Abbott Laboratories (ABT)

[DewDiligence]

Abbott to Finalize Pharma-Spinoff Name in January

http://www.ft.com/intl/cms/s/0/80762bb6-2cc2-11e1-b485-00144feabdc0.html

›December 28, 2011 12:48 pm
By Andrew Jack in London

Abbott is finalising a new name for its pharmaceutical business, as it gears up to split into two separate quoted healthcare companies by the end of next year designed to enhance their separate valuations while retaining a “joint heritage”.

Miles White, chief executive, told the Financial Times that a shortlist of new corporate names would be drawn up internally by January, as the company prepares to re-register all its existing patented prescription drugs with a new global corporate brand as part of the unusual spin-off.

He said the decision to retain the Abbott name for the diverse remaining parts of the business – which include diagnostics, generic drugs and nutrition, and will be run by him – partly reflected the far greater number of products it sells.

While Abbott’s diversified business contains about 2,000 products, its patented prescription pharmaceutical business has only a couple of dozen, making it cheaper and easier to rebrand the latter.

It also reflects the fact that Abbott began as a diversified healthcare business, while its recent success with medicines led by its anti-inflammatory treatment Humira increasingly led investors to perceive the company as a pharmaceutical group subject to the uncertainties of patent expiries, innovation difficulties and generic competition.

The naming process still requires substantial efforts to ensure that the new brand has not been registered by others in different countries, and ensuring it is culturally acceptable and passes regulatory scrutiny around the world.

Mr White said the decision to split into two companies was a response to the fact that investors “don’t value pipelines” of experimental drugs in the innovative pharmaceutical business, which has come to “overshadow” the market’s perceptions of Abbott overall.

He dismissed suggestions that the pharmaceutical business might be sold to another drug group, stressing that “I have got and will have a lot of shares in both” of the companies. He said there was “no reason to alter the culture” or shift the headquarters of either business from its current location near Chicago.

He said the non-pharmaceutical businesses – which are dominated by over-the-counter and out-of-pocket purchases and sales in emerging markets – would have a higher growth rate. But he stressed the prescription drugs arm – more reliant on the US and tightly-controlled government and insurance company reimbursement – would also grow in the coming years.

He said disputes over implementation of healthcare reforms in the US created “an uncertain environment”. He also expressed concern about long-term “rolling uncertainty” for companies operating in the eurozone.

He said the absence of a European Central Bank with the powers of the US Federal Reserve made Europe’s difficulties tougher to resolve [duh].‹