Abbott (NYSE:ABT) said it will spin out its research pharmaceuticals operation into an as-yet-unnamed publicly traded firm, keeping the Abbott brand for its diversified medical businesses.
The Chicago-area health care giant also said its third-quarter profits were down 66.0 percent on a $1.5 billion set-aside to cover litigation costs.
It’s a sea change for 123-year-old Abbott, long noted for its diversification, chairman and CEO Miles White said.
"Abbott will be one of the largest and fastest-growing global diversified medical products companies, with a compelling portfolio of durable growth businesses in medical technology, branded generic pharmaceuticals and nutritionals," White said in prepared remarks. He’ll stay on to lead Abbott; Richard Gonzalez, executive vice president of global pharmaceuticals and a 30-year Abbott veteran, will become chairman and CEO of the new pharma business.
The diversified medical businesses throw off about $22 billion a year in sales. The pharma unit generates about $18 billion, Abbott said. The split will see ABT shareholders receive a tax-free distribution of shares of the new pharma company’s stock, at a ratio yet to be determined.
Abbott said the move should be done by the end of 2012. Its board must still approve the split, which will not affect its guidance for this year. The company said it expects adjusted earnings per share of between $4.64 and $4.66 for the full year.
For the third quarter, Abbott posted profits of $303 million, or 19 cents per share, on sales of $9.82 billion. That’s a top-line slide of 66.0 percent compared with profits of $891 million, or 57 cents per share, on sales of $8.68 billion.
Abbott said the results included a $1.5 billion set-aside “related to ongoing settlement discussions in the previously disclosed investigation by U.S. Dept. of Justice, through the U.S. Attorney for the Western Department of Virginia, related to Depakote. The discussions are ongoing, and until concluded, there can be no certainty about definitive resolution," according to a press release.
Worldwide sales of coronary stents were $521 million for the quarter. Other vascular products posted sales of $828 million, with medical optics sales reaching $269 million.