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Abbott Laboratories<\/a> announced plans this morning to split into two companies. The separation is not a bitter one, however; it\u2019s simply a smart way to give the Chicago\u2013based company \u2014 the eighth-largest drugmaker in the world, with global sales of around $40 billion in 2010 \u2014 a valuation bump in the eyes of investors, analysts say.<\/p>\n The two new companies will have distinct product profiles. The first, as yet unnamed, will be a research-based pharmaceuticals company with Abbott\u2019s trademark brand-name medicines, including the rheumatoid arthritis drug Humira<\/a> (adalimumab), prostate cancer drug Lupron<\/a> (leuprolide) and Synagis<\/a> (palivizumab), a monoclonal antibody targeted at the respiratory syncitial virus. The second company, which will keep the Abbott moniker, will be a diversified medical products business including lab diagnostics, generic drugs, nutrition products and medical devices.<\/p>\n The problem with the status quo, according to Abbott spokesperson Adelle Infante, is that Humira has overshadowed all the company\u2019s other offerings. \u201cI believe this one product alone represents about 20% of the company\u2019s profits,\u201d Infante told Nature Medicine<\/em>. Consequently, for example, the medical products arm does not get as much attention from healthcare investors, she explains.<\/p>\n The looming competitor \u201cis compressing valuation of the whole group,\u201d says Jeffrey Holford, a pharmaceutical analyst with Jefferies<\/a> in New York. \u201cSo Abbott management is trying to alleviate that by breaking [Humira] into a separate company.\u201d<\/p>\n Holford believes the separation is positive, showing that Abbott \u2014 which was historically a diversified healthcare company \u2014 is going back to its roots. Healthcare investors are much more comfortable with a diverse product portfolio, and the new medical products business gives them many attractive options other than pharmaceuticals, he says.<\/p>\n Damien Conover, an analyst with Morningstar<\/a> in Chicago, is not quite so sure. \u201cIt\u2019s a good move, but it\u2019s not exactly a game-changer,\u201d he says. According to Conover, the separate companies offer shareholders more clarity about their specific products, but the overall valuation will not be dramatically different. \u201cWe see the two pieces being the same as the one piece,\u201d he says.<\/p>\n The transaction will not be complete until the end of 2012. Until then, Infante says, \u201cit\u2019s business as usual.\u201d<\/p>\n Image Credit: Abbott Laboratories<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Abbott Laboratories announced plans this morning to split into two companies. The separation is not a bitter one, however; it\u2019s simply a smart way to give the Chicago\u2013based company \u2014 the eighth-largest drugmaker in the world, with global sales of around $40 billion in 2010 \u2014 a valuation bump in the eyes of investors, analysts say. The two new companies will have distinct product profiles. The first, as yet unnamed, will be a research-based pharmaceuticals company with Abbott\u2019s trademark brand-name medicines, including the rheumatoid arthritis drug Humira (adalimumab), prostate cancer drug Lupron (leuprolide) and Synagis (palivizumab), a monoclonal antibody targeted … Read more<\/a> Continue reading
\nHumira\u2019s future also remains uncertain. The blockbuster antibody is due to go off-patent in 2016, and many shareholders are concerned the company is too dependent on Humira sales. This is especially worrisome for the company given that Pfizer looks poised to file for regulatory approval<\/a> before the end of the year for its own rheumatoid arthritis pill, tofacitinib<\/a>.<\/p>\n