Abbott Reports Double-Digit Sales and Ongoing Earnings Growth in Fourth Quarter; Issues Strong Ongoing Earnings Outlook for 2011
By Abbott, PRNETuesday, January 25, 2011
ABBOTT PARK, Illinois, January 26, 2011 -
- Worldwide Sales Increased 13.4 Percent -
- Fourth Quarter Ongoing EPS Growth of 10.2 Percent -
- Worldwide Pharmaceutical Sales Increased 22.5 Percent -
- Worldwide Vascular Products Sales Increased 13.7 Percent -
- U.S. Diagnostics Sales Increased 8.5 Percent -
Abbott (NYSE: ABT) today announced financial results for the fourth
quarter ended Dec. 31, 2010.
-- Diluted earnings per share, excluding specified items, were $1.30,
reflecting 10.2 percent growth. Diluted earnings per share under
Generally Accepted Accounting Principles (GAAP) were $0.92, primarily
reflecting costs associated with recently announced restructuring
actions for the integration of the Solvay Pharmaceuticals acquisition
and in process R&D related to the Reata collaboration.
-- Worldwide sales increased 13.4 percent to nearly $10 billion,
including an unfavorable 0.4 percent effect of foreign exchange rates.
Growth in the quarter was driven by worldwide pharmaceutical sales,
which increased 22.5 percent, including the contribution from the
Solvay and Piramal acquisitions, as well as worldwide vascular
products sales, which increased 13.7 percent.
-- Fourth quarter results included strong investment spending, with an
increased level of R&D spending, as well as an adjusted gross margin
ratio of 60.6 percent, which increased 230 basis points over the prior
year.
-- In response to changes in the healthcare industry, including U.S.
Health Care Reform and the challenging regulatory environment, today
Abbott announced a restructuring in its U.S. pharmaceutical business
to streamline commercial and manufacturing operations, improve
efficiencies and reduce costs.
-- Abbott is issuing ongoing earnings-per-share guidance for the
full-year 2011 that reflects double-digit growth over 2010 at the
midpoint of the range.
"Despite a very challenging environment, 2010 was another productive year
for Abbott, resulting in strong financial performance," said Miles D. White,
chairman and chief executive officer, Abbott. "We also took decisive
long-term strategic actions to expand our emerging markets presence and
late-stage pipeline to better position Abbott for sustainable long-term
growth. We anticipate delivering another year of double-digit ongoing
earnings-per-share growth in 2011."
The following is a summary of fourth-quarter 2010 sales.
Quarter Ended
12/31/10
(dollars in
millions) % Change vs. 4Q09
-----------------
Foreign
Sales Reported Exchange Operational
----- -------- -------- -----------
Total Sales $9,968 13.4 (0.4) 13.8
Total
International
Sales $5,681 19.4 (0.8) 20.2
Total U.S.
Sales $4,287 6.3 -- 6.3
Worldwide
Pharmaceutical
Sales $5,939 22.5 (a) (0.9) 23.4
International
Pharmaceuticals $3,284 29.9 (a) (1.7) 31.6
U.S.
Pharmaceuticals $2,655 14.4 (a) -- 14.4
Worldwide
Nutritional
Sales $1,433 0.0 (b) 1.3 (1.3)
International
Nutritionals $791 7.9 2.5 5.4
U.S.
Nutritionals $642 (8.3) (b) -- (8.3)
Worldwide
Diagnostics
Sales $1,015 4.1 (0.7) 4.8
International
Diagnostics $746 2.6 (1.0) 3.6
U.S.
Diagnostics $269 8.5 -- 8.5
Worldwide
Vascular
Sales $822 13.7 (0.3) 14.0
International
Vascular $423 36.9 (0.8) 37.7
U.S. Vascular $399 (3.7) -- (3.7)
Other Sales $759 (6.4) (0.6) (5.8)
Note: See "Consolidated Statement of Earnings" for more information.
(a) Includes impact from the acquisitions of Solvay Pharmaceuticals
and Piramal Healthcare Solutions, which closed in 2010.
(b) Includes impact from a nutritional product recall announced in
September 2010.
The following is a summary of twelve months ended December 2010 sales.
