Abbott Labs (ABT) recently zeroed in on a name for its research-based pharmaceutical company that will be launched later this year. Abbott Labs has decided to name the pharma co. AbbVie, which is a combination of Abbott and vie (Latin for life).
Abbott Labs had first announced its intention to split into two separate publicly traded companies in October 2011. While one company will deal in diversified medical products, the other will focus on research-based pharmaceuticals.
The diversified medical products company will retain the company name and will include Abbott Labs’ branded generic pharmaceutical, devices, diagnostic and nutritional businesses.
The research-based pharmaceutical company, AbbVie, will include Abbott Labs’ current portfolio of proprietary pharmaceuticals and biologics including products like Humira, Lupron, Synagis, Kaletra, Creon and Synthroid. The research-based pharmaceutical company’s annual sales are estimated to be almost $18 billion.
Abbott Labs has been investing in its pipeline which should contribute to the long-term growth of the pharma spinoff. Abbott Labs has a number of early-to-mid stage oncology candidates. The company has numerous programs in clinical development for the treatment of immunology, oncology, neuroscience, pain management and infectious diseases.
Neutral on Abbott Labs
We currently have a Neutral recommendation on Abbott Labs, which carries a Zacks #3 Rank (short-term Hold rating). The new company’s shares will be distributed to Abbott Labs’ shareholders in a tax-free transaction. The split is scheduled to close by the end of 2012.
The company is looking to ensure growth through this split. We are positive on the split which should allow the two separate entities to perform in a more focused manner.
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