Abbott Reports Strong Second Quarter Results; Confirms Double-Digit Ongoing Earnings Growth Outlook for 2010
By Abbott, PRNETuesday, July 20, 2010
ABBOTT PARK, Illinois, July 21, 2010 -
- Second Quarter Ongoing EPS Growth of 13.5 Percent -
- Worldwide Sales Increased 17.8 Percent -
- Strong Performance Across Diverse Businesses -
- Accelerated Emerging Markets Leadership -
- Enhanced Broad-Based Pipeline -
Abbott (NYSE: ABT) today announced financial results for the second
quarter ended June 30, 2010.
- Diluted earnings per share, excluding specified items, were US$1.01,
reflecting 13.5 percent growth, exceeding Abbott's previously issued
guidance range of US $0.98 to US $1.00. Diluted earnings per share
under Generally Accepted Accounting Principles (GAAP) were US $0.83.
- Worldwide sales increased 17.8 percent to US $8.8 billion, including a
favorable 2.7 percent effect of exchange rates.
- Worldwide pharmaceutical sales increased 24.5 percent, including a
favorable 2.8 percent effect of exchange rates and a full quarter of
sales contribution from the Solvay Pharmaceuticals acquisition.
- Worldwide vascular products sales increased 26.9 percent, including a
favorable 2.3 percent effect of exchange rates, driven by strong
international growth.
- Worldwide diagnostics sales increased 8.0 percent, including a
favorable 3.5 percent effect of exchange rates.
- Worldwide nutritional sales increased 10.1 percent, including a
favorable 2.8 percent effect of exchange rates, driven by strong
double-digit growth in international nutritionals.
"Abbott's diverse sources of earnings growth led to strong financial
results again this quarter, continuing Abbott's record of steady, reliable
performance," said Miles D. White, chairman and chief executive officer,
Abbott. "We also strengthened our emerging markets presence with the
announced acquisition of Piramal Healthcare Solutions, giving Abbott the
number-one position in the fast-growing Indian pharmaceutical market. This
follows several other strategic actions that provide Abbott critical mass to
capture the significant growth expected in emerging markets."
The following is a summary of second-quarter 2010 sales.
(All amounts in U.S. dollars unless otherwise noted.)
Quarter Ended 6/30/10
(dollars in millions)
% Change vs. 2Q09
-----------------
Foreign
Sales Reported Exchange Operational
----- -------- -------- -----------
Total Sales $8,826 17.8 2.7 15.1
Total
International
Sales $5,035 28.1 5.2 22.9
Total U.S.
Sales $3,791 6.4 -- 6.4
Worldwide
Pharmaceutical
Sales $4,914 (a) 24.5 2.8 21.7
International
Pharmaceuticals $2,798 (a) 40.4 5.5 34.9
U.S.
Pharmaceuticals $2,116 (a) 8.4 -- 8.4
Worldwide
Nutritional
Sales $1,414 10.1 2.8 7.3
International
Nutritionals $734 19.3 5.9 13.4
U.S.
Nutritionals $680 1.7 -- 1.7
Worldwide
Diagnostics
Sales $948 8.0 3.5 4.5
International
Diagnostics $708 10.3 4.8 5.5
U.S.
Diagnostics $240 1.6 -- 1.6
Worldwide
Vascular
Sales $835 26.9 2.3 24.6
International
Vascular $399 51.6 5.8 45.8
U.S. Vascular $436 10.5 -- 10.5
Other Sales $715 (2.0) 1.7 (3.7)
Note: See "Consolidated Statement of Earnings" for more information.
(a) Includes impact from the acquisition of Solvay Pharmaceuticals,
which closed on Feb. 15, 2010.
The following is a summary of first-half 2010 sales.