Twelve Months Ended
12/31/10
(dollars in millions) % Change vs. 12M09
------------------
Sales Reported
----- --------
Total Sales $35,167 14.3
Total International
Sales $19,974 20.7
Total U.S. Sales $15,193 6.8
Worldwide
Pharmaceutical Sales $19,894 20.7 (a)
International
Pharmaceuticals $11,150 28.3 (a)
U.S. Pharmaceuticals $8,744 12.2 (a)
Worldwide Nutritional
Sales $5,532 4.7 (b)
International
Nutritionals $2,943 11.1
U.S. Nutritionals $2,589 (1.8) (b)
Worldwide Diagnostics
Sales $3,794 6.0
International
Diagnostics $2,791 5.7
U.S. Diagnostics $1,003 6.9
Worldwide Vascular
Sales $3,194 18.6
International Vascular $1,532 40.2
U.S. Vascular $1,662 3.9
Other Sales $2,753 1.0
Twelve Months Ended
12/31/10
(dollars in millions) % Change vs. 12M09
------------------
Foreign
Exchange Operational
-------- -----------
Total Sales 1.2 13.1
Total International
Sales 2.2 18.5
Total U.S. Sales -- 6.8
Worldwide
Pharmaceutical Sales 1.0 19.7
International
Pharmaceuticals 1.9 26.4
U.S. Pharmaceuticals -- 12.2
Worldwide Nutritional
Sales 1.8 2.9
International
Nutritionals 3.6 7.5
U.S. Nutritionals -- (1.8)
Worldwide Diagnostics
Sales 1.6 4.4
International
Diagnostics 2.1 3.6
U.S. Diagnostics -- 6.9
Worldwide Vascular
Sales 1.0 17.6
International Vascular 2.5 37.7
U.S. Vascular -- 3.9
Other Sales 0.6 0.4
Note: See "Consolidated Statement of Earnings" for more information.
(a) Includes impact from the acquisitions of Solvay Pharmaceuticals
and Piramal Healthcare Solutions, which closed in 2010.
(b) Includes impact from a nutritional product recall announced in
September 2010.
The following summarizes global sales for selected products and
related foreign exchange impacts compared to the prior year.
Quarter Ended
12/31/10
(dollars in
millions)
Global Sales
% Change vs. 4Q09
-----------------
Global Foreign
Sales Reported Exchange Operational
----- -------- -------- -----------
Pharmaceutical
Products
HUMIRA $1,879 13.0 (2.4) 15.4
TRILIPIX/TriCor $499 19.2 -- 19.2
Kaletra $341 (9.8) (1.8) (8.0)
Niaspan $286 12.7 -- 12.7
Lupron $200 (7.2) (0.1) (7.1)
Synthroid $160 8.3 0.7 7.6
Nutritional
Products
Pediatric
Nutritionals $742 (5.6) (a) 1.6 (7.2) (a)
Adult Nutritionals $687 9.2 0.9 8.3
Medical Products
Core Laboratory
Diagnostics $828 1.0 (0.6) 1.6
Coronary Stents $514 19.5 0.7 18.8
Diabetes Care $337 1.5 (1.5) 3.0
Medical Optics $280 (11.7) (b) 0.3 (12.0) (b)
Molecular
Diagnostics $114 21.2 (2.1) 23.3
(a) Includes impact from a nutritional product recall announced in
September 2010.
(b) 2009 included four months of sales due to a change in reporting
to calendar year, as previously noted.
The following is a summary of Abbott's fourth-quarter 2010 sales for
selected products.
Quarter Ended 12/31/10
(dollars in millions)
U.S.
----
% Change
Sales vs. 4Q09
----- --------
Pharmaceutical
Products
HUMIRA $877 13.2
TRILIPIX/TriCor $418 (0.3)
Kaletra $111 (18.9)
Niaspan $286 12.7
Lupron $130 (7.8)
Synthroid $131 7.0
Nutritional Products
Pediatric Nutritionals $304 (15.3) (a)
Adult Nutritionals $334 3.2
Medical Products
Core Laboratory
Diagnostics $158 (0.4)
Coronary Stents $248 (5.1)
Diabetes Care $127 1.3
Medical Optics $103 6.8
Molecular Diagnostics $55 32.1
Quarter Ended
12/31/10
(dollars in
millions) International
-------------
% Change vs. 4Q09
-----------------
Foreign
Sales Reported Exchange Operational
----- -------- -------- -----------
Pharmaceutical
Products
HUMIRA $1,002 12.9 (4.5) 17.4
TRILIPIX/
TriCor $81 n/m n/m n/m
Kaletra $230 (4.7) (2.9) (1.8)
Niaspan -- -- -- --
Lupron $70 (6.1) (0.4) (5.7)
Synthroid $29 14.5 4.3 10.2
Nutritional
Products
Pediatric
Nutritionals $438 2.6 3.0 (0.4)
Adult
Nutritionals $353 15.5 1.9 13.6
Medical
Products
Core Laboratory
Diagnostics $670 1.3 (0.8) 2.1
Coronary Stents $266 57.4 1.7 55.7
Diabetes Care $210 1.7 (2.4) 4.1
Medical Optics $177 (19.8) (b) 0.4 (20.2) (b)
Molecular
Diagnostics $59 12.5 (3.7) 16.2
n/m = Not meaningful
(a) Includes impact from a nutritional product recall announced in
September 2010.
(b) 2009 included four months of sales due to a change in reporting
to calendar year, as previously noted.
The following summarizes global sales for selected products and
related foreign exchange impacts compared to the prior year.
