain and CEO of the research-based pharmaceutical company. “Today’s news is a significant event for Abbott, and reflects another dynamic change in our company’s 123-year history, strengthening our outlook for strong and sustainable growth and shareholder returns,” White remarks.
Splitting Abbott will involve a transaction expected to take the form of a tax-free distribution to Abbott shareholders of a new publicly traded stock for the new pharmaceutical company. It is expected that the two companies will each pay a dividend that, when combined, will equal the current Abbott dividend at the time of separation.
Abbott separately reported global sales of $9.8 billion in the three months to September 30, up 13.2% over the equivalent period in 2010. Proprietary pharmaceuticals sales increased 13.5%, to $4.3 billion, while durable growth business sales increased 15.3%, to $4.2 billion, including double-digit growth in nutritionals, established pharmaceuticals, core laboratory diagnostics, and diabetes care. Sales in emerging markets were $2.6 billion, up 21% on the same period in 2010, and represent 26.1% of Abbott’s overall global sales.