In many ways, Abbott Laboratories' decision to split its pharma and medical device segments makes good sense, says Venkat Rajan, industry manager, medical devices at Frost & Sullivan. While there is some overlap between the firm's pharma and medical device divisions, the business models for the two divisions are vastly different. Rajan pointed to sizable differences in R&D, testing, product lifecycles, commercialization, and intellectual property. The regulatory paths of pharmaceutical products and medical devices are also very dissimilar, he adds.

Splitting the two segments enables the company to manage each according to a specific business model. When the two branches were together, it made it hard for the device segment to really compete with the company's pharmaceutical arm, he says. "The pharma business is so big that strong growth of the device segment would get lost," he says. When the two branches were together, "it was kind of hard for the device segment to move the ticker in terms of growth."

He again stressed that the main advantage of the decision was to manage the device segment differently than the pharmaceutical segment. The main downside of the split is that it might prevent the firm from having enough capital to make large acquisitions. He points to Johnson and Johnson as a counterpoint, which, thanks to its large cash supply, can afford big purchases like Synthes. In then end, though, the inability to make large acquisitions is something of a minor disadvantage when taken in the broader context of the move.

He summarized by saying "I don't think you'll see a lot of wholesale changes at the two divisions. There probably won't be any fundamental huge change in the next three to five years."