Twelve Months Ended
12/31/10
(dollars in
millions)
Global Sales
% Change vs. 12M09
------------------
Global Foreign
Sales Reported Exchange Operational
----- -------- -------- -----------
Pharmaceutical
Products
HUMIRA $6,548 19.3 0.3 19.0
TRILIPIX/
TriCor $1,582 18.3 -- 18.3
Kaletra $1,255 (8.1) 0.3 (8.4)
Niaspan $927 8.4 -- 8.4
Lupron $748 (6.5) 1.4 (7.9)
Synthroid $555 10.6 2.0 8.6
Nutritional
Products
Pediatric
Nutritionals $2,884 1.2 (a) 1.9 (0.7) (a)
Adult
Nutritionals $2,613 10.0 1.7 8.3
Medical
Products
Core Laboratory
Diagnostics $3,136 3.6 1.8 1.8
Coronary Stents $2,007 24.0 1.6 22.4
Diabetes Care $1,276 2.7 0.9 1.8
Medical Optics $1,063 19.5 0.7 18.8
Molecular
Diagnostics $385 22.1 -- 22.1
(a) Includes impact from a nutritional product recall announced in
September 2010.
The following is a summary of Abbott's twelve months ended December
2010 sales for selected products.
Twelve Months Ended
12/31/10
(dollars in millions)
U.S.
----
% Change
vs.
Sales 12M09
----- ------
Pharmaceutical Products
HUMIRA $2,872 14.0
TRILIPIX/TriCor $1,355 1.3
Kaletra $363 (18.7)
Niaspan $927 8.4
Lupron $483 (10.6)
Synthroid $451 8.6
Nutritional Products
Pediatric Nutritionals $1,208 (7.5) (a)
Adult Nutritionals $1,345 6.0
Medical Products
Core Laboratory
Diagnostics $602 (0.5)
Coronary Stents $1,047 1.7
Diabetes Care $512 2.8
Medical Optics $407 20.7
Molecular Diagnostics $189 26.6
Twelve Months Ended
12/31/10
(dollars in millions) International
-------------
% Change vs. 12M09
------------------
Foreign
Sales Reported Exchange Operational
----- -------- -------- -----------
Pharmaceutical Products
HUMIRA $3,676 23.8 0.6 23.2
TRILIPIX/TriCor $227 n/m n/m n/m
Kaletra $892 (3.0) 0.4 (3.4)
Niaspan -- -- -- --
Lupron $265 2.0 4.3 (2.3)
Synthroid $104 20.2 11.5 8.7
Nutritional Products
Pediatric Nutritionals $1,676 8.6 3.6 5.0
Adult Nutritionals $1,268 14.7 3.7 11.0
Medical Products
Core Laboratory
Diagnostics $2,534 4.6 2.2 2.4
Coronary Stents $960 63.1 4.5 58.6
Diabetes Care $764 2.6 1.5 1.1
Medical Optics $656 18.8 1.1 17.7
Molecular Diagnostics $196 18.0 -- 18.0
n/m = Not meaningful
(a) Includes impact from a nutritional product recall announced in
September 2010.
Business Highlights
- Encouraging Results Presented in Chronic Kidney Disease (CKD): New
Phase 2b pivotal data presented at the Annual American Society of
Nephrology (ASN) suggests bardoxolone methyl, an investigational
treatment for CKD, reverses disease progression and improves measures
of kidney function in patients with CKD and type 2 diabetes. In the
study, the majority of patients treated with bardoxolone experienced a
reduction in disease severity and an improvement in kidney function. To
date, no treatment has been shown to reverse the progression of CKD. We
expect bardoxolone to enter Phase 3 clinical trials in early 2011. Also
presented data from a Phase 2 study of atrasentan, in development to
help slow CKD progression in patients with type 2 diabetic nephropathy
(diabetic kidney disease).
- New Results Presented on Abbott HCV Compound: Presented positive
results from a Phase 2 study of ABT-450/r, an investigational, oral
protease inhibitor being developed for the treatment of hepatitis C
(HCV) infection. Initial results suggest that ABT-450/r demonstrates
potent antiviral activity in treatment-naïve adults with HCV genotype 1
infection. Results show that more than 90 percent of patients on study
drug, administered with pegylated interferon/ribavirin, achieved HCV-
RNA levels <25 IU/mL (a measure of rapid virologic response) at four
weeks.
- Positive Oncology Data Presented at ASH: Presented Phase 2 data at the
Annual Meeting of the American Society of Hematology (ASH) for
elotuzumab, a late-stage compound in development for multiple myeloma,
the second-most common blood cancer in the United States. Interim
results from the Phase 2 portion of a Phase 1b/2 study, showed a high
objective response rate (ORR) among patients with relapsed multiple
myeloma who received elotuzumab plus lenalidomide and low-dose
dexamethasone. We anticipate initiating Phase 3 clinical trials with
our partner company in early 2011.
