Abbott to split off branded pharma unit, pursue specialty drug focus
Abbott said today it will separate into two publicly traded companies, one its $18-billion pharma unit and the other its $22-billion diversified medical products business.
The research-based pharmaceutical company, which has yet to be named, will be led by 30-year Abbott veteran Richard Gonzalez, currently EVP for global pharmaceuticals. It will focus on “select specialty products” Abbott said.
The drug portfolio includes brands such as blockbuster rheumatoid arthritis biologic Humira, along with Lupron, Synagis, Kaletra, Creon and Synthroid. Its pipeline has agents in hepatitis C, immunology, chronic kidney disease, women's health, oncology and neuroscience. The majority of revenue will continue to come from developed markets.
The diversified medical products company, to be led by current Abbott chairman and CEO Miles White, is retaining the Abbott name. It will focus on devices like heart stents and will have an extensive, broad-based pipeline of new products and technologies, Abbott said, while it will generate nearly 40% of sales in high-growth emerging markets.
The transaction is expected to be completed by the end of next year, but is subject to final approval by the Abbott board of directors.
In a note to investors about the spin-off, Credit-Suisse's Catherine Arnold said Abbott's decision to split branded pharmaceuticals from its diversified business “may suggest divergence in outlook. We see the pharma business entering a slower growth, higher risk profile business, while the diversified business may have margin expansion potential and pending success of emerging market, higher growth.”