Press Release
Abbott Reports 16.5 Percent Earnings Growth in Third Quarter; Raises Earnings Guidance for 2009
— Adjusted EPS Growth of 16.5 Percent (GAAP EPS Growth of 37.7
Percent)
— Company Raises Earnings-Per-Share Outlook for 2009
— Worldwide Operational Sales Increased 8.4 Percent
— Worldwide Medical Products Operational Sales Increased 16.2
Percent
— Worldwide Nutritional Operational Sales Increased 13.1 Percent
— International Pharmaceutical Operational Sales Increased 15.1
Percent
More information regarding Abbott's Investor Relations
resources:
October 14, 2009
Abbott Park, Illinois (NYSE: ABT)
— Abbott today announced financial results for the third quarter ended Sept.
30, 2009.
- Diluted earnings per share, excluding specified items, were $0.92, above
Abbott's guidance range of $0.88 to $0.90. Diluted earnings per share under
Generally Accepted Accounting Principles (GAAP) were $0.95. The company is
raising its ongoing earnings outlook for 2009 to $3.70 to $3.72, above its
previous range of $3.65 to $3.70.
- Worldwide operational sales, which excludes an unfavorable 4.9 percent effect of exchange rates, increased 8.4 percent. Reported sales, including the impact of
exchange, increased 3.5 percent. Excluding the
expected decline in Depakote® sales due to generic competition, worldwide
operational sales increased 11.4 percent.
- Worldwide pharmaceutical operational sales,which excludes an unfavorable
5.5 percent effect of exchange rates, increased
3.9 percent. Excluding the impact of Depakote,
worldwide pharmaceutical operational sales increased 9.3
percent. International pharmaceutical operational sales increased 15.1 percent, excluding an unfavorable 11.3 percent effect of exchange rates.
- Worldwide medical products operational sales, which excludes an unfavorable
5.1 percent effect of exchange rates, increased
16.2 percent.
- Worldwide nutritional operational sales,which excludes an unfavorable 3.3 percent effect of exchange rates, increased 13.1 percent.
"Abbott is performing well, generating higher-than-expected earnings
growth in the third quarter," said Miles D. White, chairman and chief
executive officer, Abbott. "During the quarter, we announced several
acquisitions that support our long-term growth strategy. These acquisitions add
to our diverse mix of global businesses, with new technologies, established
products and emerging market infrastructure that will help us deliver
sustainable industry-leading growth. In particular, the acquisition of Solvay
Pharmaceuticals will further diversify our global pharmaceuticals
business."
The following is a summary of third-quarter 2009
sales.
| 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 nine months ended
September 2009 sales.
| 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 third-quarter
2009 sales for selected products.
| 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.
| a |
Sales comparison reflects the expected impact of generic
Depakote competition. |
| n/m = Not meaningful |
The following is a summary of Abbott's nine months ended
September 2009 sales for selected products.
| 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.
| a |
Sales comparison reflects the expected impact of generic
Depakote competition. |
| n/m = Not meaningful |
Business Highlights
-
Announced Acquisition of Solvay Pharmaceuticals Business
Announced a definitive agreement with the Solvay Group for Abbott to acquire
Solvay's pharmaceuticals business, providing Abbott with a large and
complementary portfolio of pharmaceutical products and a significant presence
in key global emerging markets, including Eastern Europe and Asia. The
acquisition also provides more than $500 million
in incremental research and development investment capacity along with
significant EPS accretion. The transaction will be approximately $0.10
accretive to ongoing earnings per share in 2010, accelerating to more than
$0.20 by 2012, increasing thereafter, all before one-time transaction-related
items.
-
Presented New XIENCE V® Data at the TCT Scientific
Meeting
Announced new XIENCE V data at TCT, including one-year results from the
3690-patient SPIRIT IV trial demonstrating XIENCE
V was statistically superior to Boston Scientific's TAXUS® (p=0.001) on the primary endpoint of target
lesion failure (TLF). XIENCE V also showed an
80 percent reduction in stent thrombosis per
protocol definition compared to TAXUS (p=0.004).
In the 1800-patient investigator-initiated COMPARE trial, XIENCE V demonstrated significantly better outcomes in
key safety and efficacy measures compared to TAXUS Liberte. Also, three-year
results from our U.S. pivotal trial, SPIRIT III,
demonstrated that XIENCE V showed sustained
efficacy with a 43 percent reduction in major
adverse cardiac events (MACE) out to 3 years (p=0.003) compared to TAXUS. XIENCE V also demonstrated impressive safety, with a
low very late stent thrombosis rate of 0.2
percent and no stent thrombosis between two and three years.
-
Announced Acquisition of Evalve, Inc.
Announced an agreement to acquire the outstanding equity of Evalve, Inc., the
global leader in the development of devices for minimally invasive repair of
cardiac mitral valves. The acquisition provides Abbott with a presence in the
growing area of non-surgical treatment for structural heart disease.