- Announced a Collaboration to Develop New Anti-cancer Drugs: Announced a
collaboration agreement with EpiTherapeutics to develop new anti-cancer
drugs by making small-molecule inhibitors against selected epigenetic
oncology targets.
- Received CE Mark for World's First Drug Eluting Bioresorbable Vascular
Scaffold (BVS): Announced CE Mark in Europe for the world's first drug
eluting BVS for the treatment of coronary artery disease. Abbott's
ABSORB(TM) BVS device restores blood flow by opening a clogged vessel
and providing support to the vessel until it dissolves, leaving
patients with a treated vessel free of a permanent metallic implant.
- Announced CE Mark for XIENCE PRIME(TM) for Critical Limb Ischemia
(CLI): Received CE Mark for XIENCE PRIME Everolimus Eluting Coronary
Stent System for the treatment of critical limb ischemia (CLI) or
severe claudication (pain) of the lower leg. CLI is the most advanced
form of peripheral artery disease that can ultimately lead to limb
amputation. With this expanded indication, XIENCE PRIME can be marketed
to treat CLI or severe claudication in European Union countries and
others that recognize CE Mark.
- Introduced New Vitamin D Diagnostic Test in Europe: Introduced a new
diagnostic test in Europe to measure levels of vitamin D in blood using
Abbott's ARCHITECT automated instrument system. According to the
International Osteoporosis Foundation, vitamin D deficiency is a
worldwide health issue and the percentage of the European population
that is vitamin D insufficient is high, with some countries exceeding
75 percent. The ARCHITECT 25-OH Vitamin D assay is a fully automated
immunoassay that can help laboratories manage the increasing vitamin D
testing volumes.
Abbott issues earnings-per-share outlook for 2011
Abbott is issuing ongoing earnings-per-share guidance for the full-year
2011 of $4.54 to $4.64. The midpoint of this guidance range reflects growth
of 10 percent over 2010. Abbott's 2011 outlook reflects the previously
outlined incremental impact of costs associated with U.S. Healthcare Reform,
as well as the impact of European austerity measures.
Abbott forecasts specified items for the full-year
2011 of approximately $0.78 per share, primarily associated with acquisition
integration and cost reduction initiatives, including restructuring actions
announced today to streamline commercial and manufacturing operations in
Abbott's U.S. pharmaceutical business (see Q&A 3), and in-process R&D related
to the Reata collaboration. Including these specified items, projected
earnings per share under Generally Accepted Accounting Principles (GAAP)
would be $3.76 to $3.86 for the full-year 2011.
Abbott declares quarterly dividend
On Dec. 10, 2010, the board of directors of Abbott declared the company's
quarterly common dividend of 44 cents per share, an increase of 10 percent
over the prior year. The cash dividend is payable Feb. 15, 2011, to
shareholders of record at the close of business on Jan. 14, 2011. This marks
the 348th consecutive dividend paid by Abbott since 1924.
About Abbott
Abbott is a global, broad-based health care company devoted to the
discovery, development, manufacture and marketing of pharmaceuticals and
medical products, including nutritionals, devices and diagnostics. The
company employs nearly 90,000 people and markets its products in more than
130 countries.
Abbott's news releases and other information are available on the
company's Web site at www.abbott.com. Abbott will webcast its live
fourth-quarter earnings conference call through its Investor Relations Web
site at www.abbottinvestor.com at 8 a.m. Central time today. An archived
edition of the call will be available after 11 a.m. Central time.
- Private Securities Litigation Reform Act of 1995 -
A Caution Concerning Forward-Looking Statements
Some statements in this news release may be forward-looking statements
for purposes of the Private Securities Litigation Reform Act of 1995. Abbott
cautions that these forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially from those
indicated in the forward-looking statements. Economic, competitive,
governmental, technological and other factors that may affect Abbott's
operations are discussed in Item 1A, "Risk Factors," to our Annual Report on
Securities and Exchange Commission Form 10-K for the year ended Dec. 31,
2009, in Item 1A, "Risk Factors," to our quarterly reports on Securities and
Exchange Commission Form 10-Q for the quarters ended March 31, 2010 and
September 30, 2010, and are incorporated by reference. Abbott undertakes no
obligation to release publicly any revisions to forward-looking statements as
a result of subsequent events or developments.