First-Half Ended 6/30/10
(dollars in millions) % Change vs. 1H09
-----------------
Foreign
Sales Reported Exchange Operational
----- -------- -------- -----------
Total Sales $16,524 16.3 3.4 12.9
Total International
Sales $9,481 24.0 6.3 17.7
Total U.S. Sales $7,043 7.3 -- 7.3
Worldwide
Pharmaceutical Sales $9,018 (a) 18.9 3.6 15.3
International
Pharmaceuticals $5,193 (a) 26.6 6.6 20.0
U.S. Pharmaceuticals $3,825 (a) 9.9 -- 9.9
Worldwide Nutritional
Sales $2,734 10.9 2.7 8.2
International
Nutritionals $1,412 18.7 5.7 13.0
U.S. Nutritionals $1,322 3.7 -- 3.7
Worldwide Diagnostics
Sales $1,863 9.9 4.5 5.4
International
Diagnostics $1,381 11.7 6.1 5.6
U.S. Diagnostics $482 5.3 -- 5.3
Worldwide Vascular
Sales $1,581 21.4 2.8 18.6
International
Vascular $731 42.6 7.1 35.5
U.S. Vascular $850 7.7 -- 7.7
Other Sales $1,328 13.5 2.4 11.1
Note: See "Consolidated Statement of Earnings" for more information.
(a) Includes impact from the acquisition of Solvay Pharmaceuticals,
which closed on Feb. 15, 2010.
The following summarizes the impact of foreign exchange on global sales
for selected products.
Quarter Ended 6/30/10
(dollars in millions)
Global Sales
% Change vs. 2Q09
-----------------
Global Foreign
Sales Reported Exchange Operational
----- -------- -------- -----------
Pharmaceutical
Products
HUMIRA $1,593 21.5 3.0 18.5
TriCor/TRILIPIX $388 15.6 -- 15.6
Kaletra $294 (14.2) 1.9 (16.1)
Niaspan $211 1.6 -- 1.6
Lupron $187 (5.0) 2.9 (7.9)
Synthroid $129 11.1 3.3 7.8
Nutritional Products
Pediatric Nutritionals $763 11.7 2.8 8.9
Adult Nutritionals $639 8.8 2.9 5.9
Medical Products
Core Laboratory
Diagnostics $793 6.1 3.8 2.3
Coronary Stents $533 34.2 2.7 31.5
Diabetes Care $325 5.4 2.8 2.6
Medical Optics $269 1.4 1.5 (0.1)
Molecular Diagnostics $89 22.6 1.7 20.9
The following is a summary of Abbott's second-quarter 2010 sales for
selected products.
Quarter Ended 6/30/10
(dollars in millions)
U.S.
----
% Change
Sales vs. 2Q09
----- --------
Pharmaceutical
Products
HUMIRA $696 9.6
TriCor/TRILIPIX $318 (5.3)
Kaletra $93 (16.0)
Niaspan $211 1.6
Lupron $121 (11.9)
Synthroid $103 6.8
Nutritional Products
Pediatric Nutritionals $334 1.5
Adult Nutritionals $334 2.5
Medical Products
Core Laboratory
Diagnostics $145 (5.5)
Coronary Stents $279 9.0
Diabetes Care $127 (0.4)
Medical Optics $100 (0.3)
Molecular Diagnostics $43 18.5
(dollars in millions) International
-------------
% Change vs. 2Q09
-----------------
Foreign
Sales Reported Exchange Operational
----- -------- -------- -----------
Pharmaceutical
Products
HUMIRA $897 32.7 5.8 26.9
TriCor/TRILIPIX $70 n/m n/m n/m
Kaletra $201 (13.4) 2.8 (16.2)
Niaspan -- -- -- --
Lupron $66 10.7 9.6 1.1
Synthroid $26 32.7 20.0 12.7
Nutritional Products
Pediatric Nutritionals $429 21.3 5.4 15.9
Adult Nutritionals $305 16.7 6.5 10.2
Medical Products
Core Laboratory
Diagnostics $648 9.1 4.8 4.3
Coronary Stents $254 80.3 7.7 72.6
Diabetes Care $198 9.5 4.8 4.7
Medical Optics $169 2.5 2.3 0.2
Molecular Diagnostics $46 26.6 3.4 23.2
n/m = Not meaningful
The following summarizes the impact of foreign exchange on global
sales for selected products.
First-Half Ended 6/30/10
(dollars in millions)
Global Sales
% Change vs. 1H09
-----------------
Global Foreign
Sales Reported Exchange Operational
----- -------- -------- -----------
Pharmaceutical
Products
HUMIRA $2,991 28.1 4.7 23.4
TriCor/TRILIPIX $679 15.5 -- 15.5
Kaletra $586 (7.7) 3.1 (10.8)
Niaspan $416 7.7 -- 7.7
Lupron $360 (7.7) 3.2 (10.9)
Synthroid $252 14.4 3.4 11.0
Nutritional Products
Pediatric Nutritionals $1,463 11.3 2.5 8.8
Adult Nutritionals $1,245 11.7 3.1 8.6
Medical Products
Core Laboratory
Diagnostics $1,555 7.8 4.8 3.0
Coronary Stents $987 23.6 2.9 20.7
Diabetes Care $620 4.7 4.0 0.7
Medical Optics $530 70.9 1.3 69.6
Molecular Diagnostics $176 26.2 3.1 23.1
The following is a summary of Abbott's first-half 2010 sales for selected
products.
