Abbott Reports Strong Sales and Earnings Growth in Third Quarter; Again Raises Full-Year Earnings Outlook
- Worldwide Sales Increased 17.6 Percent -
ABBOTT PARK, Ill., Oct. 15 /PRNewswire-FirstCall/ -- Abbott today announced financial results for the third quarter ended Sept. 30, 2008.
* Diluted earnings per share, excluding specified items, were $0.79,
above Abbott's previously announced guidance range of $0.76 - $0.78,
reflecting 17.9 percent growth. Diluted earnings per share under
Generally Accepted Accounting Principles (GAAP) were $0.69, up 50.0
percent.
* Today, Abbott is raising its guidance for full-year 2008 adjusted
earnings per share to $3.31 - $3.33 from $3.24 - $3.28, excluding
specified items. Projected earnings per share under GAAP is
$3.23 - $3.25.
* Worldwide sales increased 17.6 percent to $7.5 billion, including a
favorable 4.7 percent effect of exchange rates.
* Worldwide pharmaceutical sales increased 16.7 percent driven by
double-digit growth in HUMIRA(R), TriCor(R), Niaspan(R) and
Kaletra(R). Global HUMIRA sales exceeded $1.2 billion; Abbott now
expects full-year 2008 global HUMIRA sales of more than
$4.4 billion.
* Worldwide medical products sales increased 25.2 percent, driven by
15.3 percent growth in global diagnostics sales, and 57.9 percent
growth in global vascular sales following the U.S. approval and
successful launch of XIENCE V during the quarter. Drug-eluting stent
(DES) franchise sales were $305 million.
* Worldwide nutritional products sales increased 14.5 percent led by
22.2 percent growth in international nutritionals, with continued
strength in emerging markets.
* The Abbott board of directors has recently approved a new $5 billion
share repurchase program. Last year, Abbott returned more than $3
billion to shareholders through dividends and share repurchase, and
is on track to exceed this level in 2008.
"All of Abbott's businesses are performing exceptionally well, ahead of expectations," said Miles D. White, chairman and chief executive officer, Abbott. "Abbott remains well-positioned, with strong core growth franchises, including our emerging vascular business, which is rapidly becoming a significant contributor to Abbott's growth."
The following is a summary of third-quarter 2008 sales.
Impact of
Sales Summary - 3Q08 % Change Exchange
Quarter Ended 9/30/08 ($millions) vs. 3Q07 on % Change
Total Sales $7,498 17.6 4.7
Total U.S. Sales $3,683 17.9 ---
Total International Sales $3,815 17.3 9.2
Worldwide Pharmaceutical Sales $4,121 16.7 4.8
U.S. Pharmaceuticals $2,135 12.6 ---
International Pharmaceuticals $1,986 21.5 10.3
Worldwide Nutritional Sales $1,262 14.5 2.6
U.S. Nutritionals $633 7.8 ---
International Nutritionals $629 22.2 5.5
Worldwide Diagnostics Sales $911 15.3 7.5
U.S. Diagnostics $231 14.7 ---
International Diagnostics $680 15.5 10.0
Worldwide Vascular Sales $636 57.9 5.4
U.S. Vascular $376 87.2 ---
International Vascular $260 28.8 10.7
Other Sales $568 2.9 4.1
Note: See "Consolidated Statement of Earnings" for more information.
The following is a summary of sales for the first nine months of 2008.
Impact of
Sales Summary - 9M08 % Change Exchange
Nine Months Ended 9/30/08 ($millions) vs. 9M07 on % Change
Total Sales $21,577 15.4 5.4
Total U.S. Sales $10,135 9.2 ---
Total International Sales $11,442 21.6 10.7
Worldwide Pharmaceutical Sales $12,098 15.9 5.6
U.S. Pharmaceuticals $5,957 8.3 ---
International Pharmaceuticals $6,141 24.4 11.8
Worldwide Nutritional Sales $3,606 12.7 3.1
U.S. Nutritionals $1,823 5.2 ---
International Nutritionals $1,783 21.5 6.7
Worldwide Diagnostics Sales $2,679 16.5 8.2
U.S. Diagnostics $668 10.0 ---
International Diagnostics $2,011 18.9 11.2
Worldwide Vascular Sales $1,578 26.6 5.6
U.S. Vascular $809 21.2 ---
International Vascular $769 32.9 12.0
Other Sales $1,616 6.9 4.5
Note: See "Consolidated Statement of Earnings" for more information.