Abbott Laboratories and Subsidiaries
Consolidated Statement of Earnings
Fourth Quarter Ended December 31, 2010 and 2009
(in millions, except per share data)
(unaudited)
2010 2009 % Change
---- ---- --------
Net Sales $9,968 $8,790 13.4
------ ------
Cost of products sold 4,045 3,784 6.9
Research and development 1,058 747 41.5
Acquired in-process research and
development 238 170 40.1
Selling, general and administrative 2,797 2,225 25.7
----- -----
Total Operating Cost and Expenses 8,138 6,926 17.5
----- -----
Operating earnings 1,830 1,864 (1.8)
Net interest expense 129 94 36.8
Net foreign exchange (gain) loss (19) 7 n/m
Other (income) expense, net (48) (60) (20.4)
--- ---
Earnings before taxes 1,768 1,823 (3.0)
Taxes on earnings 327 284 15.1
--- ---
Net Earnings $1,441 $1,539 (6.4)
====== ======
Net Earnings Excluding Specified Items,
as described below $2,025 $1,845 9.7 1)
====== ======
Diluted Earnings per Common Share $0.92 $0.98 (6.1)
===== =====
Diluted Earnings Per Common Share,
Excluding Specified Items,
as described below $1.30 $1.18 10.2 1)
===== =====
Average Number of Common Shares
Outstanding Plus Dilutive
Common Stock Options and Awards 1,556 1,560
1) 2010 Net Earnings Excluding Specified Items excludes after-tax
charges of $346 million, or $0.23 per share, related primarily
to the acquisitions of Solvay Pharmaceuticals and Piramal
Healthcare Solutions, as well as other cost reduction
initiatives, and $238 million, or $0.15 per share, relating to
acquired in-process research and development related to the
Reata collaboration.
2009 Net Earnings Excluding Specified Items excludes after-tax
charges of $170 million, or $0.11 per share, for acquired in-
process research and development associated with the PanGenetics
acquisition, $99 million, or $0.07 per share, primarily for
acquisition integration and cost reduction initiatives, and $37
million, or $0.02 per share, primarily related to inventory write-
offs associated with the suspension of sibutramine in certain
countries following the European regulatory recommendation.
NOTE: See attached questions and answers section for further
explanation of Consolidated Statement of Earnings line items.
n/m = Percent change is not meaningful.
Abbott Laboratories and Subsidiaries
Consolidated Statement of Earnings
Twelve Months Ended December 31, 2010 and 2009
(in millions, except per share data)
(unaudited)
2010 2009 % Change
---- ---- --------
Net Sales $35,167 $30,765 14.3
------- -------
Cost of products sold 14,665 13,209 11.0
Research and development 3,725 2,744 35.7
Acquired in-process research and
development 313 170 84.2
Selling, general and administrative 10,376 8,406 23.4
------ -----
Total Operating Cost and Expenses 29,079 24,529 18.6
------ ------
Operating earnings 6,088 6,236 (2.4)
Net interest expense 448 382 17.2
Net foreign exchange (gain) loss (11) 35 n/m
Other (income) expense, net (62) (1,375) n/m 1)
--- ------
Earnings before taxes 5,713 7,194 (20.6)
Taxes on earnings 1,087 1,448 (25.0)
----- -----
Net Earnings $4,626 $5,746 (19.5)
====== ======
Net Earnings Excluding Specified Items,
as described below $6,501 $5,805 12.0 2)
====== ======
Diluted Earnings per Common Share $2.96 $3.69 (19.8) 3)
===== =====
Diluted Earnings Per Common Share,
Excluding Specified Items,
as described below $4.17 $3.72 12.1 2)
===== =====
Average Number of Common Shares
Outstanding Plus Dilutive
Common Stock Options and Awards 1,556 1,555
1) Other (income) expense, net, in 2009 includes the
derecognition of a contingent liability and a favorable
patent litigation settlement. These items have been treated
as specified items and excluded from ongoing operations.
2010 and 2009 also include ongoing contractual payments
from Takeda associated with the conclusion of the TAP joint
venture.
2) 2010 Net Earnings Excluding Specified Items excludes after-
tax charges of $1.035 billion, or $0.67 per share,
associated primarily with the acquisitions of Solvay
Pharmaceuticals and Piramal Healthcare Solutions, including
announced restructuring plans, as well as other cost
reduction initiatives, $313 million, or $0.20 per share,
relating to acquired in-process research and development
related to the Reata and the Neurocrine collaborations,
$115 million, or $0.07 per share, for the one-time impact
of the devaluation of the Venezuelan bolivar on balance
sheet translation, $106 million, or $0.07 per share, for a
litigation reserve, $60 million, or $0.04 per share, for
specific health care reform impact on deferred tax assets,
$88 million, or $0.06 per share, for costs of a nutritional
product recall and the withdrawal of sibutramine, and $158
million, or $0.10 per share, for impairment of the
intangible asset related to sibutramine.
2009 Net Earnings Excluding Specified Items excludes an
after-tax gain of $505 million, or $0.32 per share,
relating to the derecognition of a contingent liability and
an after-tax gain of $182 million, or $0.12 per share,
relating to a patent litigation settlement. This was offset
by $170 million, or $0.11 per share, for acquired in-
process research and development, $164 million, or $0.10
per share, primarily relating to costs associated with the
acquisition of Advanced Medical Optics, $68 million, or
$0.04 per share, for litigation settlements and $344
million, or $0.22 per share, primarily for cost reduction
initiatives and costs associated with a delayed product
launch.
