Press Release
Abbott Reports Strong Second Quarter Results; Confirms Double-Digit Earnings Growth Outlook for 2009
—Worldwide Operational Sales Increased 10.5 Percent
—Worldwide Medical Products Operational Sales Increased 27.0 Percent
—International Pharmaceutical Operational Sales Increased 13.8 Percent
—U.S. Nutritional Sales Increased 10.0 Percent
More information regarding Abbott's Investor Relations
resources:
July 15, 2009
Abbott Park, Illinois (NYSE: ABT)
— Abbott today announced financial results for the second quarter ended June
30, 2009.
- Diluted earnings per share, excluding specified items, were $0.89, at the
high end of Abbott's second-quarter guidance range of $0.87 to $0.89. Diluted
earnings per share under Generally Accepted Accounting Principles (GAAP) were
$0.83.
- Worldwide operational sales, which excludes an unfavorable 8.0 percent effect of exchange rates, increased 10.5 percent. Reported sales, including the impact of
exchange, increased 2.5 percent. Excluding the
expected decline in Depakote® sales due to generic competition, worldwide
operational sales increased 14.6 percent.
- Worldwide medical products operational sales, which excludes an unfavorable
9.5 percent effect of exchange rates, increased
27.0 percent. Worldwide operational vascular
sales increased 43.0 percent driven by the
continued success of the XIENCE V® drug-eluting
stent (DES).
- Worldwide pharmaceutical operational sales,which excludes an unfavorable
8.3 percent effect of exchange rates, increased
4.0 percent. Excluding the impact of Depakote,
worldwide pharmaceutical operational sales increased 11.4 percent. Worldwide HUMIRA® operational sales
increased 32.8 percent, which excludes an
unfavorable 12.4 percent effect of exchange rates. U.S. HUMIRA sales were $635 million, up 20.9
percent.
- Worldwide nutritional operational sales,which excludes an unfavorable 5.2 percent effect of exchange rates, increased 9.2 percent. U.S. nutritional sales increased 10.0 percent, driven by market share gains in the
infant formula business.
- Submitted CERTRIAD™, the fixed-dose combination of TRILIPIX® and CRESTOR®,
for U.S. regulatory approval and received CE Mark
for XIENCE PRIME™, both ahead of the company's
forecast.
"We achieved our performance goals for the quarter, with results at the
high end of our previous expectations," said Miles D. White, chairman and
chief executive officer, Abbott. "Our diverse mix of market-leading
products and global businesses delivered double-digit operational sales growth,
with strong performance from our key growth drivers."
The following is a summary of second-quarter 2009
sales.
Quarter Ended 6/30/09
(dollars in millions) |
|
|
% Change vs. 2Q08 |
| |
Sales |
|
Operational |
Foreign
Exchange |
Reported |
| Total Sales |
$7,495 |
|
10.5a |
(8.0) |
2.5 |
| Total International Sales |
$3,932 |
|
15.6 |
(14.9) |
0.7 |
| Total U.S. Sales |
$3,563 |
|
4.5a |
. . . |
4.5 |
| Worldwide Pharmaceutical Sales |
$3,946 |
|
4.0a |
(8.3) |
(4.3) |
| International Pharmaceuticals |
$1,993 |
|
13.8 |
(16.7) |
(2.9) |
| U.S. Pharmaceuticals |
$1,953 |
|
(5.6)a |
. . . |
(5.6) |
| Worldwide Nutritional Sales |
$1,283 |
|
9.2 |
(5.2) |
4.0 |
| International Nutritionals |
$615 |
|
8.4 |
(10.3) |
(1.9) |
| U.S. Nutritionals |
$668 |
|
10.0 |
. . . |
10.0 |
| Worldwide Diagnostics Sales |
$878 |
|
3.9 |
(10.1) |
(6.2) |
| International Diagnostics |
$642 |
|
3.8 |
(13.3) |
(9.5) |
| U.S. Diagnostics |
$236 |
|
4.1 |
. . . |
4.1 |
| Worldwide Vascular Sales |
$658 |
|
43.0 |
(8.7) |
34.3 |
| International Vascular |
$263 |
|
12.4 |
(15.6) |
(3.2) |
| U.S. Vascular |
$395 |
|
81.1 |
. . . |
81.1 |
| Other Sales |
$730b |
|
44.8b |
(7.3) |
37.5 |
| Note: See "Consolidated Statement of Earnings" for more
information. |
| a |
Sales comparison reflects the expected impact of generic Depakote
competition. See Q&A Answer 1 for further discussion. |
| b |
Includes the acquisition of Advanced Medical Optics, which closed on Feb.