First-Half 6/30/10
(dollars in millions)
U.S.
----
% Change
Sales vs. 1H09
----- --------
Pharmaceutical
Products
HUMIRA $1,239 18.5
TriCor/TRILIPIX $596 1.4
Kaletra $165 (15.8)
Niaspan $416 7.7
Lupron $229 (15.2)
Synthroid $201 10.6
Nutritional Products
Pediatric Nutritionals $644 3.1
Adult Nutritionals $652 6.2
Medical Products
Core Laboratory
Diagnostics $292 (2.2)
Coronary Stents $540 3.0
Diabetes Care $250 1.1
Medical Optics $200 38.2
Molecular Diagnostics $87 25.1
(dollars in millions) International
-------------
% Change vs. 1H09
-----------------
Foreign
Sales Reported Exchange Operational
----- -------- -------- -----------
Pharmaceutical
Products
HUMIRA $1,752 35.8 8.6 27.2
TriCor/TRILIPIX $83 n/m n/m n/m
Kaletra $421 (4.1) 4.5 (8.6)
Niaspan -- -- -- --
Lupron $131 9.4 10.3 (0.9)
Synthroid $51 32.9 19.7 13.2
Nutritional Products
Pediatric Nutritionals $819 18.8 4.8 14.0
Adult Nutritionals $593 18.6 6.8 11.8
Medical Products
Core Laboratory
Diagnostics $1,263 10.5 6.1 4.4
Coronary Stents $447 62.7 8.4 54.3
Diabetes Care $370 7.3 6.9 0.4
Medical Optics $330 99.5 2.3 97.2
Molecular Diagnostics $89 27.2 6.1 21.1
n/m = Not meaningful
Business Highlights
-- Abbott Accelerates Emerging Markets Presence: Announced a
number of strategic actions to further accelerate Abbott's
presence and capture growth opportunities in key emerging
markets, including the acquisition of Piramal's Healthcare
Solutions business, giving Abbott the number-one position
in the Indian pharmaceutical market. Additionally,
announced a license and supply agreement with Zydus
Cadila, providing a complementary portfolio of branded
generics that Abbott will commercialize in 15 fast-
growing emerging markets. Created a new stand-alone
Established Products Division to provide focus, structure
and resources to optimize the global market opportunity
for its leading branded generics portfolio.
-- Added Late-Stage Pipeline Compound for Endometriosis: Announced
a collaboration agreement to develop and
commercialize elagolix for the treatment of endometriosis-
related pain. Elagolix is a novel, first-in-class oral
gonadotropin-releasing hormone (GnRH) antagonist, which
has recently completed a Phase IIb study in endometriosis.
Endometriosis is associated with a multitude of symptoms,
including pain related to menstruation (dysmenorrhea), as
well as chronic pelvic pain throughout the menstrual cycle
and infertility. In addition to endometriosis, elagolix
will be evaluated for the treatment of uterine fibroids.
-- Announced Positive New Data at EuroPCR: Presented
additional data from the MitraClip(R) pivotal trial, EVEREST
II, which demonstrated consistent performance of the
MitraClip system for the two causes of mitral
regurgitation (MR) - functional MR (FMR) or degenerative
MR (DMR). The 30-day major adverse event rate for
MitraClip was similar for the FMR and DMR patient
subgroups, both lower than the surgical control group.
Preliminary two-year results indicated the durability of
MitraClip was maintained at two years. Mitral
regurgitation is the most common structural heart defect
in the world.
Presented data from two late-breaking clinical trials that
reinforced the outstanding safety data supporting Abbott's
market-leading XIENCE V Everolimus Eluting Coronary Stent
System. In addition, announced positive six-month results
from the first 45 patients enrolled in the second stage of
the ABSORB trial demonstrating a low rate of major adverse
cardiac events (MACE) and no blood clots (thromboses) for
Abbott's bioresorbable vascular scaffold (BVS).