3) Effective January 1, 2009, Abbott adopted FSP EITF 03-6-1,
"Determining Whether Instruments Granted in Share-Based
Payment Transactions Are Participating Securities," which
requires the allocation of net earnings between common
shareholders and participating securities holders when
computing earnings per share. As a result, net earnings
allocated to common shares for the twelve months ended
December 31, 2010 and 2009 was $4.613 billion and $5.733
billion, respectively.
NOTE: See attached questions and answers section for further
explanation of Consolidated Statement of Earnings line items.
n/m = Percent change is not meaningful.
Questions & Answers
Q1) What drove the strong sales growth in the quarter?
A1) Worldwide Pharmaceutical sales increased 22.5 percent, including an
unfavorable 0.9 percent effect of exchange rates, driven by strong
international pharmaceutical sales growth of approximately 30 percent. Sales
in the quarter reflected the contribution from the Solvay Pharmaceuticals and
Piramal Healthcare Solutions acquisitions, which closed in February 2010 and
September 2010, respectively.
U.S. growth of HUMIRA was 13.2 percent. International operational sales
growth for HUMIRA was 17.4 percent, which excludes an unfavorable 4.5 percent
effect of exchange rates. Global lipid franchise sales growth was 19 percent,
including the international TriCor sales contribution from the Solvay
acquisition. U.S. Niaspan sales growth of 12.7 percent exceeded the growth
rate of the overall cholesterol market.
Double-digit growth in Worldwide Vascular sales was driven by
international vascular sales growth of approximately 37 percent. Abbott holds
the number-one global position in metallic stents, guidewires, as well as
drug-eluting stents with XIENCE V and XIENCE PRIME. Globally, Abbott's
drug-eluting stent franchise continues to perform well, including strong
international performance in Europe and Japan.
Worldwide Nutritional products sales growth was flat, including a
favorable 1.3 percent impact from exchange. Growth in the United States
during the quarter was negatively impacted by the infant nutrition recall
that was announced in September. Production resumed in October. Inventory is
near normal operating levels, and we are recapturing market share.
Growth in Worldwide Diagnostics was driven by high-single-digit growth in
U.S. diagnostics sales, with continued double-digit growth in Abbott's
Molecular and Point of Care diagnostics businesses.
Q2) What drove the strong increase in the fourth-quarter gross margin
ratio?
A2) The gross margin ratio before and after specified items is shown
below (dollars in millions):
4Q10
----
Cost of Gross Gross
Products Margin Margin
Sold ------ %
---- ---
As reported (GAAP) $4,045 $5,923 59.4%
Adjusted for specified items:
Restructuring/integration (acquisitions/
cost reductions) ($120) $120 1.2%
As adjusted $3,925 $6,043 60.6%
The adjusted gross margin ratio of 60.6 percent increased 230 basis
points from the prior year when the adjusted gross margin ratio was 58.3
percent. This increase was driven by strong performance across several
businesses, including vascular, pharmaceuticals, diabetes and diagnostics, as
well as a favorable impact from foreign exchange rates.
Q3) What is Abbott doing to further reduce costs and improve
profitability?
A3) In response to changes in the healthcare industry, including U.S.
Health Care Reform and the challenging regulatory environment, today Abbott
announced a restructuring in its U.S. pharmaceutical business to streamline
commercial and manufacturing operations, improve efficiencies and reduce
costs.
Abbott forecasts total specified items associated with this cost
reduction initiative over the next several years of approximately $295
million, which includes transfer of product manufacturing to other
facilities. These charges include employee-related costs of approximately
$135 million, accelerated depreciation of approximately $65 million, and
other related exit costs of approximately $95 million mainly related to
product transfers. Non-cash charges included in the total will be
approximately $65 million, reflecting primarily accelerated depreciation.
Specified items related to this initiative of approximately $165 million
are forecast to occur in 2011, with roughly $140 million projected in the
first quarter.
Q4) What drove SG&A and R&D investment in the quarter?
A4) In the fourth quarter, both SG&A and R&D investment increased strong
double-digits, reflecting Abbott's continued investment in programs to drive
future growth, as well as increases associated with the addition of Solvay
Pharmaceuticals. Ongoing R&D expense as a percentage of sales was nearly 10
percent, reflecting continued investment in Abbott's broad-based pipeline,
including programs in vascular devices, immunology, neuroscience, oncology
and HCV.
Q5) What was the tax rate for the fourth-quarter 2010?
A5) The ongoing tax rate this quarter was 16.4 percent, in line with
Abbott's previous forecast, and reconciled below:
4Q10
----
Pre-Tax Taxes on Tax
Income Earnings Rate
As reported $1,768 $327 18.5%
Specified items $653 $69 10.6%
---- --- ----
Excluding specified
items $2,421 $396 16.4%
Q6) How did specified items affect reported results?
