Abbott Laboratories plans to create one of the largest manufacturers of hospital products in the United States by spinning off much of Abbott's core global hospital products business.
The new, independent hospital products company will have approximately 14,000 employees worldwide, more than 5,000 customers and a large portion of Abbott's core hospital products business, including the related international hospital business.
The new company's business will include: medication delivery systems, such as electronic drug-delivery systems, infusion therapy and critical care products; generic pharmaceuticals, including acute-care injectables and other generic anesthetics; and other businesses, including intensive care pharmaceuticals such as Precedex (dexmedetomidine HCl), Abbokinase (urokinase), and Corlopam (fenoldopam mesylate), as well as contract manufacturing. The new company, to be named later, will be headquartered in Lake Forest, Illinois, north of Chicago.
"The creation of the new hospital products company will provide greater value for Abbott shareholders in the coming years because it will enable Abbott to increase its focus and investment on higher-growth segments in our medical products business and sustain a technologically advanced, higher-growth medical and pharmaceutical products portfolio," said Miles D. White, chairman and chief executive officer, Abbott Laboratories.
"At the same time, the new company will be able to focus on using its leading positions in the manufacture and supply of hospital products to provide technology solutions for the hospital customer and drive business performance. With enhanced strategic, financial and operational flexibility, the new company will have freedom to pursue alliances and other expansion opportunities," said White.
Christopher B. Begley, the current president of Abbott's U.S. hospital business, will become chief executive officer of the new company. Begley has spent the majority of his 30-year career in the hospital products business, is a 17-year veteran of Abbott, and has served in numerous management positions in Abbott's hospital and health systems businesses. David A. Jones, co-founder and chairman of Humana Inc., and a retired Abbott board member, will serve as the new company's chairman of the board.
"I am pleased to head the new company, which brings proven leadership in the hospital products business," said Begley. "With $2.5 billion in global sales, we will have a nearly 70-year track record of delivering high-quality hospital products to our customers, and we will be the only company of our size focused solely on the hospital customer. We also have a committed team of talented, dynamic employees who will propel the new company forward, continuing to offer technology solutions for the hospital all while investing in future opportunities that will best serve our patients and customers and deliver greater value for shareholders."
The spin-off is intended to take the form of a tax-free distribution to Abbott shareholders of a new publicly traded stock for the new company. Abbott has already submitted a letter ruling request to the Internal Revenue Service to confirm the tax-free nature of this transaction and will file an application to list the new company on the New York Stock Exchange. The expected stock distribution ratio will be determined at a future date. The transaction will not impact Abbott's dividend. The transaction is expected to be completed in the first half of 2004.
Abbott will retain the following proprietary pharmaceuticals, including related portions of the international hospital business: hospital operating room pharmaceuticals, such as Ultane/Sevorane (sevoflurane), Anzemet (dolasetron mesylate injection) and proprietary neuromuscular blockers; proprietary hospital pharmaceuticals such as Calcijex (calcitriol injection), Zemplar (paricalcitol injection), Simdax (levosimendan); pain management products; and portions of the international hospital business, all of which will become part of Abbott's global pharmaceuticals business. Abbott will also retain Abbott Vascular Devices, including the Perclose, Biocompatibles and JOMED assets, and the recently acquired Spinal Concepts, which will continue to be operated through Abbott's Medical Products Group.