-- New Molecular Diagnostic Test Approved by FDA: Gained
approval from the U.S. Food and Drug Administration (FDA)
to market a new, sensitive molecular diagnostic test and
instrument to simultaneously detect two of the nation's
most prevalent sexually transmitted diseases, gonorrhea
and chlamydia, including a new variant strain of chlamydia
recently discovered in Sweden.
-- Received FDA Approval for Two Core Laboratory Diagnostic
Tests: Received approval from the FDA for Abbott's
ARCHITECT HIV Ag/Ab Combo assay, which is the first test
approved in the United States that can simultaneously
detect both HIV antigen and antibodies. Studies have
demonstrated that Abbott's new test may detect HIV days
earlier than antibody-only tests. The FDA has also
cleared a new diagnostic test to monitor ovarian cancer, a
disease that will strike an estimated one out of every 71
women in the United States in their lifetimes. Abbott's
new ARCHITECT HE4 (human epididymis protein 4) assay, the
first automated test of its kind available in the United
States, uses a simple blood test to aid in monitoring for
the recurrence or progression of this disease.
-- Completed Acquisition of Facet Biotech; Advanced MS
Compound into Phase III: Completed the acquisition of
Facet Biotech Corporation, strengthening Abbott's
pharmaceutical pipeline in neuroscience and oncology. The
acquisition provides Abbott with daclizumab, a promising
biologic that recently advanced into Phase III trials for
multiple sclerosis (MS), as well as compounds that
complement its existing diverse oncology program.
Abbott confirms double-digit earnings-per-share growth outlook for 2010
Abbott is confirming previously issued earnings-per-share guidance for
the full-year 2010 of $4.13 to $4.18, excluding specified items. The midpoint
of this guidance range reflects growth of approximately 12 percent over 2009.
Abbott forecasts specified items for the full-year 2010 of approximately
$0.55 per share, primarily associated with the impact of health care reform
on deferred tax assets, acquisition integration, previously announced cost
reduction initiatives, a litigation reserve, in-process research and
development related to the Neurocrine collaboration, and the one-time impact
of the devaluation of the Venezuelan bolivar on balance sheet translation.
Including these specified items, projected earnings per share under Generally
Accepted Accounting Principles (GAAP) would be $3.58 to $3.63 for the
full-year 2010. As previously indicated, this forecast excludes additional
integration costs associated with the Solvay Pharmaceuticals acquisition that
are expected to be quantified in the third quarter.
Abbott declares quarterly dividend
On June 11, 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 period. The cash dividend is payable Aug. 15, 2010, to
shareholders of record at the close of business on July 15, 2010. This marks
the 346th 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 approximately 83,000 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
second-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 report on Securities and
Exchange Commission Form 10-Q for the quarter ended March 31, 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
Second Quarter Ended June 30, 2010 and 2009
(in millions, except per share data)
(unaudited)
2010 2009 % Change
---- ---- --------
Net Sales $8,826 $7,495 17.8
------ ------
Cost of products sold 3,544 3,129 13.3
Research and development 858 670 28.0
Acquired in-process research and development 75 - n/m
Selling, general and administrative 2,743 2,025 35.5
----- -----
Total Operating Cost and Expenses 7,220 5,824 24.0
----- -----
Operating earnings 1,606 1,671 (3.9)
Net interest expense 96 103 (6.6)
Net foreign exchange (gain) loss (41) 14 n/m
Other (income) expense, net (8) (13) n/m
--- ---
Earnings before taxes 1,559 1,567 (0.5)
Taxes on earnings 267 279 (4.3)
--- ---
Net Earnings $1,292 $1,288 0.3
====== ======
Net Earnings Excluding Specified Items, as
described below $1,578 $1,388 13.6 1)
====== ======
Diluted Earnings per Common Share $0.83 $0.83 --
===== =====
Diluted Earnings Per Common Share, Excluding
Specified Items,
as described below $1.01 $0.89 13.5 1)
===== =====
Average Number of Common Shares Outstanding
Plus Dilutive
Common Stock Options and Awards 1,552 1,551
1) 2010 Net Earnings Excluding Specified Items excludes after-tax
charges of $75 million, or $0.05 per share, for acquired
in-process research and development related to the Neurocrine
collaboration, $106 million, or $0.07 per share, for a
litigation reserve, $83 million, or $0.05 per share, for closing
and integration costs associated with the acquisition of
Solvay Pharmaceuticals and other recent acquisitions and $22
million, or $0.01 per share, for cost reduction initiatives
and other.