25, 2009. |
The following is a summary of first-half 2009
sales.
First-Half Ended 6/30/09
(dollars in millions) |
|
|
% Change vs. 1H08 |
| |
Sales |
|
Operational |
Foreign
Exchange |
Reported |
| Total Sales |
$14,213 |
|
8.0a |
(7.1) |
0.9 |
| Total International Sales |
$7,648 |
|
13.3 |
(13.0) |
0.3 |
| Total U.S. Sales |
$6,565 |
|
1.7a |
. . . |
1.7 |
| Worldwide Pharmaceutical Sales |
$7,582 |
|
2.5a |
(7.5) |
(5.0) |
| International Pharmaceuticals |
$4,102 |
|
13.0 |
(14.3) |
(1.3) |
| U.S. Pharmaceuticals |
$3,480 |
|
(9.0)a |
. . . |
(9.0) |
| Worldwide Nutritional Sales |
$2,465 |
|
9.8 |
(4.7) |
5.1 |
| International Nutritionals |
$1,190 |
|
12.7 |
(9.6) |
3.1 |
| U.S. Nutritionals |
$1,275 |
|
7.1 |
. . . |
7.1 |
| Worldwide Diagnostics Sales |
$1,694 |
|
4.9 |
(9.0) |
(4.1) |
| International Diagnostics |
$1,237 |
|
4.9 |
(12.0) |
(7.1) |
| U.S. Diagnostics |
$457 |
|
4.7 |
. . . |
4.7 |
| Worldwide Vascular Sales |
$1,302 |
|
45.0 |
(6.7) |
38.3 |
| International Vascular |
$513 |
|
13.1 |
(12.4) |
0.7 |
| U.S. Vascular |
$789 |
|
82.6 |
. . . |
82.6 |
| Other Sales |
$1,170b |
|
17.9b |
(6.3) |
11.6 |
| Note: See "Consolidated Statement of Earnings" for more
information. |
| a |
Sales comparison reflects the expected impact of generic Depakote
competition. See Q&A Answer 1 for further discussion. |
| b |
Includes the acquisition of Advanced Medical Optics, which closed on Feb.
25, 2009. |
The following is a summary of Abbott's second-quarter
2009 sales for selected products.
Quarter Ended 6/30/09
(dollars in millions) |
|
|
|
|
International |
| |
U.S. |
|
|
|
% Change vs. 2Q08 |
| |
Sales |
|
% Change
vs. 2Q08 |
|
Sales |
|
Operational |
|
Foreign
Exchange |
|
Reported |
Pharmaceutical Products; |
| HUMIRA |
$635 |
|
20.9 |
|
$676 |
|
44.0 |
|
(24.0) |
|
20.0 |
| Kaletra |
$111 |
|
(8.0) |
|
$232 |
|
13.9 |
|
(15.1) |
|
(1.2) |
| TriCor/TRILIPIX |
$336 |
|
9.1 |
|
. . . |
|
. . . |
|
. . . |
|
. . . |
| Niaspan |
$208 |
|
6.9 |
|
. . . |
|
. . . |
|
. . . |
|
. . . |
| Lupron |
$137 |
|
68.5 |
|
$60 |
|
1.9 |
|
(18.7) |
|
(16.8) |
| Synthroid |
$97 |
|
(16.0) |
|
$19 |
|
1.4 |
|
(18.6) |
|
(17.2) |
| Depakotea |
$80 |
|
(79.3) |
|
$22 |
|
(0.4) |
|
(19.3) |
|
(19.7) |
Nutritional Products |
| Pediatric Nutritionals |
$329 |
|
6.0 |
|
$354 |
|
11.7 |
|
(8.1) |
|
3.6 |
| Adult Nutritionals |
$326 |
|
12.0 |
|
$262 |
|
4.5 |
|
(12.9) |
|
(8.4) |
Medical Products |
| Core Laboratory Diagnostics |
$154 |
|
(2.3) |
|
$593 |
|
2.9 |
|
(13.1) |
|
(10.2) |
| Coronary Stents |
$256 |
|
225.8 |
|
$141 |
|
19.7 |
|
(17.5) |
|
2.2 |
| Diabetes Care |
$128 |
|
(4.8) |
|
$181 |
|
7.4 |
|
(17.9) |
|
(10.5) |
| Medical Optics |
$100 |
|
n/m |
|
$165 |
|
n/m |
|
n/m |
|
n/m |
| Molecular Diagnostics |
$36 |
|
23.8 |
|
$37 |
|
18.0 |
|
(17.4) |
|
0.6 |
| a |
Sales comparison reflects the expected impact of generic Depakote
competition. |
| Note: The impact of foreign exchange on global sales can be
found on the subsequent page. |
| n/m = Not meaningful |
The following summarizes the impact of foreign exchange
on global sales for selected products.