-
Announced Acquisition of Visiogen, Inc. Announced an agreement to
acquire Visiogen, Inc., providing the company with a next-generation
accommodating intraocular lens (IOL) technology to address presbyopia for
cataract patients.
-
Received Approval for Blood Screening Test and Launched a New Diagnostic
Instrument
Received approval from the U.S. Food and Drug Administration (FDA) for ABBOTT
PRISM HIV O Plus test, the first fully automated blood screening test for
HIV-1/HIV-2. Also announced the launch of a new low-to-mid volume diagnostic
instrument — the ARCHITECT® c4000®
clinical chemistry analyzer which performs diagnostic tests that monitor
general health including a patient's levels of sodium, potassium, chloride and
organ function.
-
XIENCE V and XIENCE PRIME™ International Expansion
Abbott received regulatory approval for XIENCE V in China and Canada. In
addition, Abbott announced the widespread availability of its next-generation
XIENCE PRIME for the treatment of coronary artery
disease. XIENCE PRIME, which received CE Mark in June, offers a novel stent design and a
delivery system designed for greater flexibility and enhanced deliverability.
XIENCE PRIME is now widely available in Europe
and in select countries throughout the Asia-Pacific region and Latin
America.
-
Announced Acquisition of Nutrition Business in India
Announced a definitive agreement to acquire the nutrition businesses of
Wockhardt Limited, Carol Info Services Limited, and certain Wockhardt
subsidiaries and group companies. Wockhardt has a significant presence in
India's pediatric and adult nutrition segments with infant formulas, weaning
foods and adult protein supplements.
Abbott raises guidance for full-year earnings per
share
Based on the company's continued strong results year to date, including
third-quarter results that were ahead of expectations, Abbott is raising its
ongoing earnings-per-share forecast for the full-year 2009 to $3.70 to $3.72
from its previous guidance range of $3.65 to $3.70. The midpoint of this 2009
guidance range reflects 11.7 percent growth over
2008 ongoing earnings per share.
Abbott is forecasting earnings per share under GAAP above the full-year
ongoing earnings per share for 2009.
Abbott declares quarterly dividend; double-digit
increase over prior year
On Sept. 17, 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 Nov. 15, 2009, to
shareholders of record at the close of business on Oct.
15, 2009. This marks the 343rd 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 third-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, 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.
| 1) |
Other (income) expense, net in 2009 includes a patent
litigation settlement and ongoing contractual payments from Takeda associated
with the conclusion of the TAP joint venture. The patent litigation settlement
has been treated as a specified item and excluded from ongoing operations as
discussed in Q&A Answer 6. Other (income) expense, net in 2008 includes
primarily 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 $178 million, or $0.11 per share, relating to a patent
litigation settlement. This was partially offset by after-tax charges of $127
million, or $0.08 per share, primarily for integration and cost reduction
initiatives.
2008 Net Earnings Excluding Specified Items excludes after-tax charges of $151
million, or $0.10 per share, for cost reduction initiatives. |
| NOTE: See attached questions and answers section
for further explanation of Consolidated Statement of Earnings line items. |
| n/m = Percent change is not meaningful. |
| 1) |
Other (income) expense, net, in 2009 includes the
derecognition of a contingent liability and a patent litigation settlement.
These items have been treated as specified items and excluded from ongoing
operations. 2009 also includes ongoing contractual payments from Takeda
associated with the conclusion of the TAP joint venture. Other (income)
expense, net, in 2008 includes a gain associated with the closing of the TAP
Pharmaceutical Products Inc. joint venture transaction and a gain 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 and an after-tax gain of $178 million,
or $0.11 per share, relating to a patent litigation settlement. This was
partially offset by $122 million, or $0.08 per share, primarily relating to
costs associated with the acquisition of Advanced Medical Optics, $78 million,
or $0.05 per share, for litigation settlements and $236 million, or $0.14 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 $94
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, $224 million, or
$0.14 per share, for cost reduction initiatives, and $60 million, or $0.04 per
share, for acquisition integration, TAP separation and other. |
| 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 nine months ended September 30, 2009 was $4.196
billion. Net earnings allocated to common shares in 2008 was not significantly
different than net income. |
| 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) |
International pharmaceutical operational sales increased 15.1 percent, excluding an 11.3
percent negative impact from exchange. Internationally, operational
growth for HUMIRA was 41.5 percent, with reported
sales of $791 million, in line with our previous
expectations. 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.
U.S. pharmaceutical sales increased 3.9 percent, excluding the expected decline
of Depakote sales due to generic competition, which reduced reported U.S.
pharmaceutical sales growth by 10.5 percentage
points.
U.S. pharmaceutical sales were led by HUMIRA, which increased 21.3 percent to
$700 million. Underlying demand for HUMIRA
remains strong across all three major indications. Given the performance of
HUMIRA year-to-date, we're raising our global HUMIRA forecast to 28 to 30 percent operational sales growth for the full-year
2009, excluding the negative impact of foreign exchange (18 to 20 percent reported sales growth).
In our lipid franchise, Niaspan sales were $215 million, up 10.6 percent.
