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 -

ABBOTT PARK, Ill., Oct. 14 /PRNewswire-FirstCall/ -- Abbott (NYSE:ABT) 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.



  Quarter Ended 9/30/09
  (dollars in millions)                          % Change vs. 3Q08
                                                         Foreign
                                   Sales    Operational  Exchange Reported

  Total Sales                      $7,761       8.4        (4.9)   3.5

      Total International Sales    $4,140      18.1        (9.6)   8.5

      Total U.S. Sales             $3,621      (1.7)(a)      --   (1.7)

  Worldwide Pharmaceutical
   Sales                           $4,055       3.9 (a)    (5.5)  (1.6)

      International
       Pharmaceuticals             $2,061      15.1       (11.3)   3.8

      U.S. Pharmaceuticals         $1,994      (6.6)(a)      --   (6.6)

  Worldwide Nutritional Sales      $1,386      13.1        (3.3)   9.8

      International Nutritionals     $725      21.8        (6.5)  15.3

      U.S. Nutritionals              $661       4.4          --    4.4

  Worldwide Diagnostics Sales        $909       5.8        (6.1)  (0.3)

      International Diagnostics      $676       7.5        (8.2)  (0.7)

      U.S. Diagnostics               $233       0.8          --    0.8

  Worldwide Vascular Sales           $666       8.0        (3.3)   4.7

       International Vascular        $271      12.4        (8.1)   4.3

       U.S. Vascular                 $395       4.9          --    4.9

  Other Sales                        $745 (b)  35.5        (4.1)  31.4

  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.


  Nine Months Ended 9/30/09
  (dollars in millions)                          % Change vs. 9M08
                                                          Foreign
                                    Sales   Operational   Exchange Reported

  Total Sales                      $21,975       8.1        (6.3)   1.8

      Total International Sales    $11,789      14.9       (11.9)   3.0

      Total U.S. Sales             $10,186       0.5 (a)      --    0.5

  Worldwide Pharmaceutical
   Sales                           $11,637       3.0 (a)    (6.8)  (3.8)

      International
       Pharmaceuticals              $6,164      13.8       (13.4)   0.4

      U.S. Pharmaceuticals          $5,473      (8.1)(a)      --   (8.1)

  Worldwide Nutritional Sales       $3,851      11.0        (4.2)   6.8

      International Nutritionals    $1,915      15.9        (8.5)   7.4

      U.S. Nutritionals             $1,936       6.2          --    6.2

  Worldwide Diagnostics Sales       $2,603       5.2        (8.0)  (2.8)

      International Diagnostics     $1,912       5.8       (10.7)  (4.9)

      U.S. Diagnostics                $691       3.4          --    3.4

  Worldwide Vascular Sales          $1,968      30.1        (5.3)  24.8

       International Vascular         $784      12.8       (10.9)   1.9

       U.S. Vascular                $1,184      46.4          --   46.4

  Other Sales                       $1,916 (b)  24.1        (5.5)  18.6

  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 third-quarter 2009 sales for
  selected products.


  Quarter Ended 9/30/09
  (dollars in millions)                           International
                          U.S.                    % Change vs. 3Q08
                             % Change                      Foreign
                    Sales    vs. 3Q08    Sales Operational Exchange Reported
  Pharmaceutical
   Products

    HUMIRA           $700      21.3      $791      41.5     (15.3)   26.2

    Kaletra          $114     (10.3)     $239       2.6     (10.5)   (7.9)

    TriCor/TRILIPIX  $330      (1.0)       --        --        --      --

    Niaspan          $215      10.6        --        --        --      --

    Lupron           $129     (13.4)      $66       4.8     (12.3)   (7.5)

    Synthroid        $111       3.8       $23      17.1     (14.0)    3.1

    Depakote(a)       $66     (77.2)(a)   $26      13.8     (17.2)   (3.4)

  Nutritional Products

    Pediatric
     Nutritionals    $323       1.1      $426      27.1      (5.2)   21.9

    Adult
     Nutritionals    $331       9.0      $300      15.2      (8.2)    7.0

  Medical Products

    Core Laboratory
     Diagnostics     $147      (5.9)     $618       5.9      (8.1)   (2.2)

    Coronary Stents  $244      (1.3)     $145      15.3      (8.0)    7.3

    Diabetes Care    $124     (14.1)     $193       2.4     (10.6)   (8.2)

    Medical Optics    $96       n/m      $167       n/m       n/m     n/m

    Molecular
     Diagnostics      $38      11.3       $44      30.0     (10.7)   19.3

  (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 9/30/09
  (dollars in millions)                        Global Sales
                                             % Change vs. 3Q08
                           Global                    Foreign
                            Sales    Operational     Exchange    Reported
  Pharmaceutical Products

