US drugmaker Merck plans to streamline its organization by spinning off assets with around $6.5 billion in annual revenue. Businesses to be separated out by the first half of 2021 into an entity provisionally called NewCo include women’s health, legacy branded products and biosimilars.

The spinoff will reduce Merck’s human health manufacturing footprint by about 25% and the number of human health products it manufactures and markets by about 50%.

Assets that will transfer to NewCo, headed by Merck senior executive Kevin Ali, currently make up around 15% of total sales. The core Merck will focus in future on oncology, vaccines, hospital and animal health.

The spinoff that will employ 10,000 to 11,000 people is expected to generate three-quarters of its sales from outside the US. Along with women’s health, the portfolio will include drugs in the fields of dermatology, pain and respiratory diseases.

Ali said NewCo will aim to become a leader in women’s health, a market that includes contraception and fertility drugs. Ali said he expects the estrogen implant Nexplanon to become the company’s first women’s health drug to generate $1 billion in revenue.

Following the split, the refocused New Jersey drugmaker said it hopes to generate cost savings of more than $1.5 billion up to 2024, primarily in areas such as manufacturing and sales. Parallel to this, it plans to increase investment in growth drivers, with an eye to widen operating margins to 40%.

“Over the past several years, we have purposefully shifted the focus of our efforts and resources to our best opportunities for growth,” CEO Kenneth Frazier said. “Given the opportunities now in front of us, we believe we can benefit from even greater focus.”

Frazier said the asset split will bring Merck closer to being “the premier research-intensive biopharmaceutical company,” while allowing the spun off business to focus on products that are important for public health.

US pharmaceutical companies are under scrutiny for high drug prices in a market where all health insurance, apart from the elder care plan Medicare and state subsidized care for low income patients Medicaid, is private. The Merck chief noted that the company must emphasize innovation and prepare for increased pressure on pricing.

As rising drug prices will also be a prominent topic during this year’s US election issues, Frazier said, “we are staying ahead of the curve rather than waiting until something happens in the pricing environment that we have to react to.”