Abbott to split into two separate companies
pharmafile | October 20, 2011 | News story | Manufacturing and Production, Research and Development, Sales and Marketing | Abbott, Abbott Laboratories
Abbott’s management has decided to split the company into two separate entities in order to give shareholders a ‘distinct investment opportunity’.
The pharma company will be divided into two publicly traded firms: the first will focus on medical products and the other on research-based medicines.
The diversified medical products company will consist of Abbott’s existing diversified medical products portfolio, including its branded generic pharmaceuticals, devices, diagnostic and nutritional businesses, and will retain the ‘Abbott’ name.
The research-based pharmaceutical company will include Abbott’s current portfolio of pharmaceuticals and biologics and will be given a separate name at a later date.
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 and other legal proceedings.
Abbott expects to incur one-time charges related to the transaction during the periods preceding the separation, to be quantified at a later date.
Both areas have produced strong revenue for Abbott, with its research pharmaceutical business generating about $18 billion in annual revenue, while the medical products area made $22 billion, according to a 2011 report by the US firm.
Miles White, chief executive of Abbott, said: “[This] 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 will remain chairman and chief executive of Abbott, the diversified medical products company.
Richard Gonzalez, currently executive VP of global pharmaceuticals, will become chairman and chief executive of the as-yet unnamed research-based pharmaceutical company.
Gonzalez said: “The research-based pharmaceutical company will be a leader in its industry with a strong and sustainable portfolio of specialty medicines and a promising pipeline of future products.
“This business has been delivering market-leading performance and is well positioned for future success.”
There will be a tax-free distribution to Abbott shareholders of publicly traded stock for the new pharma company, the firm said in a statement.
The company said it expects the companies will each pay a dividend that, combined, will equal the current Abbott dividend at the time of separation.
Humira, which is licensed to treat a number of autoimmune diseases, is Abbott’s best-selling drug, with sales of $6.5 billion in 2010, representing a third of the research based pharma unit’s sales.
The company has also recently been granted FDA approval for its ALK gene test to be used alongside Pfizer’s new non-small cell lung cancer drug Xalkori (crizotinib), which is forecast to make blockbuster sales.
Ben Adams
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