2009 Net Earnings Excluding Specified Items excludes after-tax
charges of $33 million, or $0.02 per share, primarily for
costs associated with the acquisition of Advanced Medical Optics
(AMO) and $67 million, or $0.04 per share, for cost
reduction initiatives and other.
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
First-Half Ended June 30, 2010 and 2009
(in millions, except per share data)
(unaudited)
2010 2009 % Change
---- ---- --------
Net Sales $16,524 $14,213 16.3
------- -------
Cost of products sold 6,879 6,065 13.4
Research and development 1,588 1,321 20.2
Acquired in-process research and
development 75 - n/m
Selling, general and administrative 4,906 4,095 19.8
----- -----
Total Operating Cost and Expenses 13,448 11,481 17.1
------ ------
Operating earnings 3,076 2,732 12.6
Net interest expense 185 191 (3.3)
Net foreign exchange (gain) loss 29 29 1.1
Other (income) expense, net (19) (988) n/m 1)
--- ----
Earnings before taxes 2,881 3,500 (17.7)
Taxes on earnings 586 773 (24.1)
--- ---
Net Earnings $2,295 $2,727 (15.8) 1)
====== ======
Net Earnings Excluding Specified Items,
as described below $2,845 $2,531 12.4 2)
====== ======
Diluted Earnings per Common Share $1.47 $1.75 (16.0) 1)
===== =====
Diluted Earnings Per Common Share,
Excluding Specified Items,
as described below $1.82 $1.62 12.3 2)
===== =====
Average Number of Common Shares
Outstanding Plus Dilutive
Common Stock Options and Awards 1,557 1,554
1) In 2009, other (income) expense, net earnings, and diluted earnings
per common share included the one time favorable impact of the
derecognition of a contingent liability associated with the
conclusion of the TAP joint venture ($797 million pre-tax, $505
million after-tax, or $0.32 per share). Since this did not recur
in 2010, this results in a 2010 decline in net earnings and diluted
earnings per common share on a GAAP basis when compared to 2009.
For ongoing purposes, in 2009, as discussed in footnote 2 below,
this item was excluded from net earnings and diluted earnings per
common share.
2) 2010 Net Earnings Excluding Specified Items excludes after-tax
charges of $115 million, or $0.07 per share, for the one-
time impact of the devaluation of the Venezuelan bolivar on balance
sheet translation, $75 million, or $0.05 per share,
relating to acquired in-process research and development related to
the Neurocrine collaboration, $106 million, or $0.07
per share, for a litigation reserve, $136 million, or $0.09 per
share, for closing and integration costs associated with the
acquisition of Solvay Pharmaceuticals and other recent
acquisitions, $60 million, or $0.04 per share, for specific health
care reform impact on deferred tax assets, and $58 million, or
$0.03 per share, for cost reduction initiatives and other.
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 that was recorded in
connection with the conclusion of the TAP joint venture.
This was partially offset by $108 million, or $0.07 per share,
primarily relating to costs associated with the acquisition of
Advanced Medical Optics, $41 million, or $0.02 per share, for
litigation settlements and $160 million, or $0.10 per share,
for cost reduction initiatives and costs associated with a delayed
product launch.
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 growth of Worldwide Pharmaceutical sales?
A1) Worldwide Pharmaceutical sales increased 24.5 percent, including a
favorable 2.8 percent effect of exchange rates, driven by strong
international pharmaceutical sales growth of more than 40 percent. Sales
included the first full-quarter contribution from the Solvay acquisition,
which closed in February 2010.
Growth in the quarter was driven by HUMIRA global sales growth of 21.5
percent, with reported international growth of 32.7 percent. International
anti-TNF market growth trends remain strong, and HUMIRA maintains a
market-leading position in many of the international markets. U.S. HUMIRA
sales increased approximately 10 percent, in-line with underlying
prescription trends for the product. Global lipid franchise sales growth was
10.3 percent, including the international TriCor sales contribution from the
Solvay acquisition.
Q2) What drove the strong performance in Worldwide Vascular, Worldwide
Nutritional and Worldwide Diagnostics sales?