    HUMIRA                 $1,491       31.8           (8.0)       23.8

    Kaletra                  $353       (1.7)          (7.0)       (8.7)

    TriCor/TRILIPIX          $330       (1.0)            --        (1.0)

    Niaspan                  $215       10.6             --        10.6

    Lupron                   $195       (7.5)          (4.0)      (11.5)

    Synthroid                $134        6.1           (2.4)        3.7

    Depakote(a)               $92      (69.4)(a)       (1.5)      (70.9)

  Nutritional Products

    Pediatric Nutritionals   $749       14.7           (2.7)       12.0

    Adult Nutritionals       $631       12.0           (3.9)        8.1

  Medical Products

    Core Laboratory
     Diagnostics             $765        3.6           (6.5)       (2.9)

    Coronary Stents          $389        4.5           (2.8)        1.7

    Diabetes Care            $317       (4.3)          (6.3)      (10.6)

    Medical Optics           $263        n/m            n/m         n/m

    Molecular Diagnostics     $82       20.9           (5.5)       15.4

  (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.


  Nine Months Ended 9/30/09
  (dollars in millions)                        International
                        U.S.                         % Change vs. 9M08
                            % Change                       Foreign
                  Sales     vs. 9M08    Sales  Operational Exchange Reported
  Pharmaceutical
   Products

    HUMIRA        $1,745      16.0      $2,081     44.6     (19.7)    24.9

    Kaletra         $310     (14.2)       $678      4.8     (12.5)    (7.7)

    TriCor/TRILIPIX $919       3.6          --       --        --       --

    Lupron          $399      73.0        $186      5.3     (16.1)   (10.8)

    Niaspan         $601       6.4          --       --        --       --

    Depakote(a)     $257     (74.8)(a)     $67      4.4     (18.4)   (14.0)

    Synthroid       $293      (7.0)        $61      9.7     (18.3)    (8.6)

  Nutritional Products

    Pediatric
     Nutritionals   $947       1.3      $1,115     20.2      (6.8)    13.4

    Adult
     Nutritionals   $946       9.2        $799     10.6     (10.6)      --

  Medical Products

    Core Laboratory
     Diagnostics    $446      (2.4)     $1,761      4.6     (10.5)    (5.9)

    Coronary Stents $768      91.3        $420     20.3     (11.6)     8.7

    Diabetes Care   $372     (10.5)       $538      3.6     (14.1)   (10.5)

    Medical Optics  $241       n/m        $332      n/m       n/m      n/m

    Molecular
     Diagnostics    $108      16.0        $114     24.7     (14.2)    10.5

  (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.


  Nine Months Ended 9/30/09
  (dollars in millions)                            Global Sales
                                                % Change vs. 9M08
                                Global                    Foreign
                                 Sales   Operational      Exchange  Reported
  Pharmaceutical Products

    HUMIRA                      $3,826       31.0           (10.3)    20.7

    Kaletra                       $988       (1.4)           (8.4)    (9.8)

    TriCor/TRILIPIX               $919        3.6              --      3.6

    Lupron                        $585       40.9            (7.7)    33.2

    Niaspan                       $601        6.4              --      6.4

    Depakote(a)                   $324      (69.1)(a)        (1.3)   (70.4)

    Synthroid                     $354       (4.1)           (3.2)    (7.3)

  Nutritional Products

    Pediatric Nutritionals      $2,062       11.0            (3.5)     7.5

    Adult Nutritionals          $1,745        9.8            (5.1)     4.7

  Medical Products

    Core Laboratory
     Diagnostics                $2,207        3.3            (8.5)    (5.2)

    Coronary Stents             $1,188       56.5            (5.7)    50.8

    Diabetes Care                 $910       (2.1)           (8.4)   (10.5)

    Medical Optics                $573        n/m             n/m      n/m

    Molecular Diagnostics         $222       20.6            (7.5)    13.1

  (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
      3,690-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 1,800-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(TM) 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 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's news releases and other information are available on the company's Web site at www.abbott.com. 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.
 

                    Abbott Laboratories and Subsidiaries
                     Consolidated Statement of Earnings
              Third Quarter Ended September 30, 2009 and 2008
                   (in millions, except per share data)
                                (unaudited)

                                               2009    2008     % Change
                                               ----    ----     --------
  Net Sales                                   $7,761  $7,498       3.5
                                              ------  ------

  Cost of products sold                        3,360   3,353       0.2
  Research and development                       676     680      (0.7)
  Selling, general and administrative          2,085   2,068       0.9
                                               -----   -----
  Total Operating Cost and Expenses            6,121   6,101       0.3
                                               -----   -----