Quarter Ended 6/30/09
(dollars in millions) |
|
|
Global Sales |
| |
|
|
% Change vs. 2Q08 |
| |
Global
Sales |
|
Operational |
|
Foreign
Exchange |
|
Reported |
Pharmaceutical Products |
| HUMIRA |
$1,311 |
|
32.8 |
|
(12.4) |
|
20.4 |
| Kaletra |
$343 |
|
6.5 |
|
(10.0) |
|
(3.5) |
| TriCor/TRILIPIX |
$336 |
|
9.1 |
|
. . . |
|
9.1 |
| Niaspan |
$208 |
|
6.9 |
|
. . . |
|
6.9 |
| Lupron |
$197 |
|
37.1 |
|
(8.8) |
|
28.3 |
| Synthroid |
$116 |
|
(13.1) |
|
(3.1) |
|
(16.2) |
| Depakotea |
$102 |
|
(74.0) |
|
(1.3) |
|
(75.3) |
Nutritional Products |
| Pediatric Nutritionals |
$683 |
|
8.9 |
|
(4.2) |
|
4.7 |
| Adult Nutritionals |
$588 |
|
8.3 |
|
(6.4) |
|
1.9 |
Medical Products |
| Core Laboratory Diagnostics |
$747 |
|
1.9 |
|
(10.6) |
|
(8.7) |
| Coronary Stents |
$397 |
|
94.6 |
|
(11.1) |
|
83.5 |
| Diabetes Care |
$309 |
|
2.6 |
|
(10.8) |
|
(8.2) |
| Medical Optics |
$265 |
|
n/m |
|
n/m |
|
n/m |
| Molecular Diagnostics |
$73 |
|
20.6 |
|
(9.6) |
|
11.0 |
| a |
Sales comparison reflects the expected impact of generic Depakote
competition. |
| n/m = Not meaningful |
The following is a summary of Abbott's first-half 2009
sales for selected products.
First-Half Ended 6/30/09
(dollars in millions) |
|
|
|
|
International |
| |
U.S. |
|
|
|
% Change vs. 1H08 |
| |
Sales |
|
% Change
vs. 1H08 |
|
Sales |
|
Operational |
|
Foreign
Exchange |
|
Reported |
Pharmaceutical Products |
| HUMIRA |
$1,045 |
|
12.7 |
|
$1,290 |
|
46.4 |
|
(22.3) |
|
24.1 |
| Kaletra |
$195 |
|
(16.3) |
|
$440 |
|
6.1 |
|
(13.6) |
|
(7.5) |
| TriCor/TRILIPIX |
$588 |
|
6.4 |
|
. . . |
|
. . . |
|
. . . |
|
. . . |
| Lupron |
$270 |
|
n/m |
|
$120 |
|
5.5 |
|
(18.1) |
|
(12.6) |
| Niaspan |
$386 |
|
4.2 |
|
. . . |
|
. . . |
|
. . . |
|
. . . |
| Depakotea |
$190 |
|
(73.8) |
|
$42 |
|
(0.5) |
|
(19.0) |
|
(19.5) |
| Synthroid |
$182 |
|
(12.6) |
|
$38 |
|
5.9 |
|
(20.4) |
|
(14.5) |
Nutritional Products |
| Pediatric Nutritionals |
$624 |
|
1.4 |
|
$690 |
|
16.4 |
|
(7.7) |
|
8.7 |
| Adult Nutritionals |
$614 |
|
9.2 |
|
$500 |
|
8.1 |
|
(11.9) |
|
(3.8) |
Medical Products |
| Core Laboratory Diagnostics |
$299 |
|
(0.6) |
|
$1,143 |
|
4.0 |
|
(11.8) |
|
(7.8) |
| Coronary Stents |
$524 |
|
240.2 |
|
$275 |
|
23.0 |
|
(13.6) |
|
9.4 |
| Diabetes Care |
$248 |
|
(8.5) |
|
$345 |
|
4.2 |
|
(16.0) |
|
(11.8) |
| Medical Optics |
$145 |
|
n/m |
|
$165 |
|
n/m |
|
n/m |
|
n/m |
| Molecular Diagnostics |
$70 |
|
18.8 |
|
$70 |
|
21.8 |
|
(16.2) |
|
5.6 |
| a |
Sales comparison reflects the expected impact of generic Depakote
competition. |
| Note: The impact of foreign exchange on global sales can be
found on the subsequent page. |
| n/m = Not meaningful |
The following summarizes the impact of foreign exchange
on global sales for selected products.
