One year on from the announcement that it was splitting in two, US drug firm Abbott Laboratories yesterday (17 October) recorded a 0.4% year-on-year decline in total sales for the third quarter to USD9.7 billion as incremental sales growth in the United States was offset by a small decline in international sales.
IHS Global Insight perspective | |
Significance | Abbott's top-line results are again almost entirely dominated by Humira (adalimumab), which grew 10.1% to USD2.3 billion for the quarter. Apart from its testosterone gel Androgel, almost all of Abbott's other pharmaceutical products declined in sales on the quarter, including Lupron (leuprolide), TriCor (fenofibrate), Kaletra (lopinavir/ritonavir), Niaspan (niacin), and Creon (pancrelipase). |
Implications | The top-line vulnerability to Humira partly explains the ongoing transition towards divestment, as the company prepares for the split of the pharmaceutical division into AbbVie. On the cost side, Abbott maintained dramatic control on expenditure, particularly on sales spend, resulting in significant increases in net and operating incomes. |
Outlook | Abbott confirmed that the AbbVie divestment is on track, with a scheduled completion of 1 January 2013. The company narrowed its earnings guidance from USD5.00–5.10 to USD5.06–5.08 for the full year. In the pipeline, Abbott's (and AbbVie's) near-term focus is on consolidating the expansion of Humira's indications to Crohn's disease and axial spondyloarthritis in Europe and ulcerative colitis in the United States. Elsewhere, the company has elotuzumab (multiple myeloma), bardoxolone (chronic kidney disease), daclizumab (multiple sclerosis), elagolix (endometriosis), and its highly anticipated injection-free hepatitis C programme, in late-stage Phase III development. |
US drug firm Abbott Laboratories yesterday (17 October) recorded a 0.4% year-on-year (y/y) decline in total sales for the third quarter to USD9.7 billion as incremental sales growth in the United States was offset by a small decline in international sales. Abbott recorded a dramatic decline in marketing spend (down 31% y/y) as well as a 7% decline in cost of sales, which offset the impact of increased research and development (R&D) expenses (up 15%) as a result of several late-stage pipeline activities. The overall stable top-line, coupled with a dramatic decrease in operating spend, led to a significant increase in operating income to USD1.989 billion, up from USD595 million last year. Abbott's press release is available here.
Abbott Laboratories Selected Results | ||
Q3 2012 (USD Mil.) | % Change Y/Y on Reported Basis | |
Net Sales | 9,773 | -0.4 |
Proprietary Pharmaceuticals | 4,418 | 2.4 |
Total US Sales | 4,214 | 3.1 |
Total International Sales | 5,559 | -3.0 |
Cost of Sales | 3,698 | -6.9 |
SGA Expenses | 2,922 | -31.1 |
R&D Expenses | 1,164 | 15.3 |
R&D Expenses As % of Net Sales* | 11.9 | - |
Operating Income* | 1,989 | 234 |
Operating Margin* | 20.3 | |
Net Income | 1,943 | n/m |
Source: Abbott Laboratories | ||
Abbott's top-line results are again almost entirely dominated by Humira (adalimumab), which grew 10.1% to USD2.3 billion for the quarter. Apart from its testosterone gel Androgel, almost all of Abbott's other pharmaceutical products declined in sales on the quarter, including Lupron (leuprolide), TriCor (fenofibrate), Kaletra (lopinavir/ritonavir), Niaspan (niacin), and Creon (pancrelipase).
Abbott: Net Sales of Leading Products/Divisions Q2 sales | ||||
US Sales (USD Mil.) | % Growth, Y/Y | International Sales (USD Mil.) | % Growth, Y/Y on Reported Basis | |
Humira (adalimumab) | 1,135 | 27 | 1,190 | -2.2 |
Kaletra (lopinavir/ritonavir) | 72 | -11.5 | 195 | -9.3 |
TriCor/Trilipix (fenofibrate) | 331 | -4.1 | 73 | 3.6 |
Lupron (leuprolide) | 133 | -9.2 | 56 | -14.9 |
Niaspan (niacin) | 232 | -5.3 | - | - |
Synthroid (levothyroxine) | 132 | 1.5 | 25 | -5.9 |
Creon (pancrelipase) | 92 | 5.3 | 71 | -13.7 |
Paediatric Nutritionals | 348 | 7.9 | 507 | 2.5 |
Adult Nutritionals | 366 | 3.1 | 383 | 6.2 |
Established Pharmaceuticals | - | - | 1,272 | -7.3 |
Abbott Diabetes Care | 135 | -7.1 | 182 | -12.5 |
Xience Drug Eluting Stents | 138 | -2.5 | 257 | 3.9 |
Other Coronary Products | 47 | -3.8 | 99 | 1.8 |
Endovascular | 60 | -3.9 | 99 | 1.8 |
Core Laboratory Diagnostics | 162 | 2.7 | 692 | 1.5 |
Molecular Diagnostics | 47 | -13.6 | 55 | -4.3 |
Medical Optics | 95 | -1.4 | 162 | -5.9 |
Source: Abbott | ||||
Outlook and implications
Abbott confirmed that the AbbVie divestment is on track, with a scheduled completion of 1 January 2013. The company narrowed its earnings guidance from USD5.00–5.10 to USD5.06–5.08 for the full year. In the pipeline, Abbott's (and AbbVie's) near-term focus is on consolidating the expansion of Humira's indications to Crohn's disease and axial spondyloarthritis in Europe and ulcerative colitis in the US. Elsewhere, the company has elotuzumab (multiple myeloma), bardoxolone (chronic kidney disease), daclizumab (multiple sclerosis), elagolix (endometriosis), and its highly anticipated hepatitis C programme, in late-stage Phase III development.
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