Not long after I wrote about this big health care firm in December 2010, this stock began a nice hot streak. It’s now up 31% in the past 12 months, compared with a 14% gain for the S&P 500 during the same time.

This is undoubtedly a great-performing stock.

But when I first suggested investing in this company, currently best known for its blockbuster rheumatoid arthritis drug Humira, I wasn’t thinking much about what the stock might do in the next year or two. What I liked about it then, as I still do now, is how well it’s likely to perform over a much longer time span.

So even though the stock’s already up 31%, I think it has plenty more room to grow. In fact, I think it could easily rise another 50% during the next three to five years.

I’m talking about Abbott Laboratories (NYSE: ABT).

I referred to Abbott Labs as a health care company instead of a pharmaceutical manufacturer, because it’s more than just a drug maker — even though many investors probably only see it that way. Actually, Abbott Labs has so many irons in the fire that last November it announced it would split into two separate public companies  by the end of 2012. The plan is for the medical products segment to retain the Abbott Labs name, while the newly-created research-based pharmaceutical segment will be spun off to existing Abbott Labs shareholders. Both stocks will be publicly traded.

Analysts project the medical products division to have $23 billion in sales, while the newly formed drug company should initially have $18 billion in annual sales.

Abbott will be in charge of the company’s medical devices, which include blood analyzers and other devices for use by diabetics, such as blood glucose meters. It will also make Abbott’s line of nutritional products, such as PediaSure formula for children and Ensure nutritional drinks for older adults. It also has a new stent — a device that holds open blocked coronary blood vessels. The stent is already available in Europe and Japan and should soon be approved for use in the United States.

The new pharmaceuticals company will own several patent-protected blockbuster drugs — aside from Humira, which I mentioned earlier — including the HIV/AIDS treatment Kaletra, and the cardiovascular medications Tricor and Trilipix. Together, these four medications currently account for roughly $11 billion in annual revenue (with Humira alone kicking in $8 billion). This accounts for almost 30% of the $39 billion in total revenue Abbott Labs generated in the past year.

Splitting into two companies makes good strategic sense. While Abbott Labs has a very long history of success (it was founded in 1888), the two divisions that currently make up the company have evolved along very different lines.

The pharmaceutical segment, while profitable, is more mature, domestically-focused and noticeably slower-growing. Indeed, management projects 3%-4% annual growth in sales, at most, in the coming years. The medical device business, on the other hand, is poised for faster growth because of greater exposure to emerging markets like China and India, where demand for medical devices is growing 20% annually, compared with a only a 4%-6% growth rate in the U.S. and Europe.

Once the split is complete, investors will have a choice.  They can either own a dependable, slower-growing drug stock that will likely pay a nice dividend, thanks to dependable cash flow, or a medical device/health care stock with more prospects for growth, but a lower dividend.

Risks to Consider: Though it has diversified, Abbott Labs still counts heavily on current blockbuster drugs for revenue. Keep in mind the danger of increased competition for Humira, but don’t worry too much about it.  Actemra, a newer drug developed by Roche, was recently shown in a study to be more effective for treating rheumatoid arthritis. It also goes off-patent in the U.S. in 2016 and Europe in 2018. The drug should still do well in the meantime. Besides, the new pharmaceuticals company could be bought out long before Humira loses patent protection, perhaps even right away.

Action to Take –> The drug unit is adapting by developing new drugs with blockbuster potential, including several hepatitis C medications and a kidney disease drug, all of which have been performing well in clinical trials. Plus, new uses for Humira have been identified in the treatment of psoriasis and an intestinal condition called Crohn’s disease, which should further propel global sales.

After the split, I suggest hanging on to both stocks, since both should be strong performers, though I’d continue to watch them closely just like any other investment. Even if a buyout of the drug division doesn’t happen, shares of the new company will likely be worth holding for the long-term, particularly for more conservative investors seeking income.