The following is a summary of Abbott's third-quarter 2008 sales for
selected products.
Quarter Ended 9/30/08 Percent Percent Percent
(dollars in millions) Change Rest Change Change
U.S. vs. of vs. Global vs.
Sales 3Q07 World 3Q07 Sales 3Q07
Pharmaceutical Products
HUMIRA $577 35.1 $627 67.0a $1,204 50.0
Kaletra $128 (6.4) $259 28.4b $387 14.4
TriCor $334 11.1 --- --- $334 11.1
Depakote $290 (19.1) $27 7.1 $317 (17.4)
Lupron $149 n/m $72 11.8c $221 n/m
Ultane/Sevorane $47 (3.0) $153 10.0d $200 6.6
Niaspan $194 16.2 --- --- $194 16.2
Synthroid $106 (3.5) $23 14.6 $129 (0.7)
Biaxin (clarithromycin) $3 n/m $112 (8.3)e $115 (11.9)
Nutritional Products
Pediatric Nutritionals $319 (2.0) $349 25.9f $668 10.8
Adult Nutritionals $304 20.4 $280 17.8g $584 19.1
Medical Products
Coronary Stents $248 262.3 $135 42.8h $383 135.0
Abbott Diabetes Care $145 (0.7) $210 19.3i $355 10.2
Other Coronary $70 1.7 $84 13.2j $154 7.7
Endovascular $58 (7.8) $41 24.4k $99 3.1
a Without the positive impact of exchange of 16.8 percent, HUMIRA
sales increased 50.2 percent internationally.
b Without the positive impact of exchange of 10.4 percent, Kaletra
sales increased 18.0 percent internationally.
c Without the positive impact of exchange of 10.7 percent, Lupron
sales increased 1.1 percent internationally.
d Without the positive impact of exchange of 8.0 percent, Sevorane
sales increased 2.0 percent internationally.
e Without the positive impact of exchange of 7.9 percent,
clarithromycin sales decreased 16.2 percent internationally.
f Without the positive impact of exchange of 4.6 percent, Pediatric
Nutritionals sales increased 21.3 percent internationally.
g Without the positive impact of exchange of 6.6 percent, Adult
Nutritionals sales increased 11.2 percent internationally.
h Without the positive impact of exchange of 11.9 percent, Coronary
Stent sales increased 30.9 percent internationally.
i Without the positive impact of exchange of 11.2 percent, Abbott
Diabetes Care sales increased 8.1 percent internationally.
j Without the positive impact of exchange of 9.4 percent, Other
Coronary sales increased 3.8 percent internationally.
k Without the positive impact of exchange of 10.3 percent,
Endovascular sales increased 14.1 percent internationally.
n/m = Not meaningful
The following is a summary of Abbott's first nine months of 2008 sales for selected products.
Nine Months Ended 9/30/08 Percent Percent Percent
(dollars in millions) Change Rest Change Change
U.S. vs. of vs. Global vs.
Sales 9M07 World 9M07 Sales 9M07
Pharmaceutical Products
HUMIRA $1,504 33.9 $1,666 69.0a $3,170 50.3
Kaletra $361 (6.2) $734 29.2b $1,095 14.9
Depakote $1,017 (2.7) $78 13.8 $1,095 (1.7)
TriCor $886 7.3 --- --- $886 7.3
Ultane/Sevorane $135 (9.7) $454 11.0c $589 5.5
Niaspan $565 17.7 --- --- $565 17.7
Biaxin (clarithromycin) $11 n/m $485 (3.7)d $496 (5.4)
Lupron $231 n/m $208 12.9e $439 n/m
Synthroid $315 (3.2) $67 23.7 $382 0.7
Nutritional Products
Pediatric Nutritionals $935 2.9 $984 24.3f $1,919 12.9
Adult Nutritionals $866 8.7 $800 18.1g $1,666 13.0
Medical Products
Abbott Diabetes Care $415 (0.9) $601 21.4h $1,016 11.2
Coronary Stents $402 75.4 $386 48.5i $788 61.1
Other Coronary $226 (4.6) $262 17.1j $488 5.9
Endovascular $181 (10.1) $121 27.4k $302 2.0
a Without the positive impact of exchange of 17.9 percent, HUMIRA
sales increased 51.1 percent internationally.