  Operating earnings                           1,640   1,397      17.4

  Net interest expense                            97      70      38.0
  Net foreign exchange (gain) loss                --      17       n/m
  Other (income) expense, net                   (328)    (63)      n/m   1)
                                                ----     ---
  Earnings before taxes                        1,871   1,373      36.3
  Taxes on earnings                              391     288      35.6
                                                 ---     ---

  Net Earnings                                $1,480  $1,085      36.5
                                              ======  ======

  Net Earnings Excluding Specified Items, as
   described below                            $1,429  $1,236      15.7   2)
                                              ======  ======

  Diluted Earnings Per Common Share            $0.95   $0.69      37.7
                                               =====   =====

  Diluted Earnings Per Common Share,
   Excluding Specified Items,
   as described below                          $0.92   $0.79      16.5   2)
                                               =====   =====

  Average Number of Common Shares
   Outstanding Plus Dilutive
   Common Stock Options and Awards             1,552   1,564


  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.



                     Abbott Laboratories and Subsidiaries
                      Consolidated Statement of Earnings
                Nine Months Ended September 30, 2009 and 2008
                     (in millions, except per share data)
                                  (unaudited)

                                                2009     2008     % Change
                                                ----     ----     --------
  Net Sales                                   $21,975  $21,577       1.8
                                              -------  -------

  Cost of products sold                         9,425    9,434      (0.1)
  Research and development                      1,997    1,957       2.0
  Acquired in-process research and
   development                                     --       97       n/m
  Selling, general and administrative           6,181    6,138       0.7
                                                -----    -----
  Total Operating Cost and Expenses            17,603   17,626      (0.1)
                                               ------   ------

  Operating earnings                            4,372    3,951      10.7

  Net interest expense                            287      246      16.7
  Net foreign exchange (gain) loss                 29       38     (23.8)
  (Income) from TAP Pharmaceutical Products
   Inc. joint venture                              --     (119)      n/m
  Other (income) expense, net                  (1,315)    (384)      n/m  1)
                                              -------     ----
  Earnings before taxes                         5,371    4,170      28.8
  Taxes on earnings                             1,164      826      41.0
                                                -----      ---

  Net Earnings                                 $4,207   $3,344      25.8
                                               ======   ======

  Net Earnings Excluding Specified Items, as
   described below                             $3,960   $3,531      12.1  2)
                                               ======   ======

  Diluted Earnings Per Common Share             $2.70    $2.14      26.2  3)
                                                =====    =====

  Diluted Earnings Per Common Share,
   Excluding Specified Items,
   as described below                           $2.54    $2.26      12.4  2)
                                                =====    =====

  Average Number of Common Shares
   Outstanding Plus Dilutive
   Common Stock Options and Awards              1,553    1,560

  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, similar 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 and point of care diagnostics 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):
 

                                           3Q09
                              --------------------------
                              Cost of             Gross
                              Products  Gross     Margin
                                Sold    Margin       %
                              --------------------------
  As reported                  $3,360   $4,401     56.7%
  Adjusted for specified
   items:
  Acquisition related            ($13)     $13      0.2%
  Cost reduction
   initiatives and other         ($19)     $19      0.2%
                              --------------------------
  As adjusted                  $3,328   $4,433     57.1%



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):
 

                                       3Q09
                           --------------------------
                           Pre-Tax    Income    Tax
                            Income      Tax     Rate
                           --------------------------
  As reported              $1,871      $391     20.9%
  Specified items            $132       $81     61.7%
                           --------------------------
  Excluding specified
   items                   $1,739      $310     17.8%


  Q6)  How did specified items affect reported results?

  A6)  Specified items impacted third-quarter results as follows:



                                                       3Q09
                                           ---------------------------
  (dollars in millions, except                   Earnings
   earnings-per-share)                     -------------------
                                             Pre-      After-
                                             tax        tax      EPS
                                           ---------------------------
  As reported                              $1,871     $1,480    $0.95
  Adjusted for specified items:
  Patent settlement                         ($287)     ($178)  ($0.11)
  Acquisition related                         $18        $14    $0.01
  Cost reduction initiatives and other       $137       $113    $0.07
                                           ---------------------------
  As adjusted                              $1,739     $1,429    $0.92


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):
 

                                               3Q09
                               --------------------------------------
                              Cost of                       Other
                              Products                     (Income)
                                Sold     R&D   SG&A      Expense, Net
                               --------------------------------------
  As reported                  $3,360   $676  $2,085        ($328)
  Adjusted for specified
   items:
  Patent settlement                --     --      --        ($287)
  Acquisition related             $13     --      $5           --
  Cost reduction
   initiatives and other          $19     $6    $112           --
                               --------------------------------------
  As adjusted                  $3,328   $670  $1,968         ($41)



  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 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.

Source: Abbott

CONTACT: 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
 

Web Site: http://www.abbott.com/
 

Posted: October 2009


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