Merck & Company, Inc., d.b.a. Merck Sharp & Dohme outside the United States and Canada, is an American pharmaceutical company and one of the largest pharmaceutical companies in the world.

Merck & Co said on Wednesday it will spin off its women's health, biosimilar drugs and older products into a separate publicly traded company as it tightens its focus on growth drivers like cancer drug Keytruda and vaccines.

The new company's assets currently make up around 15% of Merck's total sales and around half of its drugs that treat people.

Merck will retain its animal health business, as well as drugs used for acute care in hospitals such as Biridion, which reverses the effects of anesthesia.

Merck shares fell 3.7% to $85.12 after the U.S. drug maker also reported quarterly Keytruda sales below Wall Street's lofty estimates.

The spin off is a culmination of the drug maker's strategy of concentrating on a few key areas, particularly oncology, where Merck has turned the immunotherapy Keytruda into one of the world's top selling drugs, Merck Chief Executive Ken Frazier said in an interview.

"The whole key to this is that it allows Merck to be much more focused on its greatest growth opportunities," he said.

That starts with Keytruda, now a mainstay of many cancer regimens including for newly diagnosed advanced lung cancer, the biggest commercial opportunity in oncology. Its sales jumped nearly 45% to $3.11 billion, below analysts' estimates of $3.24 billion, according to Refinitiv data.

Sales of the assets that will make up the new company were expected to fall or be flat through 2024, but it can achieve growth through management attention, said Kevin Ali, a Merck veteran who will head the new company.

Merck, which expects to complete the transaction in the first half of 2021, said the new company will send it $8 billion to $9 billion through a special tax-free dividend.

Merck forecast cost savings of over $1.5 billion by 2024 after the spin off.

Announcement of the spin off without more color on management succession could cause some concern for investors said Cantor Fitzgerald analyst Louise Chen. Merck in 2018 scrapped a policy requiring CEOs step down at age 65, ensuring that Frazier, who turned 65 last year, can remain at the helm.

However, the spin off was not related to succession, Frazier told Reuters.

"Our board has a process in place for succession. This is really again taking actions today that will assure the longer term growth."

Merck also reported an adjusted quarterly profit of $1.16 per share, beating analysts' estimates by a penny.