I've always thought of Abbott Labs (NYS: ABT) as a mini Johnson & Johnson (NYS: JNJ) , diversified between drugs, medical devices, nutrition products, and diagnostics. But apparently, being a big Johnson & Johnson isn't in the cards. Yesterday, Abbott said it plans to split in two: drugs in one company, everything else in the other.

The move is almost entirely about Humira, Abbott's megablockbuster that treats inflammatory diseases, rheumatoid arthritis, and the like. Abbott's growth has become dominated by how well Humira is doing, which puts a drag on the value of the rest of Abbott's products. So far Humira has done pretty well; in the third quarter, Humira sales were up another 18% on a constant currency basis. But Pfizer (NYS: PFE) , Incyte (NAS: INCY) , Rigel Pharmaceuticals (NAS: RIGL) , and Vertex Pharmaceuticals (NAS: VRTX) are all developing oral rheumatoid arthritis drugs, causing worry that Humira's growth -- and thus Abbott's growth -- might stall out or even drop.

For current shareholders, the move is kind of mixed bag. Sure the diversified part should be able to achieve full value, but the pharmaceutical business will be even more dependent on Humira. Currently the drug makes up 20% of the sales. In the new drug spinoff, it'll be approaching half the sales.

There's nothing wrong with owning a company dependent on one or two drugs; that's biotech investing at its finest. But in biotech, the risk of being dependent on one drug is balanced with the potential for hypergrowth as the biotech goes from one drug to two. Unfortunately adding another drug to Abbott's drug spinoff won't do much since it'll be starting with a base of $18 billion.

We'll have to see where the valuations lie after the split is complete sometime next year, but investors might be best off holding on to the diversified part, which will retain the Abbott name, and selling the drug business. Who knows, maybe Abbott will buy Pfizer's to-be spun off animal-health business and try to rival Johnson & Johnson -- sans the drugs -- anyway.

Keep track of Abbott as it goes through its breakup by adding it to the Fool's My Watchlist service. Don't have My Watchlist account? Sign up here for free.

At the time this article was published Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Vertex Pharmaceuticals, Johnson & Johnson, Abbott Laboratories, and Pfizer. Motley Fool newsletter services have recommended creating a diagonal call position in Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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