NORTH CHICAGO, Ill. (AP) ? Abbott Laboratories plans to spin off its branded drug business and become two separate medical companies, the drug and medical device maker said Wednesday.
Abbott, based in North Chicago, Ill., also reported a 66 percent decline in third-quarter net income as it set aside $1.5 billion for legal reserve related to an investigation into its marketing of the drug Depakote.
The new spinoff will sell Abbott's branded pharmaceuticals, including the blockbuster arthritis and immune-disorder drug Humira. That business will be led by Abbott's Richard Gonzalez. He now heads the company's pharmaceutical business.
The new drug company would have annual revenue of about $18 billion, Abbott said, based on 2011 estimates.
Abbott CEO Miles White will continue to lead the rest of the diversified medical products company. It markets medical implants, diagnostic tests, generic drugs and baby formula. This company will retain the Abbott name and would have annual revenue of about $22 billion. The branded drug company hasn't been named yet.
The company said the split would allow investors to value the companies on their distinct characteristics. Shares of the new company will be distributed to Abbott shareholders in a tax-free transaction, Abbott said.
Abbott is the latest in a series of companies to announce such split-ups in the past year, including Kraft Foods Inc., the former Fortune Brands Inc. and Sara Lee Corp.
Also Wednesday, Abbott reported net income of $303 million, or 19 cents per share, down from $891 million, or 57 cents per share, in the same quarter last year.
Excluding a big charge to set aside a $1.5 billion pretax legal reserve related to the Depakote investigation, earnings were $1.18 per share, which beat analyst expectations by a penny.
Revenue rose 13.2 percent to $9.82 billion. Analysts expected $9.63 billion.
Shares of Abbott rose $5.07, or 9.7 percent, to $57.51 in premarket trading.
Abbott has been one of the pharmaceutical industry's rare success stories in recent years, largely thanks to double-digit growth of multibillion-dollar, anti-inflammatory drug Humira. And while the injectable biotech drug continued to deliver double-digit growth last year, Abbott has been mostly unsuccessful in efforts to find new therapies to replace the drug.
Early this year the company withdrew the application for a next-generation psoriasis drug after the FDA indicated additional work would be needed to win approval.
Humira, which treats rheumatoid arthritis and other inflammatory disease, is scheduled to lose patent protection in 2016.
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