Abbott Laboratories’ chief executive Miles White has been talking about the rationale behind the recent decision to split the firm’s business and dismissed rumours that its pharmaceuticals business will be sold off.
In October, the US major announced it is to split off its $18 billion drugs arm into a new, as-yet unnamed company, while the remainder – diagnostics, devices, nutrition and branded generics – will keep the Abbott name. Speaking at the FT Pharmaceutical and Biotechnology conference in London, Mr White said the move followed discussions with investors who no longer regard pharma as a growth business.
The feeling was that Abbott was viewed as “Humira and other”, referring to the firm’s huge-selling rheumatoid arthritis drug and investors nowadays do not value the pipeline (a view echoed by other speakers at the conference). They are only interested in the drug portfolio when they “can see the whites of its eyes”, he said.
The non-pharma operations are seen as areas of growth, as opposed to the “expensive science” side, Mr White went on to claim. The less risky businesses attract a different type of investor, he added.
The Abbott boss went on to say that both halves of the business are profitable and will have a market capitalisation of around $40-$45 billion. However, when asked whether either of the businesses could be sold off, he made it pretty clear that is not the plan.
Mr White said a buyer “would have to have an awful lot of cash and would have to have a ‘yes’ from the CEO and that’s a hard ‘yes’ to get”.
