The split mirrors one made last year by Abbott Laboratories, which spun off its branded drug business into the new company AbbVie. Abbott's remaining business model is built around nutritional formula, generic drugs, medical implants and diagnostics.
Baxter's biopharmaceuticals business had about $6 billion in revenue last year, while the medical products business had more than $9 billion in 2013 sales, Baxter said.
By 2017, the global biopharmaceuticals market has the potential to reach $65 billion, and the medical products business $50 billion, the company said.
The biopharmaceuticals business includes treatments for hemophilia and other bleeding disorders and blood plasma therapies used to treat immune deficiencies and other problems.
The medical products business includes a portfolio of intravenous solutions and nutritional therapies, drug delivery systems, anesthetics and surgery products. It will include the $2.76 billion acquisition of kidney dialysis product maker Gambro AB.
Both companies will be based in Northern Illinois. Baxter is based in Deerfield, Ill.
The split will be a tax-free distribution to Baxter shareholders of new publicly traded stock in the biopharmaceuticals company.
The transaction is expected to be completed by mid-year 2015.
"A decision of this magnitude is not an easy one, but the right one for (our future)," Mr. Parkinson said, noting that Baxter has had a history of successful spin-offs.
The Associated Press contributed to this report.Baxter to split into 2 companies originally appeared on the website of Crain's Chicago Business.