A2) Double-digit growth in Worldwide Vascular sales were driven by
international vascular sales growth of more than 50 percent. Abbott holds the
number-one global position in drug-eluting stents, metallic stents and
guidewires. Abbott's drug-eluting stent franchise, which includes XIENCE V
and XIENCE PRIME, continues to perform well, including strong international
performance in Europe and Japan.
Worldwide nutritional products sales increased 10.1 percent, including a
favorable 2.8 percent impact from exchange and driven by more than 19 percent
growth internationally. Both pediatric and adult international nutritional
sales were up double-digits in the quarter. Abbott continues to perform well
in key emerging markets, including China, Southeast Asia and Latin America.
In the United States, Abbott continues to hold its leadership position in
infant formula and adult nutritionals.
High single-digit growth in Worldwide Diagnostics reflects continued
double-digit growth in Abbott's Molecular and Point of Care diagnostics
businesses as well as strong growth in its international Core Laboratory
Diagnostics business.
Q3) What was the second-quarter gross margin ratio?
A3) The gross margin ratio before and after specified items is shown
below (dollars in millions):
2Q10
----
Cost of Gross Gross
Products Margin Margin
Sold ------ %
---- ---
As reported $3,544 $5,282 59.8%
Adjusted for specified items:
Acquisition related ($38) $38 0.4%
Cost reduction
initiatives and other ($30) $30 0.4%
---- --- ---
As adjusted $3,476 $5,350 60.6%
The adjusted gross margin ratio of 60.6 percent, above Abbott's previous
forecast, was driven by strong performance across several businesses,
including vascular, diagnostics, diabetes and nutrition, as well as a
favorable impact from foreign exchange.
Q4) What drove SG&A and R&D investment in the quarter?
A4) In the second 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. R&D expense reflected 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 second-quarter 2010?
A5) The ongoing tax rate this quarter was 16.3 percent, in line with
Abbott's previous forecast. The reported second-quarter tax rate is
reconciled to the ongoing rate below (dollars in millions):
2Q10
----
Pre-Tax Taxes on Tax
Income Earnings Rate
------ -------- ----
As reported $1,559 $267 17.1%
Specified items $326 $40 12.3%
---- --- ----
Excluding specified
items $1,885 $307 16.3%
Q6) How did specified items affect reported results?
A6) Specified items impacted second-quarter results as follows:
2Q10
----
(dollars in millions, except
earnings-per-share) Earnings
--------
Pre- After- EPS
tax tax ---
--- ---
As reported $1,559 $1,292 $0.83
Adjusted for specified items:
Acquired IPR&D $75 $75 $0.05
Litigation reserve $126 $106 $0.07
Acquisition related $99 $83 $0.05
Cost reduction initiatives and other $26 $22 $0.01
As adjusted $1,885 $1,578 $1.01
Acquired in-process research and development is related to the agreement
with Neurocrine Biosciences to develop and commercialize elagolix for the
treatment of endometriosis. Litigation reserve relates to a settlement
reached in principle for which a reserve was established during the quarter.
Acquisition related is associated with closing and integration costs related
to the Solvay Pharmaceuticals and other recent acquisitions. Cost reduction
initiatives include actions to improve efficiencies, including the previously
announced efforts in the core laboratory diagnostic business.
The impact of specified items by Consolidated Statement of Earnings line
item is as follows (dollars in millions):
2Q10
----
Cost of R&D Acquired SG&A Other
Products --- IPR&D (Income)/
Sold ----- Expense
---- -------
As reported $3,544 $858 $75 $2,743 ($8)
Adjusted for specified items:
Acquired IPR&D -- -- ($75) -- --
Litigation reserve -- -- -- ($126) --
Acquisition related ($38) ($2) -- ($54) ($5)
Cost reduction
initiatives and other ($30) -- -- ($3) $7
---- --- --- --- ---
As adjusted $3,476 $856 -- $2,560 ($6)
Q7) What are the key areas of focus in Abbott's broad-based pipeline?
A7) Abbott is conducting leading-edge research across the company and is
focused on competing in attractive growth markets where R&D-based product
differentiation drives success. Today, 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. This includes a
drug-eluting stent in the United States for small vessels; many new
diagnostic assays; advances in the vision care portfolio; improvements across
the global nutritional product line; several new pharmaceutical products in
late-stage development; and a new heart-valve technology called MitraClip.