First-Half Ended 6/30/09
(dollars in millions) |
|
|
Global Sales
% Change vs. 1H08 |
| |
Global
Sales |
|
Operational |
|
Foreign
Exchange |
|
Reported |
Pharmaceutical Products |
| HUMIRA |
$2,335 |
|
30.6 |
|
(11.8) |
|
18.8 |
| Kaletra |
$635 |
|
(1.3) |
|
(9.1) |
|
(10.4) |
| TriCor/TRILIPIX |
$588 |
|
6.4 |
|
. . . |
|
6.4 |
| Lupron |
$390 |
|
89.8 |
|
(11.4) |
|
78.4 |
| Niaspan |
$386 |
|
4.2 |
|
. . . |
|
4.2 |
| Depakotea |
$232 |
|
(68.9) |
|
(1.3) |
|
(70.2) |
| Synthroid |
$220 |
|
(9.3) |
|
(3.6) |
|
(12.9) |
Nutritional Products |
| Pediatric Nutritionals |
$1,314 |
|
9.0 |
|
(3.9) |
|
5.1 |
| Adult Nutritionals |
$1,114 |
|
8.6 |
|
(5.7) |
|
2.9 |
Medical Products |
| Core Laboratory Diagnostics |
$1,442 |
|
3.1 |
|
(9.5) |
|
(6.4) |
| Coronary Stents |
$799 |
|
105.4 |
|
(8.4) |
|
97.0 |
| Diabetes Care |
$593 |
|
(0.9) |
|
(9.5) |
|
(10.4) |
| Medical Optics |
$310 |
|
n/m |
|
n/m |
|
n/m |
| Molecular Diagnostics |
$140 |
|
20.4 |
|
(8.6) |
|
11.8 |
| a |
Sales comparison reflects the expected impact of generic Depakote
competition. |
| n/m = Not meaningful |
Business Highlights
-
Initiated Trial of Next-Generation XIENCE PRIME™ Drug-Eluting
Stent
Announced CE Mark for Abbott's next-generation XIENCE PRIME Everolimus Eluting
Coronary Stent System for the treatment of coronary artery disease. Abbott is
launching XIENCE PRIME in a broad size matrix
with lengths up to 38 mm in Europe in the third
quarter. Abbott also announced the initiation of SPIRIT PRIME, a clinical trial
to study the performance of XIENCE PRIME. Results from SPIRIT PRIME will be
used to support the regulatory filing for XIENCE PRIME in the United
States.
-
Presented Five-Year Data on HUMIRA®
Data presented at the European League Against Rheumatism (EULAR) annual
congress showed that patients with moderate to severe early rheumatoid
arthritis (RA) initially treated with the combination of HUMIRA and
methotrexate (MTX) for two years had greater inhibition of radiographic
progression at five years than patients initially treated with either of the
monotherapies.
-
Presented TRILIPIX® Combination Data in Diabetic Subset
Announced that TRILIPIX (fenofibric acid) delayed-release capsules in
combination with rosuvastatin calcium achieved individual and combined lipid
targets in patients with mixed dyslipidemia and type
2 diabetes. In these patients, the combination of TRILIPIX and
rosuvastatin helped up to three times more patients simultaneously reach all
three key lipid targets – HDL, triglycerides and LDL – than the pre-determined
monotherapy. These results were presented at the American Diabetes
Association's 2009 Scientific Sessions.
-
Extended Lipid Management Relationship with
AstraZeneca
Announced an agreement for AstraZeneca to co-promote Abbott's TRILIPIX
(fenofibric acid). AstraZeneca is now co-promoting TRILIPIX alongside Abbott in
the United States Abbott also promotes AstraZeneca's CRESTOR® in the United
States
-
Submitted New Drug Application to the FDA for CERTRIAD™
Abbott and AstraZeneca announced that the companies submitted a New Drug
Application (NDA) to the U.S. Food and Drug Administration (FDA) for CERTRIAD,
the fixed-dose combination of TRILIPIX and CRESTOR (rosuvastatin) for the
treatment of mixed dyslipidemia. The NDA submission is supported by data from
multiple studies, including efficacy and safety studies with the 5 mg, 10 mg
and 20 mg doses of rosuvastatin combined with fenofibric acid.