TriCor/TRILIPIX franchise sales were $330
million, to the prior year. Sales growth this quarter was impacted by
the comparison to the prior year as well as a temporary reduction in net price
associated with broader managed care access and expanded patient assistance
programs. Total prescriptions for the TriCor/TRILIPIX franchise continue to
grow in the mid-single digits, exceeding the growth rate of the cholesterol
market. The launch of TRILIPIX is on-track, driving steady market share gains.
During the quarter, we initiated a consumer outreach program and we expanded
our relationship with AstraZeneca to include the co-promotion of TRILIPIX.
These actions are expected to drive future lipid franchise sales growth.
|
| Q2) |
What drove the 16.2 percent operational increase in
worldwide medical products sales and the 13.1
percent operational increase in worldwide nutritional products
sales? |
| A2) |
Medical products operational sales increased 16.2 percent,
excluding a 5.1 percent negative impact from
exchange. This includes the second full quarter of sales from Advanced Medical
Optics (AMO), which was acquired during the first quarter of 2009. Strength in
the quarter reflects 8 percent operational growth
in worldwide vascular sales and continued double-digit growth in Abbott's
molecular diagnostics and point of care businesses.
Vascular sales were driven by the continued successful uptake of XIENCE V,
which remains the number one drug-eluting stent (DES) in the United States and
Europe. XIENCE platform share, which includes XIENCE V and Promus,
accounts for more than half of the U.S. market. Recent XIENCE V clinical data presented at the Transcatheter
Cardiovascular Therapeutics (TCT) meeting is expected to drive market share
gains for the XIENCE platform.
Worldwide nutritional products operational sales increased 13.1 percent,
excluding 3.3 percent negative exchange.
International nutritional product operational sales increased nearly 22 percent, reflecting strong growth in key emerging
markets, including Latin America and Asia.
|
| Q3) |
What was the third-quarter gross margin ratio? |
| A3) |
The gross margin ratio before and after specified items is
shown below (dollars in millions):
The adjusted gross margin ratio was 57.1 percent, consistent with our previous
forecast, reflecting better operating performance of the diagnostic and
nutrition businesses offset by lower Depakote sales and the negative impact of
foreign exchange on the ratio.
|
| Q4) |
What drove SG&A and R&D investment in the
quarter? |
| A4) |
Both SG&A and R&D were in line with our forecasts.
Ongoing R&D expense reflects the timing of investment in our broad-based
pipeline, including programs in vascular devices, biologics, neuroscience,
oncology and HCV. Ongoing SG&A expense was 25.4 percent of sales, in line
with our forecast for SG&A leverage in 2009, particularly in the second
half of this year. We are forecasting a reduction in full-year SG&A as a
percentage of sales of more than 100 basis points compared to 2008 and R&D
investment of approximately 9 percent of sales for the full-year 2009.
|
| Q5) |
What was the tax rate in the quarter? |
| A5) |
The tax rate this quarter was 17.8 percent, in line with our
previous forecast. The reported tax rate is reconciled to the ongoing rate
below (dollars in millions):
|
| Q6) |
How did specified items affect reported results? |
| A6) |
Specified items impacted third-quarter results as
follows:
There were net favorable specified items in the quarter. The patent settlement
relates to a favorable DES patent settlement that was reached during the
quarter. The favorable impact of this settlement has been excluded from ongoing
earnings per share of $0.92.
Acquisition related is primarily associated with costs related to the
acquisition of 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):
|
| 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
- Earlier this year, we launched TRILIPIX, Abbott's next-generation
fenofibric acid. The launch is proceeding 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. Abbott also expanded its relationship with
AstraZeneca to include the co-promotion of 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. The development of two
Abbott-discovered compounds continues to progress in collaboration with
Genentech/Roche. These compounds include ABT-263,
a Bcl-2 family protein antagonist and ABT-869, a multi-targeted kinase inhibitor.
- 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.
- Abbott is 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. In our pipeline,
we continue to explore additional indications for HUMIRA and have ongoing
studies for ABT-874, Abbott's anti-IL 12/23 biologic. 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.
In June, we received CE Mark for XIENCE PRIME in Europe, and it is now widely available
in Europe and in select countries throughout Asia-Pacific and Latin
America.
-
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.
-
"Thinman" DES — Abbott is developing an ultra thin
drug-eluting stent (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.
-
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.
-
Molecular Diagnostics
- Abbott entered into an agreement with GlaxoSmithKline (GSK) to develop an
automated molecular diagnostic test, based on polymerase chain reaction (PCR)
technology, intended to screen non-small cell lung cancer (NSCLC) tumors for
expression of the MAGE-A3 antigen.
- Abbott has also entered into an agreement with Pfizer to develop a
molecular diagnostic test intended to screen NSCLC tumors for the presence of
gene rearrangements.
|
Financial:
John Thomas
Larry Peepo
Tina Ventura |
(847) 938-2655
(847) 935-6722
(847) 935-9390 |
Media:
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Scott Stoffel |
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(847) 936-9502 |