b Without the positive impact of exchange of 11.1 percent, Kaletra
sales increased 18.1 percent internationally.
c Without the positive impact of exchange of 9.1 percent, Sevorane
sales increased 1.9 percent internationally.
d Without the positive impact of exchange of 9.3 percent,
clarithromycin sales decreased 13.0 percent internationally.
e Without the positive impact of exchange of 11.5 percent, Lupron
sales increased 1.4 percent internationally.
f Without the positive impact of exchange of 5.5 percent, Pediatric
Nutritionals sales increased 18.8 percent internationally.
g Without the positive impact of exchange of 8.1 percent, Adult
Nutritionals sales increased 10.0 percent internationally.
h Without the positive impact of exchange of 12.3 percent, Abbott
Diabetes Care sales increased 9.1 percent internationally.
i Without the positive impact of exchange of 13.3 percent, Coronary
Stents sales increased 35.2 percent internationally.
j Without the positive impact of exchange of 10.3 percent, Other
Coronary sales increased 6.8 percent internationally.
k Without the positive impact of exchange of 12.2 percent,
Endovascular sales increased 15.2 percent internationally.
n/m = Not meaningful
Business Highlights
* TCT Data Presentations -- At this week's Transcatheter
Cardiovascular Therapeutics (TCT) meeting, presented results from a
new meta-analysis of its XIENCE V(TM) drug-eluting stent clinical
trials, SPIRIT II and SPIRIT III, which showed XIENCE V outperformed
TAXUS(R) in key efficacy and safety endpoints out to two years. We
also presented new two-year data from our ABSORB trial, which
demonstrated that our bioabsorbable drug-eluting stent successfully
treated coronary artery disease and absorbed within two years.
* Similac(R) Enhancements -- In September, announced the launch of an
innovative infant nutrition product and new consumer packaging.
Similac Advance EarlyShield(TM) is the only infant formula that has
a unique blend of prebiotics, nucleotides and antioxidants --
nutrients found in breast milk. Similac(R) SimplePac(TM) is Abbott's
most significant packaging redesign of baby formula powder
containers.
* HUMIRA(R) Psoriasis Data -- In September, presented data at the
European Academy of Dermatology and Venereology (EADV) Congress
demonstrating more psoriasis patients achieved efficacy when they
received continuous treatment with HUMIRA (adalimumab) vs.
interrupted treatment. Additional analysis showed HUMIRA effectively
treats adult patients with psoriasis regardless of age, duration of
disease, diagnosis of psoriatic arthritis or recent systemic
therapy.
* Patient Side Point-of-Care Testing -- In August, announced patient
side, point-of-care testing -- where diagnostic testing is conducted
at or near the site of the patient -- enabling doctors to make
decisions on patients presenting with chest pain up to 20 minutes
faster than those whose lab tests are evaluated by a standard lab,
according to a study that appeared in the peer-reviewed journal
Annals of Emergency Medicine.
* AstraZeneca Relationship Expanded -- In August, announced an
agreement with AstraZeneca to promote AstraZeneca's CRESTOR(R)
(rosuvastatin calcium), a medication used along with diet to reduce
high cholesterol. Abbott will obtain the non-exclusive right to
promote CRESTOR alongside AstraZeneca in the United States,
excluding Puerto Rico.
* Post-Approval Study of XIENCE V -- In July, announced the start of
the XIENCE V USA post-approval study. The XIENCE V USA study will
evaluate the safety and effectiveness of the XIENCE V drug-eluting
stent in 5,000 patients in a real-world clinical setting out to five
years.
* XIENCE V Approved in United States -- On July 2, received FDA
approval and launched XIENCE V, which demonstrated superiority to
TAXUS in two randomized, controlled clinical trials. Abbott's
application included safety and efficacy data from the SPIRIT
clinical trials, which met its primary endpoint and demonstrated
the superiority of XIENCE V over the previous market leader,
TAXUS.
Abbott raises guidance for full-year earnings per share
Based on the company's continued strong results year-to-date, and the outlook for the remainder of the year, Abbott is raising its earnings-per- share forecast for the full-year 2008 to $3.31 - $3.33 from $3.24 - $3.28, excluding specified items. Abbott's original guidance range for 2008, provided in January, was $3.20 - $3.25.