A6) Specified items impacted fourth-quarter results as follows:
4Q10
----
(dollars in millions, except earnings-
per-share) Earnings
--------
Pre- After- EPS
tax tax ---
--- ---
As reported (GAAP) $1,768 $1,441 $0.92
Adjusted for specified items:
Restructuring/integration
(acquisitions/cost reductions) $415 $346 $0.23
Acquired in-process research and
development $238 $238 $0.15
---- ---- ----
As adjusted $2,421 $2,025 $1.30
Restructuring/integration (acquisitions/cost reductions) is primarily
associated with acquisition closing, restructuring, and integration costs for
the Solvay Pharmaceuticals and Piramal Healthcare Solutions acquisitions.
This item also includes cost reduction initiatives to improve efficiencies,
primarily related to continuing efforts in the vascular and core laboratory
diagnostic businesses.
Acquired in-process research and development is related to the agreement
with Reata to develop and commercialize bardoxolone methyl outside the United
States, excluding certain Asian markets.
The impact of specified items by Consolidated Statement of Earnings line
item is as follows (dollars in millions):
4Q10
----
Cost of R&D Acquired SG&A Other
Products --- IPR&D (Income)/
Sold ----- Expense
---- -------
As reported (GAAP) $4,045 $1,058 $238 $2,797 ($48)
Adjusted for specified
items:
Restructuring/
integration
(acquisitions/cost
reductions) ($120) ($81) -- ($200) ($14)
Acquired in-process
research and
development -- -- ($238) -- --
---- ---- ----- ---- -----
As adjusted $3,925 $977 -- $2,597 ($62)
Q7) What are the key areas of focus in Abbott's broad-based pipeline?
A7) Across its businesses, Abbott has more than 350 clinical trials
underway and expects to deliver more than 75 new products or indications over
the next five years. In 2010, we added a total of four new molecular entities
that are in late-stage development, and expect to have nearly 20 new
molecular entities and indications in Phase 2 or 3 development by the end of
2011. We also expect numerous new trial starts and new data presentations
throughout the year. Following are select highlights from breakthrough
research across both pharmaceuticals and medical products pipelines:
- Hepatitis C
- Abbott's antiviral program is focused on developing treatments for
hepatitis C (HCV), a disease that affects more than 180 million
people worldwide, with approximately three to four million people
newly infected each year. Abbott's broad-based HCV programs include
its partnership with Enanta Pharmaceuticals to discover protease
inhibitors, as well as its internal programs focused on additional
viral targets.
- Abbott currently has three HCV mechanisms of action in clinical
trials, including protease polymerase and NS5A inhibitors. Abbott is
well positioned to explore combinations of these compounds, both
with and without the current standard of care, a strategy that has
the potential to markedly transform current treatment practices by
shortening therapy duration, improving tolerability and increasing
cure rates.
- Chronic Kidney Disease
- Abbott recently entered into an agreement with Reata Pharmaceuticals
for ex-U.S. rights to bardoxolone, an investigational treatment for
chronic kidney disease (CKD). Bardoxolone is a first-in-class anti-
inflammatory that activates Nrf2, a pathway involved in the
progression of CKD. A Phase 2b study was recently completed and
initiation of a global Phase 3 trial is targeted to begin in the
coming months.
- Women's Health
- Abbott's collaboration agreement with Neurocrine to develop and
commercialize elagolix for the treatment of endometriosis-related
pain and fibroids brings Abbott a novel, first-in-class oral
gonadotropin-releasing hormone (GnRH) antagonist. A Phase 2 study in
endometriosis was recently completed.
- Neuroscience / Pain
- Abbott is conducting innovative research in neuroscience, where it
has developed compounds that target receptors in the brain that help
regulate mood, memory and other neurological functions. Abbott has
more than a dozen new molecular entities in clinical trials for
conditions such as schizophrenia, pain, Alzheimer's disease,
Parkinson's disease and multiple sclerosis (MS). This includes three
compounds in development for Alzheimer's.
- Abbott's neuroscience pipeline includes a novel, next-generation
antibody, daclizumab, which entered Phase 3 development in 2010 for
relapsing remitting MS (RRMS), the most common form of the disease.
- Abbott is pursuing compounds that could provide relief across a
broad spectrum of pain states, such as chronic back pain,
postoperative pain and cancer pain.
- Oncology
- Abbott's oncology pipeline includes therapies that represent
promising, unique scientific approaches to treating cancer. Abbott
is focused on the development of targeted treatments that inhibit
tumor growth and improve response to common cancer therapies. Abbott
currently has nine new molecular entities in human trials.
