You choose, we deliver
If you are interested in this story, you might be interested in others from The Journal Gazette. Go to www.journalgazette.net/newsletter and pick the subjects you care most about. We'll deliver your customized daily news report at 3 a.m. Fort Wayne time, right to your email.

Business

  • Small cars fare poorly in new front-crash tests
    DETROIT – The four-door Mini Cooper Countryman was the only one of 12 cars to earn a top rating of “good” in new frontal crash tests.The Nissan Leaf, Nissan Juke, Fiat 500L and Mazda ...
  • Economy rebounds with fast 4% growth
    WASHINGTON – The U.S. economy has rebounded with vigor from a grim start to 2014 and should show renewed strength into next year.That was the general view of analysts Wed­nesday after the g ...
  • Lincoln National quarterly earnings up 26%
    Lincoln National Corp. today reported second-quarter earnings of $398 million, or $1.48 per diluted common share, a 26 percent increase from the $317 million, or $1.15 a share, posted for the same three months of 2013.
Advertisement

Health care firm to split into two

– Following a rival’s lead, Baxter International Inc. said it’s planning a breakup into two health care companies as it tries to boost innovation and profitability and reward shareholders.

Thursday’s news could mark a recent trend as Wall Street banks look for lucrative business and urge giants such as Pfizer Inc. and Johnson & Johnson, which includes its DePuy unit in Warsaw, to break up into companies that can grow faster.

Deerfield, Ill.-based Baxter, known for its treatments for hemophilia and other blood disorders, will split into a biopharmaceutical company making those and some other medicines, and a medical products business. That one will sell the rest of Baxter’s products, including anesthetics, injectable drugs, intravenous solutions and equipment to administer them.

Baxter shares jumped $3.43, or 4.9 percent, to $73.51.

Early last year, much-larger Abbott Laboratories spun off its branded drug business into the new company AbbVie. Abbott’s remaining business sells nutritional formula, generic drugs, medical implants and diagnostics.

Which companies might follow suit is a hot question. Meanwhile, the mergers and acquisitions that have driven cost cutting and boosted profits for most top international drugmakers are losing allure due to expensive valuations of small drug and biotech companies that often serve as surrogate research labs for big pharma.

Some stock analysts – at investment banks that would stand to make millions for handling breakups and spin-offs – have been pushing Pfizer to split into two or three companies.

Pfizer, the biggest U.S.-based drugmaker, says that won’t happen, at least for a couple of more years.

More recently, some analysts have asked J&J, which makes medical devices and diagnostic tests as well as prescription drugs and consumer health products, whether it would split up.

The company, which has long touted its decentralized, heavily diversified business model, has said it’s sticking with that successful strategy.

Other analysts are divided on whether Baxter’s news will put more pressure on Johnson & Johnson, the world’s biggest health products maker with annual revenue topping $71 billion and market capitalization of about $276 billion.

Steve Brozak of WBB Securities thinks J&J already is being pushed to split up.

“They are probably reviewing internal plans and plans being presented by every bank on Wall Street,” Brozak said of J&J. “They can’t be immune to all that.”

Advertisement