-
Presented XIENCE V® Data from SPIRIT V at EuroPCR
Announced one-year results from our SPIRIT V post-approval, single-arm study of
Abbott's drug-eluting stent, XIENCE V. Results showed an impressively low 1.8 percent rate of repeat procedure (target lesion
revascularization), a 0.7 percent rate of stent
thrombosis and a 5.1 percent rate of major
adverse cardiac events (MACE) at one year in patients treated with XIENCE V.
-
Added Hepatitis B Test to Broad Menu of Immunoassays on the ARCHITECT®
i2000 and i2000SR
Launched ARCHITECT® CORE™ in the United States, an automated hepatitis B test for use on its ARCHITECT i2000
and i2000SR immunoassay testing instruments.
Hepatitis B is a liver disease caused by the hepatitis B virus (HBV). It ranges in severity from a
mild illness, lasting a few weeks (acute), to a serious long-term (chronic)
illness that can lead to liver disease or liver cancer.
Abbott confirms double-digit earnings-per-share growth
outlook for 2009
Abbott is confirming previously issued earnings-per-share guidance for the
full-year 2009 of $3.65 to $3.70 under both Generally Accepted Accounting
Principles (GAAP) and on a non-GAAP, or adjusted basis. The midpoint of this
2009 guidance range reflects double-digit growth over 2008 earnings per
share.
Abbott is also providing earnings-per-share guidance for the third-quarter
2009 of $0.88 to $0.90, excluding specified items.The midpoint of this guidance
reflects nearly 13 percent growth over the prior year third quarter. Abbott
forecasts specified items for the third-quarter 2009 of approximately $0.05 per
share, primarily associated with previously announced acquisitions and cost
reduction initiatives. Including these specified items, projected earnings per
share under GAAP would be $0.83 to $0.85 for the third-quarter 2009.
Abbott declares quarterly dividend; double-digit
increase over prior year
On June 12, 2009, the board of directors of Abbott declared the company's
quarterly common dividend of 40 cents per share,
an increase of 11 percent over the prior period.
The cash dividend is payable Aug. 15, 2009, to
shareholders of record at the close of business on July
15, 2009. This marks the 342nd consecutive dividend paid by Abbott since
1924.
About Abbott
Abbott (NYSE: ABT)
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 more than
72,000 people and markets its products in more than 130 countries.
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 —
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, 2008, 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, 2009 and 2008
(in millions, except per share data)
(unaudited) |
| |
2009 |
2008 |
% Change |
| Net Sales |
$ 7,495 |
$ 7,314 |
2.5 |
| |
| Cost of products sold |
3,129 |
3,120 |
0.3 |
| Research and development |
670 |
657 |
2.0 |
| Acquired in-process research and development |
. . . |
78 |
n/m |
| Selling, general and administrative |
2,025 |
2,052 |
(1.4) |
| Total Operating Cost and Expenses |
5,824 |
5,907 |
(1.4) |
| |
| Operating earnings |
1,671 |
1,407 |
18.8 |
| |
| Net interest expense |
103 |
83 |
23.7 |
| Net foreign exchange (gain) loss |
14 |
15 |
(0.5) |
| (Income) from TAP Pharmaceutical Products Inc. joint venture |
. . . |
(17) |
n/m |
| Other (income) expense, net 1) |
(13) |
(310) |
n/m |
| Earnings before taxes |
1,567 |
1,636 |
(4.2) |
| Taxes on earnings |
279 |
314 |
(11.3) |
| |
| Net Earnings |
$ 1,288 |
$ 1,322 |
(2.6) |
| |
Net Earnings
Excluding Specified Items, as described below 2) |
$ 1,388 |
$ 1,308 |
6.1 |
| |
| Diluted Earnings Per Common Share |
$ 0.83 |
$ 0.85 |
(2.4) |
| |
Diluted Earnings Per Common Share,
Excluding Specified Items, as described below 2) |
$ 0.89 |
$ 0.84 |
6.0 |
| |
Average Number of Common Shares Outstanding
Plus Dilutive Common Stock Options and Awards |
1,551 |
1,553 |
|
| 1) |
2008 Other (income) expense, net, includes a gain of $95
million in connection with the closing of the TAP Pharmaceutical Products Inc.
joint venture transaction and a gain of $52 million from the sale of an equity
investment in Millennium Pharmaceuticals. These items have been treated as
specified items. The remainder of Other (income) expense, net, is primarily
related to ongoing contractual payments from Takeda associated with the
conclusion of the TAP joint venture. |
| 2) |
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. See Q&A Answer 6 for a
discussion of specified items.