- The oncology pipeline includes: ABT-263, a Bcl-2 family protein
antagonist; ABT-869, a multi-targeted kinase inhibitor; and ABT-888,
a PARP-inhibitor that is being studied in a variety of cancers.
Additionally, Abbott is evaluating a number of promising mechanisms
in its pre-clinical pipeline, including work on an early-stage cMET
antibody biologic for cancer.
- The acquisition of Facet Biotech brought several oncology
collaborations, including elotuzumab, a late-stage compound in
development for multiple myeloma. We expect to initiate the Phase 3
clinical program with our partner company this year.
- Immunology
- Abbott's scientific experience with the anti-TNF biologic HUMIRA
serves as a strong foundation for its continuing research in
immunology. In its pipeline, Abbott continues to explore additional
indications for HUMIRA and is working to advance development of its
early discovery programs, including oral DMARD therapies, as well as
other potential biologic targets.
- Additionally, Abbott's proprietary DVD-Ig technology represents an
innovative approach that can target multiple disease-causing
antigens with a single biologic agent. This technology could lead to
combination biologics for complex conditions such as cancer or
rheumatoid arthritis, where multiple pathways are involved in the
disease.
- Molecular Diagnostics
- Abbott expects to launch more than 12 new molecular diagnostic
products over the next two to three years, including several novel
oncology and infectious disease assays, as well as improved
instrument systems. Abbott received approval from the U.S. Food and
Drug Administration (FDA) to market the Abbott RealTime HBV assay
for measuring viral load or the amount of hepatitis B virus in a
patient's blood, as well as a new sensitive molecular diagnostic
test and instrument to simultaneously detect two of the nation's
most prevalent sexually transmitted diseases, gonorrhea and
chlamydia.
- Diagnostics
- In 2010, Abbott launched a number of key assays on its ARCHITECT
immunochemistry platform, which will significantly broaden its
industry-leading menu. These tests include assays to assess Chagas
disease, ovarian cancer and the first HIV combination assay approved
for use in the United States, which detects the virus days earlier
than current U.S. tests.
- Abbott expects to launch several more products this year and is
researching dozens of novel biomarkers focusing on important areas
such as diabetes, infectious disease, and neuroscience disorders, as
well as developing next generation systems.
- Vascular Devices
- Abbott has one of the industry's most robust vascular pipelines and
expects to deliver more than 10 coronary technologies over the next
five years. Abbott is working on well-staged incremental advances,
and truly game-changing technologies that have the ability to
restate the market.
- ABSORB Bioresorbable Vascular Scaffold (BVS) - Abbott recently
received CE Mark in Europe for the world's first drug-eluting BVS
for the treatment of coronary artery disease. ABSORB restores blood
flow by opening a clogged vessel and providing support to the vessel
until it dissolves, leaving patients with a treated vessel free of a
permanent metallic implant. Abbott has the most advanced BVS
clinical program in the industry.
- MitraClip - Presented additional data from the pivotal trial,
EVEREST II, at the TCT conference, which continued to demonstrate
the safety and sustained meaningful clinical benefits of the therapy
for the treatment of mitral regurgitation. Abbott's MitraClip system
is on the market in Europe and is currently under review for
approval by the FDA.
- Next-generation DES - Abbott has several next-generation DES
platforms in development. This includes XIENCE PRIME, our next-
generation drug-eluting stent (DES) that offers improved
deliverability, especially in long lesions. XIENCE PRIME is on the
market in Europe, and is in clinical trials in the United States
with an expected launch in 2012. XIENCE Nano for small vessels is on
the market in Europe and under U.S. FDA review. Our ultra thin DES
is also in development. It's designed to improve clinical outcomes
by reducing vessel injury upon deployment, enabling faster healing
and improving deliverability in complex anatomy.
- Core Coronary products - Abbott is continuing to expand its position
in the more than $2 billion core coronary market. Abbott launched
its next-generation balloon dilatation catheter, TREK, in Europe
last year and expects to launch TREK in the United States and Japan
in early 2011. In addition, Abbott has a new line of guidewires in
development.
- Vision Care
- Abbott expects 20 new products and technology advancements over the
next five years, including the launch of a new contact lens solution
that is underway in Europe and the United States. In its market-
leading LASIK business, Abbott is expanding its proprietary laser
platform into new vision correction applications, including cataract
surgery, and is developing new diagnostic instruments and treatments
to improve visual outcomes. Abbott also continues to expand its
premium and standard intraocular lenses (IOL), including Synchrony,
its next-generation IOL approved in Europe and other countries
around the world. Synchrony is currently under FDA review in the
United States.
Financial, John Thomas, +1-847-938-2655, or Larry Peepo, +1-847-935-6722, or Tina Ventura, +1-847-935-9390, or Media, Melissa Brotz, +1-847-935-3456, or Scott Stoffel, +1-847-936-9502, all of Abbott
Tags: Abbott, Abbott park, Illinois, January 26