Abbott continues to forecast net specified items for the full-year 2008 of $0.08 per share, primarily associated with cost reduction initiatives and acquired in-process R&D, offset by favorable items including the gain related to the conclusion of the TAP joint venture, a favorable settlement of a prior year's tax audit, the gain on the sales of equity investments, and the gain on sale of Abbott's spine business, which is forecast to occur in the fourth quarter. Including these specified items, projected earnings per share under GAAP would be $3.23 - $3.25 for the full-year 2008.
Abbott declares quarterly dividend; double-digit increase over prior year
On September 12, 2008, the board of directors of Abbott declared the company's quarterly common dividend of 36 cents per share, a 10.8 percent increase over the prior year. The cash dividend is payable Nov. 15, 2008, to shareholders of record at the close of business on October 15, 2008, 2008. This marks the 339th 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 68,000 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 http://www.abbott.com. Abbott will webcast its live third-quarter earnings conference call through its Investor Relations Web site at http://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 the purposes of the Private Securities Litigation Reform Act of 1995. We caution that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated. 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, 2007, and in Item 1A, "Risk Factors," to Abbott's Quarterly Report on Securities and Exchange Commission Form 10-Q for the quarter ended June 30, 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, 2008 and 2007
(unaudited)
Percent
2008 2007 Change
Net Sales $7,497,660,000 $6,376,706,000 17.6
Cost of products sold 3,352,869,000 2,864,030,000 17.1
Research and
development 680,360,000 640,718,000 6.2
Selling, general and
administrative 2,067,914,000 1,945,404,000 6.3
Total Operating Cost
and Expenses 6,101,143,000 5,450,152,000 11.9
Operating earnings 1,396,517,000 926,554,000 50.7
Net interest expense 69,701,000 106,224,000 (34.4)
Net foreign exchange
(gain) loss 17,156,000 4,959,000 n/m
(Income) from TAP
Pharmaceutical
Products Inc. joint
venture --- (114,084,000) (100.0)
Other (income)
expense, net (63,376,000) 36,036,000 n/m 1)
Earnings before taxes 1,373,036,000 893,419,000 53.7
Taxes on earnings 288,424,000 176,414,000 63.5
Net Earnings $1,084,612,000 $717,005,000 51.3
Net Earnings Excluding
Specified Items, as
described below $1,235,553,000 $1,046,437,000 18.1 2)
Diluted Earnings Per
Common Share $0.69 $0.46 50.0
Diluted Earnings Per
Common Share,
Excluding Specified
Items, as described
below $0.79 $0.67 17.9 2)
Average Number of
Common Shares
Outstanding Plus
Dilutive
Common Stock
Options and
Awards 1,563,730,000 1,557,758,000
1) Other (income) expense, net in 2008 includes primarily ongoing
contractual payments from Takeda associated with the conclusion of the
TAP joint venture. Other (income) expense, net, in 2007 is primarily
associated with Abbott's ownership of Boston Scientific stock.
2) 2008 Net Earnings Excluding Specified Items excludes after-tax charges
of $151 million, or $0.10 per share, for cost reduction initiatives,
related primarily to actions announced in August 2008 to streamline
global manufacturing operations, reduce overall costs, and improve
efficiencies in Abbott's core diagnostic business.
2007 Net Earnings Excluding Specified Items excludes after-tax charges
of $111 million, or $0.07 per share, for a contract termination and
other litigation, $79 million, or $0.05 per share, for reestablishment
of suspended depreciation and amortization expense on the long-term
assets of the core laboratory diagnostics business, $56 million, or
$0.04 per share, for acquisition integration, and other, $21 million,
or $0.01 per share, for fair value loss adjustments related to Boston
Scientific stock, and $62 million, or $0.04 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, 2008 and 2007
(unaudited)
Percent
2008 2007 Change
Net Sales $21,577,284,000 $18,692,887,000 15.4
Cost of products sold 9,433,641,000 8,260,366,000 14.2
Research and
development 1,957,180,000 1,843,248,000 6.2
Acquired in-process
research and
development 97,256,000 --- n/m
Selling, general and
administrative 6,138,264,000 5,528,729,000 11.0
Total Operating Cost
and Expenses 17,626,341,000 15,632,343,000 12.8
Operating earnings 3,950,943,000 3,060,544,000 29.1
Net interest expense 246,200,000 355,245,000 (30.7)
Net foreign exchange
(gain) loss 37,849,000 16,058,000 135.7
(Income) from TAP
Pharmaceutical
Products Inc. joint
venture (118,997,000) (376,442,000) (68.4)
Other (income)
expense, net (384,189,000) 78,960,000 n/m 1)
Earnings before taxes 4,170,080,000 2,986,723,000 39.6
Taxes on earnings 825,587,000 583,436,000 41.5
Net Earnings $3,344,493,000 $2,403,287,000 39.2
Net Earnings
Excluding Specified
Items, as described
below $3,531,274,000 $2,976,580,000 18.6 2)
Diluted Earnings Per
Common Share $2.14 $1.54 39.0 2)
Diluted Earnings Per
Common Share, Excluding
Specified Items, as
described below $2.26 $1.91 18.3
Average Number of
Common Shares
Outstanding Plus
Dilutive Common
Stock Options
and Awards 1,559,686,000 1,559,074,000
1) Other (income) expense, net, in 2008 includes a gain of $94 million in
connection with the closing of the TAP Pharmaceutical Products Inc.