2008 Net Earnings Excluding Specified Items excludes a tax-free gain of $95
million, or $0.06 per share, recorded on the closing of the TAP joint venture
transaction, a reduction in income taxes of $30 million, or $0.02 per share,
relating to the settlement of an IRS audit, and an after-tax gain of $40
million, or $0.03 per share, relating to the sale of an equity investment in
Millennium Pharmaceuticals. These items were partially offset by after-tax
charges of $61 million, or $0.04 per share, for acquired in-process research
and development relating to technology investments, $45 million, or $0.03 per
share, for cost reduction initiatives, and $45 million, or $0.03 per share, for
acquisition integration, TAP separation 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, 2009 and 2008
(in millions, except per share data)
(unaudited) |
| |
2009 |
2008 |
% Change |
| Net Sales |
$ 14,213 |
$ 14,080 |
0.9 |
| |
| Cost of products sold |
6,065 |
6,081 |
(0.3) |
| Research and development |
1,321 |
1,277 |
3.5 |
| Acquired in-process research and development |
. . . |
97 |
n/m |
| Selling, general and administrative |
4,095 |
4,070 |
0.6 |
| Total Operating Cost and Expenses |
11,481 |
11,525 |
(0.4) |
| |
| Operating earnings |
2,732 |
2,555 |
7.0 |
| |
| Net interest expense |
191 |
177 |
8.4 |
| Net foreign exchange (gain) loss |
29 |
21 |
39.3 |
(Income) from TAP Pharmaceutical Products Inc.
joint venture |
. . . |
(119) |
n/m |
| Other (income) expense, net 1) |
(988) |
(321) |
n/m |
| Earnings before taxes |
3,500 |
2,797 |
25.1 |
| Taxes on earnings |
773 |
537 |
43.9 |
| |
| Net Earnings |
$ 2,727 |
$ 2,260 |
20.7 |
| |
Net Earnings Excluding Specified Items,
as described below 2) |
$ 2,531 |
$ 2,296 |
10.2 |
| |
| Diluted Earnings Per Common Share |
$ 1.75 |
$ 1.45 |
20.7 |
| |
| Diluted Earnings Per Common Share, Excluding Specified |
|
|
|
| Items, as described below 2) |
$ 1.62 |
$ 1.47 |
10.2 |
| |
Average Number of Common Shares Outstanding
Plus Dilutive Common Stock Options and Awards |
1,554 |
1,557 |
|
| 1) |
Other (income) expense, net, in 2009 includes the
derecognition of a contingent liability ($797 pre-tax, $505 after-tax) and
ongoing contractual payments from Takeda associated with the conclusion of the
TAP joint venture. Other (income) expense, net, in 2008 includes a gain of
$95 million in connection with the closing of the
TAP Pharmaceutical Products Inc. joint venture transaction and a gain of $52 million from the sale of an equity investment in
Millennium Pharmaceuticals. These items have been treated as specified items.
The remainder of Other (income) expense, net, is primarily related to ongoing
contractual payments from Takeda associated with the conclusion of the TAP
joint venture. |
| 2) |
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.
2008 Net Earnings Excluding Specified Items excludes a tax-free gain of $95 million, or $0.06 per
share, recorded on the closing of the TAP joint venture transaction, a
reduction in income taxes of $30 million, or
$0.02 per share, relating to the settlement of an
IRS audit, and an after-tax gain of $49 million,
or $0.03 per share, relating to sales of equity
investments in Millennium Pharmaceuticals and Boston Scientific. These items
were offset by after-tax charges of $76 million,
or $0.05 per share, for acquired in-process
research and development relating to technology investments, $75 million, or $0.05 per
share, for cost reduction initiatives, and $59
million, or $0.03 per share, for
acquisition integration, TAP separation 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. |
Questions & Answers
| Q1) |
What drove the operational growth of worldwide
pharmaceutical sales? |
| A1) |
Excluding Depakote, U.S. pharmaceutical sales increased more
than 9 percent. As expected, U.S. pharmaceutical
sales reflected the impact of generic competition for Depakote. This resulted
in a $306 million decline in Depakote sales in
the second quarter, reducing reported U.S. pharmaceutical sales growth by
nearly 15 percentage points.
