(Oct 21): Abbott Laboratories said it plans to spin off its nutrition unit into a separate publicly traded company after a series of missteps have weighed on the company’s broader performance.
As an independent company, the nutrition business will “be better-positioned to focus its resources more strategically,” Abbott said in a statement.
The planned separation won’t impact Abbott’s guidance for 2026 or guidance it will provide in January for 2027, the company said. Daniel Salvadori, executive vice president and group president of established pharmaceuticals and nutritional products, will become chief executive officer of the new nutrition company.
Abbott’s shares fell 4% in pre-market trading on Wednesday. They have fallen more than 18% since the start of the year through Tuesday’s close.
The move will allow the company’s healthcare-focused units in medical devices, diagnostics and established drugs to operate independently of the nutrition and infant formula operations that have had a number of issues in recent years. The challenges have included recalls that sparked a nationwide shortage in 2022.
The separation, a tax-free distribution to shareholders, is expected to be completed by the end of 2027. The company’s nutrition brands include Similac, Pedialyte and Ensure.
The nutrition industry has proven difficult to navigate, with manufacturers grappling with costly recalls and mounting litigation. Abbott isn’t alone in rethinking its exposure: rival Reckitt Benckiser Plc also sought to shed its Mead Johnson infant-formula business to focus on more high performing areas.
Abbott lowered prices on some of its nutrition products at the end of last year to attract price-conscious consumers, after previously raising them to account for higher manufacturing costs.
The company last month agreed to pay US$385 million (RM1.57 billion) to settle US allegations related to poor manufacturing practices at two facilities, including one involving an investigation of a contaminated facility that made powder infant formula. It also agreed to pay US$670 million in August to settle some lawsuits alleging that it hid the risk that its infant formula for premature babies can cause a deadly bowel disease.
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