joint venture transaction and gains of $63 million from the sale of
equity investments in Millennium Pharmaceuticals and Boston Scientific.
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. Other (income) expense, net, in 2007 is primarily
associated with Abbott's ownership of Boston Scientific stock.
2) 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, $225 million, or $0.14 per share, for cost
reduction initiatives, and $59 million, or $0.04 per share for
acquisition integration, TAP separation and other.
2007 Net Earnings Excluding Specified Items excludes after-tax charges
of $164 million, or $0.11 per share, for acquisition integration,
$111 million, or $0.07 per share, for a contract termination and other
litigation, $41 million, or $0.03 per share, for fair value loss
adjustments, net of realized gains, related to Boston Scientific stock,
$34 million, or $0.02 per share, for write-down of Omnicef inventory,
$19 million, or $0.01 per share, for transaction and separation costs
relating to the terminated sale of the core laboratory diagnostics
business, and $204 million, or $0.13 per share, for cost reduction
initiatives and other.
NOTE: See attached questions and answers section for further explanation
of Consolidated Statement of Earnings line items.
n/m = Percent change is not meaningful.
Questions & Answers
Q1) What drove the 16.7 percent increase in global pharmaceutical sales
in the quarter?
A1) U.S. pharmaceutical sales increased 12.6 percent, reflecting
double-digit growth for HUMIRA, TriCor and Niaspan. U.S. HUMIRA
sales increased more than 35 percent, as strong market demand
continued across the three major market segments of rheumatology,
gastroenterology and dermatology. Based on the strength of HUMIRA
and the outlook for global growth, Abbott now expects HUMIRA sales
of more than $4.4 billion in 2008.
Also in the quarter, Abbott's lipid franchise performed well, with
growth outpacing the overall cholesterol market and both Niaspan and
TriCor achieving double-digit growth. Niaspan increased 16.2 percent
with sales of $194 million. TriCor sales increased more than 11
percent with sales of $334 million.
International pharmaceutical sales increased 21.5 percent, including
a 10.3 percent favorable impact from exchange. Better-than-expected
international growth was driven by HUMIRA, which increased 67.0
percent, and Kaletra, which grew 28.4 percent, driven by continued
success of the tablet launch in international markets. Synthroid,
Lupron and Sevorane also contributed to reported international
growth, as well as a number of other established products.
Q2) What drove the 25.2 percent increase in global medical products
sales and strong international nutritional products sales?
A2) Medical products sales increased 25.2 percent, reflecting 15.3
percent growth in global diagnostics sales and 57.9 percent growth
in worldwide vascular. Each of Abbott's major diagnostic
segments -- molecular, point of care, and the core immunochemistry
business -- delivered double-digit growth.
Abbott Vascular achieved record sales of $636 million, driven by
drug-eluting stent (DES) franchise sales of $305 million, which more
than doubled sequentially from the second quarter, exceeding the
company's previous guidance. The substantial increase in vascular
sales this quarter was due to the U.S. approval and successful
launch of XIENCE V beginning July 2. XIENCE V is now the
market-leading DES in the U.S. The XIENCE platform, which includes a
private-label version of XIENCE V called Promus, has captured more
than 50 percent of the U.S. market. Market conditions for coronary
stents continue to improve in the U.S., with U.S. percutaneous
coronary intervention (PCI) volumes up versus the third quarter 2007
and DES penetration rates steadily increasing to more than 70
percent.
