Abbott Laboratories

(ABT) - Get Report

said it will spin off its hospital products business to create an independent company that will have $2.5 billion in sales.

The new company, which hasn't yet been named, will be based in Lake Forest, Ill., a northern suburb of Chicago. The company will focus on medication delivery systems, generic pharmaceuticals and other businesses, such as intensive care pharmaceuticals. Abbott said it will retain certain proprietary pharmaceuticals.

The company will have 14,000 employees worldwide, more than 5,000 customers and a large portion of Abbott's core hospital products business, the company said in a written statement. Abbott expects to complete the transaction in the first half of 2004.

Christopher B. Begley, the current president of Abbott's U.S. hospital business and a 17-year veteran of the company, will be chief executive of the independent operation. David A. Jones, co-founder and chairman of

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and a retired Abbott board member, will serve as chairman of the board.

Abbott, based in Abbott Park, Ill., said it will file an application to list the new company on the

New York Stock Exchange

.

Shares of Abbott were up 40 cents, or 1%, at $39 in recent trading.