Abbott has announced plans to separate into two publicly traded companies, one in diversified medical products and the other in research-based pharmaceuticals.
The diversified medical products company will consist of Abbott's existing diversified medical products portfolio, including its branded generic pharmaceutical, devices, diagnostic and nutritional businesses, and will retain the Abbott name. The research-based pharmaceutical company will include Abbott's current portfolio of proprietary pharmaceuticals and biologics and will be named later.
"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," said Miles D. White, chairman and CEO of Abbott.
Abbott's proprietary pharmaceutical business has built a sustainable mix of products and a pipeline of proprietary medicines through internal discovery, in-licensing and collaboration efforts. Abbott’s diversified businesses include established pharmaceuticals, nutritionals, diagnostics and vascular devices.
The research-based pharmaceutical company currently has nearly $18 billion in annual revenue and will have a sustainable portfolio of market-leading brands. A pipeline of R&D assets in specialty therapeutic areas such as Hepatitis C, immunology, chronic kidney disease, women's health, oncology and neuroscience will help drive growth.
The diversified medical products company currently has approximately $22 billion in annual revenue and a mix of products balanced across four major businesses. It will target opportunities for geographic expansion, particularly in high-growth emerging markets. The company will have a broad-based pipeline of new products and technologies.
White will remain chairman and CEO of Abbott, the diversified medical products company. Richard A. Gonzalez, currently executive vice president, global pharmaceuticals, will become chairman and CEO of the research-based pharmaceutical company. Gonzalez is a 30+-year Abbott veteran and previously was Abbott president and COO.
The two companies have evolved into distinct investment and business opportunities. The research-based pharmaceutical company will focus on select specialty products with breakthrough innovation that serve patient needs in some of the most critical medical areas, such as immunology, Multiple Sclerosis, chronic kidney disease, Hepatitis C, women's health and oncology. This company will continue to generate the majority of its revenue from developed markets. The company's portfolio and pipeline, including established biologics expertise, have the potential to deliver accelerating revenue growth.
The diversified medical products company will be a large and fast-growing investment opportunity with a broad mix of products addressing many essential areas of health care. It will generate nearly 40% of its sales in high-growth emerging markets, with further expansion expected in the coming years.
The transaction is intended 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. The transaction is expected to be completed by the end of next year, and is subject to final approval by the Abbott board of directors, receipt of a favorable ruling from the IRS on the tax-free nature of the transaction and the effectiveness of a Form 10 registration statement to be filed with the SEC.