Biotech Values

[DewDiligence]

ABT—I guess the Pharma unit will have the higher PE

I think it will be the reverse: i.e. the diversified products successor company (the one that will continue to be called Abbott) will have a higher P/E than the proprietary pharma successor company that keeps Humira, the cholesterol franchise, and the development pipeline.

Worry about future competition for Humira (especially from PFE’s Tofacitinib) has unduly affected ABT’s share price (#msg-61383188, #msg-66970993), and the split-up is intended to remove this worry from the valuation of the diversified products successor company. It’s a dumb move, IMO, but that’s the rationale.