U.S. pharmaceutical sales were led by HUMIRA, with sales of $635 million, up 20.9
percent. Underlying demand for HUMIRA remains strong, and share gains
occurred across all three major indications in the quarter. The lipid franchise
continues to perform well, with TriCor/TRILIPIX sales up more than 9 percent and Niaspan sales up nearly 7 percent, both exceeding the market growth rate.
International pharmaceutical operational sales increased 13.8 percent, excluding a 16.7
percent negative impact from exchange. Internationally, operational
growth for HUMIRA was 44 percent, with sales of
$676 million, in line with our expectations.
There was a 24-percentage point negative impact
of exchange on international HUMIRA sales. International anti-TNF market growth
trends remain strong, and HUMIRA maintains a market-leading position in many of
the international markets, including the number one share position in Western
Europe. Kaletra also performed well internationally, with operational growth of
nearly 14 percent. |
| Q2) |
What drove the 27.0 percent operational increase in global
medical products sales and strong global nutritional products sales? |
| A2) |
Medical products operational sales increased 27.0 percent, excluding a 9.5
percent negative impact from exchange. This includes the first full
quarter of sales from Advanced Medical Optics (AMO), which was acquired during
the first quarter of 2009. Strength in the quarter reflects 43 percent operational growth in worldwide vascular
sales and continued double-digit growth in Abbott's molecular diagnostics
business.
Vascular sales were driven by the continued successful uptake of XIENCE V, which remains the number one DES in the
United States and Europe. XIENCE platform share, which includes XIENCE and
Promus, is now more than half of the U.S. market. U.S. DES penetration is in
the mid-70s and percutaneous coronary intervention (PCI) volumes increased in
the low-single digits from the second quarter of last year.
Worldwide nutritional products operational sales increased more than 9 percent, excluding 5.2
percent negative exchange. This reflects continued strong growth in key
emerging markets, including Latin America and Asia. U.S. nutritional sales
increased 10.0 percent, driven by strong market
share gains in the infant nutritional 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):
| |
2Q09 |
| |
Cost of
Products
Sold |
Gross
Margin |
Gross
Margin % |
| As reported |
$3,129 |
$4,366 |
58.3% |
| Adjusted for specified items: |
|
|
|
| Acquisition related |
($17) |
$17 |
0.2% |
| Cost reduction initiatives and other |
($52) |
$52 |
0.7% |
| As adjusted |
$3,060 |
$4,435 |
59.2% |
The adjusted gross margin ratio was 59.2 percent, an improvement of 80 basis
points from the prior year. This gross margin expansion was driven by improved
operating performance of the diagnostic and nutrition businesses, and the
impact of foreign exchange. This occurred despite the negative impact from
lower Depakote sales. |
| Q4) |
How did R&D and SG&A investment compare to the
company's guidance? |
| A4) |
Both SG&A and R&D were in line with our forecast for
the quarter. Ongoing R&D expense, excluding specified items and the impact
of foreign exchange, was up nearly 6 percent,
reflecting continued investment in our pipeline, including programs in vascular
devices, biologics, neuroscience, oncology and HCV. Ongoing SG&A expense,
excluding specified items and the impact of foreign exchange, was up nearly
5 percent, in line with our forecast for
significant SG&A leverage in 2009. We are forecasting a reduction in
full-year ongoing SG&A as a percentage of sales of more than 100 basis
points compared to 2008. |
| Q5) |
What was the tax rate in the quarter? |
| A5) |
The tax rate this quarter was 17.8 percent, in line with the
previous forecast. |
| Q6) |
How did specified items affect reported results? |
| A6) |
Specified items impacted second-quarter results as
follows:
| |
2Q09 |
| (dollars in millions, except earnings-per-share) |
Earnings |
|
| |
Pre-tax |
After-tax |
EPS |
| As reported |
$1,567 |
$1,288 |
$0.83 |
| Adjusted for specified items: |
|
|
|
| Acquisition related |
$40 |
$33 |
$0.02 |
| Cost reduction initiatives and other |
$82 |
$67 |
$0.04 |
| As adjusted |
$1,689 |
$1,388 |
$0.89 |
Acquisition related is primarily associated with acquisition costs related to
Advanced Medical Optics (AMO), which closed during the first quarter of 2009.
