BD Announces Plans to Split Life Science Business, Focus on Medtech Investment

BD (Becton, Dickinson and Company) has unveiled plans to separate its biosciences and diagnostics business from its core medical technology operations, aiming to fuel investments and acquisitions in high-growth areas. The announcement, made after the stock market closed on Wednesday, signals a significant strategic shift for the healthcare giant.

Separation Details and Financial Impact

BD's biosciences and diagnostics business, which generated $3.4 billion in revenue during the 2024 fiscal year, will be spun off from the company's primary medtech operations. The diagnostics segment, specializing in products such as point-of-care infectious disease tests, accounted for $1.8 billion of this total.

The remaining medtech business, which brought in $17.8 billion in revenue last fiscal year, will continue to operate under the BD banner. This unit comprises two major segments: medical essentials and interventional, contributing approximately $6.2 billion and $5 billion in revenue, respectively.

CEO Tom Polen emphasized the strategic importance of this move during an earnings call, stating that the medtech business's interventional segment "has a number of tremendous market opportunities." The company has not yet finalized the method of separation, considering options such as a sale, spin-off, or Reverse Morris Trust.

Strategic Focus and Growth Opportunities

Polen outlined BD's post-separation strategy, indicating a renewed focus on the medtech business. "We will double down on shifting our portfolio, both organically and inorganically through tuck-in M&A, into higher-growth, high-margin accretive growth spaces," he explained.

The CEO also highlighted potential growth avenues for the separated biosciences and diagnostics business, noting that over the past decade, "99.5% plus" of BD's acquisition spending has been directed towards the medtech business. This separation could allow for accelerated capital deployment in areas such as infectious disease and "near adjacencies" like cancer screening, which have not received significant investment in recent years.

Market Reaction and Analyst Perspectives

The announcement has garnered attention from industry analysts, with J.P. Morgan expressing support for the decision. In a note to investors, J.P. Morgan analysts stated they "absolutely see the logic for the decision" but cautioned that they "wouldn't categorize this business as innovative growth, but rather a mixture of some interesting assets in interventional along with some solid supplies-like assets in medical."

William Blair analysts also voiced support for the separation but noted potential risks, citing varying levels of success in recent healthcare spin-offs. They also speculated on potential buyers, stating that there are "only a handful of likely buyers who have the capacity and willingness to buy this separated business outright."

BD expects to provide more details about the separation during the current fiscal year, which ends in September, with plans to complete the transaction in fiscal 2026. However, J.P. Morgan analysts suggest the deal could close sooner if "an acquirer emerges quickly."