Following are select highlights from breakthrough research across both
pharmaceuticals and medical products pipelines:
- 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 on track to move into Phase III development for
breast cancer by year end. 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 recent acquisition of Facet Biotech brought several oncology
collaborations, including early- and mid-stage compounds that are
being studied for difficult to treat types of cancer, including
multiple myeloma and chronic lymphocytic leukemia.
- 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 to address
conditions such as Alzheimer's disease and schizophrenia. Abbott has
eight new molecular entities in the clinic for conditions such as
schizophrenia, pain, Alzheimer's disease and multiple sclerosis (MS).
This includes three compounds in Phase II for Alzheimer's.
-- Abbott's neuroscience pipeline also includes a novel, next-generation
antibody, daclizumab, which recently entered into Phase III
development for relapsing remitting MS (RRMS), the most common form of
the disease.
-- Abbott is also pursuing compounds that could provide relief across a
broad spectrum of pain states, such as chronic back pain,
postoperative pain and cancer pain.
- Women's Health
-- The recent collaboration agreement with Neurocrine to develop and
commercialize elagolix for the treatment of endometriosis-related pain
brings Abbott a novel, first-in-class oral gonadotropin-releasing
hormone (GnRH) antagonist. A Phase IIb study in endometriosis was
recently completed.
- 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 on track to file regulatory
applications in the U.S. and Europe for ABT-874, an anti-IL 12/23
biologic for psoriasis. Abbott is also 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.
- Hepatitis C
-- Abbott's antiviral program is focused on the treatment of hepatitis C
(HCV), a disease that affects more than 180 million people worldwide,
with approximately 3 to 4 million people newly infected each year.
Abbott's broad-based HCV development programs include its partnership
with Enanta Pharmaceuticals to discover protease inhibitors, as well
as its internal programs focused on additional viral targets,
including polymerase inhibitors.
-- Abbott currently has three HCV compounds in Phase II clinical trials
and expects to advance another promising mechanism of action into
human studies by year-end. Abbott is well positioned to explore
combinations of these new therapies, a strategy with the potential to
markedly transform current treatment practices by shortening therapy
duration, improving tolerability and increasing cure rates.
- Molecular Diagnostics
-- Abbott expects to launch more than 12 new products over the next two
to three years, including several novel oncology and infectious
disease assays, as well as improved instrument systems. Abbott
recently received approval from the U.S. Food and Drug Administration
(FDA) to market 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 has 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, acute kidney injury and HIV.
-- Abbott expects to launch several more products this year and also has
several next generation instrument systems for hematology,
immunochemistry and blood screening in development.
- Vascular Devices
-- Abbott has the industry's most robust vascular pipeline 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.
-- MitraClip - Presented additional data from the pivotal trial, EVEREST
II, at the EuroPCR conference, which demonstrated consistent
performance of the MitraClip system for the two causes of mitral
regurgitation (MR) - functional MR (FMR) or degenerative MR (DMR).
Abbott's MitraClip is on the market in Europe and under regulatory
review in the United States.
-- XIENCE PRIME - Abbott's next-generation DES that capitalizes on the
proven attributes of XIENCE V while offering a novel stent design and
a modified delivery system for improved deliverability. 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 - XIENCE V for small vessels is in clinical trials in the
United States. This 2.25 mm diameter stent was launched in Europe in
2008, and is expected to launch in the United States in 2011.
-- "Thinman" DES - Abbott is developing an ultra thin DES, which would be
the thinnest DES on the market at the time of launch. Thin stent
struts are designed to improve clinical outcomes by reducing vessel
injury upon deployment, enabling faster healing and improving
deliverability in complex anatomy.
-- Bioresorbable Vascular Scaffold (BVS) - Abbott is developing a BVS
that is gradually resorbed into the vessel wall - much like sutures
are absorbed after healing a wound - with the potential to return the
vessel to full motion. Abbott has the most advanced BVS clinical
program in the industry.
-- Core Coronary products - Abbott is continuing to expand its position
in the more than $2 billion core coronary market, recently launching a
next-generation frontline balloon dilatation catheter in Europe.
Abbott plans to launch several new balloons in Europe and the United
States over the next year. In addition, Abbott is maintaining its
worldwide leadership in the metallic stent market with its
next-generation bare metal stent, MULTI-LINK 8, which is in
development in the United States. Abbott also has a new line of
guidewires in development.
- Vision Care
-- Abbott expects more than 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 is expected to launch in the
United States by year end. 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 accommodating IOL approved in
Europe and 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, July 21, United Kingdom
