Abbott Laboratories, one of the biggest multinationals in the State, said yesterday it would spin off part of its hospital unit to focus on branded drugs and medical devices.
The US firm, which plans to employ 3,000 Irish staff by 2008, is spinning off the less-profitable parts of its hospital products division into a public firm.
It will also reorganise the structure of its medical products unit to make it more entrepreneurial. The firm has been moving for the past four years to acquire fast-growing businesses and shed those with slow growth rates.
The new hospital products firm, yet to be named, will sell generic drugs, medication delivery systems, critical-care products and infusion therapies. The firm will have sales of about $2.5 billion (€2.3 billion), representing two-thirds of Abbott's hospital products business.
An Abbott spokeswoman said yesterday the firm remained committed to its Irish operations, which employ 1,700 people, but she could not speak for the newly created public entity.
Abbott's Irish management held talks with IDA Ireland yesterday to discuss how the decision would affect the Republic.
An IDA spokesman said it was too early to analyse how the decision would affect the firm in Ireland. In March, Abbott presented plans to create 600 jobs in Longford and 350 jobs in Sligo.
Two of Abbott's operations in the Republic, those in Donegal and Sligo, will move to the new public company consisting of the slower-growing hospital division.
Abbott's remaining Irish units in Galway, Longford, Cootehill, and parts of its Sligo operation will stay with the main Abbott Ireland operation.
Abbott, with annual sales of nearly $18 billion, will retain higher-growth products such as prescription drugs, molecular diagnostics and drug-coated stents. It will give shareholders stock in the new hospital products firm in the form of a tax-free dividend.
"We've looked extensively at our portfolio and our first priority has been to emphasise our proprietary pharmaceuticals business, which we've done," said Mr Miles White, Abbott's chief executive, on a conference call with analysts. "We're looking to shape our medical products division into a higher-growth business."
The new hospital products company would have annual net income of about $300 million, Abbott said. It will raise an undisclosed amount of debt, in order to raise money to pay to Abbott.
Abbott expects to take unspecified one-time charges from the spin-off.
