* Q1 EPS, excluding items, $1.03 vs Street view $1.00
* Sales $9.46 bln vs Street view $9.36 bln
* Humira sales jump 17 pct to $1.93 bln
* Shares little changed
By Ransdell Pierson
April 18 Abbott Laboratories Inc
reported better-than-expected quarterly earnings on surging
sales of Humira, underscoring the company's reliance on the
injectable arthritis medicine expected to overtake Lipitor as
the world's top-selling drug this year.
"Abbott has posted a strong start to 2012," Jefferies analyst
Jeffrey Holford said, suggesting a strong tone for the full
Humira was launched by Abbott a decade ago and keeps picking
up steam. Its sales rose 17 percent to $1.93 billion in the
quarter, well above many industry analysts' predictions.
"There's very little to quibble with; it's a solid
performance," said Atlantic Equities analyst Richard Purkiss,
citing Humira sales and surprisingly strong growth for Abbott's
nutritional products and diagnostic brands in the first quarter.
Abbott in October announced plans to spin off its branded
prescription drug business into a separate publicly traded
company, amid criticism that it has become too dependent on
Humira is facing growing competitive threats, including
possible cheaper generic versions of the injected drug and a new
type of pill being developed by Pfizer Inc, and concerns
about its vulnerability have held back Abbott shares.
Abbott said on Wednesday the spinoff -- meant to increase
Wall Street's focus on the remaining company's medical devices,
diagnostics, nutritionals and drugs that have lost patent
protection -- remains on track to take place by late in the
year. The new company's pipeline would include potentially
lucrative treatments for hepatitis C, Parkinson's disease and
The big question for investors is whether those drugs
succeed in trials and whether the new branded pharmaceuticals
business, to be named AbbVie, can successfully acquire enough
promising new medicines to lessen its reliance on Humira.
"That's one of the key risks for owning the pharmaceuticals
business after the separation: it will be very leveraged to the
long-term future of Humira," Purkiss said.
GAUGING THE THREAT FROM PFIZER
Humira is deemed somewhat protected from generic rivals
because it is grown in living cells and therefore difficult to
But it could face a significant threat from Pfizer's
experimental drug tofacitinib, which blocks a protein called JAK
and could be approved in the United States as soon as August. In
clinical trials, the Pfizer drug has proven as effective as
As a pill, the Pfizer drug would likely be far cheaper than
Humira and appeal to governments outside the United States
intent on controlling medical costs, Purkiss said.
"A cheaper oral alternative, that more than anything is the
risk" to Humira, the analyst said.
Abbott shares have risen 15 percent in the past two years,
versus a 12 percent gain for the drug sector. But company Chief
Executive Miles White has long complained that Abbott shares
deserve a higher premium given the company's superior earnings
growth in recent years.
White will run the diversified products company, while his
longtime lieutenant Richard Gonzalez becomes CEO of the branded
pharmaceuticals unit. White in December said each company would
likely be valued in the $40 billion to $45 billion range and
that neither would be put up for sale.
For future growth, Abbott is counting heavily on sales in
emerging markets, such as India and China, with products like
infant formula having especially bright prospects among their
growing numbers of middle class families
Abbott earned $1.24 billion, or 78 cents per share, in the
first quarter, up from $864 million, or 55 cents per share, in
the year-earlier period.
Excluding special items, it earned $1.03 per share.
Analysts, on average, had forecast $1.00.
Revenue rose 4.6 percent to $9.46 billion, topping Wall
Street expectations of $9.36 billion.
Nutritional product sales, which include the company's
Similac baby formula, rose 10 percent to $1.6 billion, helped by
new product launches and growing demand in emerging markets. The
company's diagnostics products also reported solid growth.
Sales of vascular products, comprised largely of heart
stents, fell 5 percent to $803 million on declining revenue from
Boston Scientific Corp's Promus stent. Promus is a
private-label version of Abbott's widely used Xience stent;
Abbott has shared in profits from Promus under a longstanding
agreement to manufacture the product for Boston Scientific.
Abbott on Wednesday raised its full-year profit forecast to
between $5.00 and $5.10 per share, from its earlier view of
$4.95 to $5.05. The new forecast would mean growth of up to 9.4
percent from 2011.
Abbott shares were down 1 cent to $60.42 in afternoon
trading on the New York Stock Exchange, amid slight declines for
the drug sector and broad stock market.