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Abbott Spins Off its Hospital Products Group--and Then There Were None

Abbott's announced spin-off of its hospital supply business suggests once and for all that a key medical device model of the 1980s is now dead. At the same time, it creates an enormous company with significant resources.

Twenty years ago, the medical device industry was largely a hospital supply business and that hospital supply business was dominated by a pantheon of large companies—American Hospital Supply Corp., Johnson & Johnson , and Abbott Laboratories Inc. —all of whom sold a broad array of hospital-based products through advanced marketing and distribution networks. Other suppliers, including Becton, Dickinson & Co., CR Bard Inc. , Kendall, and Sherwood Medical, the last two now part of Tyco International Ltd. , endorsed the model, if they didn't copy it outright, by making distribution and channel management a critical priority. More importantly, virtually all saw a broad-based approach to hospital supply as crucial.

The announcement that Abbott is spinning off its hospital products group (HPG) represents the final bell tolling for such a...

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