Cost reduction initiatives include actions to improve efficiencies, including
the previously announced efforts in the core laboratory diagnostic
business.
The pre-tax impact of specified items by Consolidated Statement of Earnings
line item is as follows (dollars in millions):
| |
2Q09 |
| |
Cost of Products Sold |
R&D |
SG&A |
| As reported |
$3,129 |
$670 |
$2,025 |
| Adjusted for specified items: |
|
|
|
| Acquisition related |
$17 |
$8 |
$15 |
| Cost reduction initiatives and other |
$52 |
$3 |
$27 |
| As adjusted |
$3,060 |
$659 |
$1,983 |
|
| Q7) |
What are the key areas of focus in Abbott's broad-based
pipeline? |
| A7) |
Abbott is advancing leading-edge scientific discoveries across the company,
including:
-
Lipid Management
- In January of this year, we launched TRILIPIX, Abbott's next-generation
fenofibric acid. The product has been well received and the launch has been in
line with our expectations. During the second quarter, we submitted CERTRIAD
for U.S. regulatory approval. CERTRIAD is the fixed-dose combination of
TRILIPIX and CRESTOR that Abbott is developing with AstraZeneca. Also in the
quarter, we expanded our relationship with AstraZeneca with an agreement for
the company to co-promote TRILIPIX in the United States.
-
Oncology
- Abbott's oncology pipeline includes therapies that represent promising,
unique scientific approaches to treating cancer. Abbott is focused on the
development of targeted, less-toxic treatments that inhibit tumor growth and
improve response to common cancer therapies. Our collaboration with
Genentech/Roche to develop two Abbott-discovered compounds continues to
progress. These compounds include ABT-869, a multi-targeted kinase inhibitor
and ABT-263, a Bcl-2 family protein antagonist. We now anticipate beginning a
pivotal study for ABT-869 later this year.
- Abbott’s oncology research also includes a PARP-inhibitor in Phase II, which prevents DNA repair in cancer cells,
enhancing the effectiveness of current cancer therapies.
-
Neuroscience
- Abbott is conducting innovative research in neuroscience, where we have
developed compounds that target receptors in the brain that help regulate mood,
memory and other neurological functions to address conditions such as attention
deficit hyperactivity disorder, Alzheimer's disease and schizophrenia.
- We're also pursuing compounds that could provide relief across a broad
spectrum of pain states, such as osteoarthritis, postoperative pain and cancer
pain.
-
Immunology
- Abbott's scientific experience with the anti-TNF biologic HUMIRA serves as
a strong foundation for our continuing research in immunology. HUMIRA has
several indications in Phase III, including
ulcerative colitis and pediatric Crohn's disease. In addition, ABT-874,
Abbott’s anti-IL 12/23 biologic, is in Phase III for psoriasis and Phase II for
Crohn's disease. ABT-874 is on track for regulatory submission in 2010 for the
psoriasis indication. We are also working to advance development of our early
discovery programs, including oral DMARD therapies, as well as other potential
biologic targets.
- Additionally, our 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, 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 hepatitis
C program includes our partnership with Enanta Pharmaceuticals to
develop protease inhibitors, as well as our internal polymerase inhibitor
program. Our compounds in development have the potential to shorten treatment
duration, improve tolerability and increase cure rates. Abbott has three HCV
compounds in human trials, with additional pre-clinical compounds in
development. Abbott is well positioned to explore combinations of these new
therapies, which may provide additional benefit to patients with HCV
infection.
-
Vascular Devices
-
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. We recently received CE
Mark for XIENCE PRIME in Europe.
-
XIENCE Nano –XIENCE V for small vessels in the United States. This
2.25 mm diameter stent has been available in
Europe since early 2008.
-
Bioabsorbable DES – DES that is gradually absorbed 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 bioabsorbable
DES clinical program, with an opportunity to reach the market years ahead of
competitors.
-
Core products –Devices in active development include a
next-generation bare metal stent, frontline and high-pressure balloons, and new
guidewires.
-
Endovascular products –Self-expanding and balloon-expanding
peripheral stents, including the Absolute Pro and Omnilink Elite Peripheral
Stent Systems, and the Emboshield Nav6 Embolic Protection Device for carotid
stenting.
|
Financial:
John Thomas
Larry Peepo
Tina Ventura |
(847) 938-2655
(847) 935-6722
(847) 935-9390 |
Media:
Melissa Brotz
Scott Stoffel |
(847) 935-3456
(847) 936-9502 |