Abbott Laboratories plans to split into two publicly traded companies, separating its medical products and research-based pharmaceuticals operations.
The medical products company will consist of Abbott’s branded generic pharmaceutical, devices, diagnostic and nutritional businesses, and will keep the Abbott name. Meanwhile, the research-based pharmaceutical company will include Abbott’s portfolio of pharmaceuticals and biologics and will be named later.
Shares climbed 7% to $56.10 premarket. The stock is up 9.5% this year through Tuesday’s close.
The medical-products company has about $22 billion in annual revenue, while the research-based pharmaceutical company has nearly $18 billion. Miles White will remain chairman and chief executive of Abbott, while Richard A. Gonzalez, currently executive vice president of global pharmaceuticals, will become chairman and chief executive of the research-based pharmaceutical company.
Abbott has posted declining profits in recent quarters due to restructuring and acquisition charges, though it also has seen stronger revenue as of late. Overall, Abbott’s diverse portfolio has cushioned it from some problems facing other large drug makers, like patent expirations and generic competition. The company’s series of acquisitions in recent years aims to reduce Abbott’s dependence for sales growth on the anti-inflammatory drug Humira.
The split follows a number of other companies in the consumer products and energy industries in particular that have decided the sum of their parts is worth more than the whole.