Worldwide nutritional products sales were led by 22.2 percent growth
in international nutritionals, including a 5.5 percent favorable
impact from exchange, with continued strong growth in key emerging
markets, including Latin America and Asia, where Abbott is opening a
new state-of-the art nutritionals manufacturing facility in
Singapore beginning in early 2009.
Q3) How did specified items affect reported results?
A3) Specified items impacted third-quarter results as follows:
3Q08
(dollars in millions, except
earnings-per-share) Earnings
Pre-tax After-tax EPS
As reported $1,373 $1,085 $0.69
Adjusted for specified items:
Cost reduction initiatives $191 $151 $0.10
As adjusted $1,564 $1,236 $0.79
Cost reduction initiatives are related primarily to actions
announced in August 2008 to streamline global manufacturing
operations, reduce overall costs, and improve efficiencies in
Abbott's core diagnostic business. Charges related to this action
were in line with the previous forecast.
The pre-tax impact of specified items by Consolidated Statement of
Earnings line item is as follows (dollars in millions):
3Q08
Cost of
Products Sold R&D SG&A
As reported $3,353 $680 $2,068
Adjusted for specified items:
Cost reduction initiatives $165 $6 $20
As adjusted $3,188 $674 $2,048
Q4) What drove the strong investment spending in the quarter?
A4) Combined investment in R&D and SG&A was up 13.6 percent, excluding
specified items. The strong growth in SG&A included new and ongoing
promotional initiatives across multiple businesses, including
spending to support the numerous new product approvals this year.
Growth in R&D expense reflected continued investment in our
broad-based pipeline, including early-to-mid-stage opportunities
across a number of therapeutic areas, such as oncology, immunology,
hepatitis C, neuroscience and our bioabsorbable stent program.
Q5) How does the third-quarter gross margin ratio compare to the
company's guidance?
A5) The gross margin ratio before and after specified items is shown
below (dollars in millions):
3Q08
Cost of
Products Gross
Sold Gross Margin Margin %
As reported $3,353 $4,145 55.3%
Adjusted for specified items:
Cost reduction initiatives ($165) $165 2.2%
As adjusted $3,188 $4,310 57.5%
The adjusted gross margin ratio was 57.5 percent, at the high-end of
our previous forecast range of 57.0 to 57.5 percent for the quarter.
The gross margin ratio for the fourth quarter is forecasted to be
approximately 59.0 percent.
Q6) What was the tax rate in the quarter?
A6) The tax rate this quarter, excluding specified items, was 21.0
percent, in line with our forecasted rate. The year-to-date tax rate
for 2008, excluding specified items, was 21.0 percent, also in line
with our previous forecast. As a reminder, the third quarter and
year-to-date tax rates do not include the benefit of the U.S. R&D
tax credit since it was enacted in the fourth quarter.
Q7) What are some near-term opportunities in Abbott's broad-based
pipeline?
A7) Abbott's late-stage pipeline has been very productive this year,
generating eight new regulatory approvals to date in 2008, with two
additional approvals expected in the fourth quarter. Highlights of
the near-term opportunities include:
* HUMIRA
o Psoriasis -- Launched in Europe and the U.S. in the
first-quarter 2008.
o RA Japan -- Launched in June 2008.
o Psoriasis Japan -- Indication filed, under regulatory
review.
o Ulcerative colitis -- Currently in Phase III development.
* TRILIPIX(TM) -- We expect a fourth-quarter approval of
TRILIPIX, Abbott's next-generation fenofibrate. To support
TRILIPIX, Abbott has executed the largest clinical program to
date to evaluate the efficacy and safety of a fibrate in
combination with statins. Development also continues on a
fixed-dose combination of TRILIPIX and CRESTOR to address all
three lipid parameters in a single pill. We plan to submit a
New Drug Application for this fixed-dose combination in the
second half of 2009.
* Controlled-Release Vicodin -- We expect a fourth-quarter
approval of this new branded pain medication. When approved,
this product will be the first extended release formulation of
hydrocodone with acetaminophen.
* Flutiform -- Flutiform, a combination asthma treatment in Phase
III development, is targeted for a first-quarter 2009 NDA
filing.
* ABT-874 -- In Immunology, Abbott's anti-IL-12/23 biologic,
ABT-874, has demonstrated promising results in early studies
for Crohn's disease and psoriasis. Abbott moved ABT-874 into
Phase III development for psoriasis in December 2007.
* Diabetes Care Pipeline -- The FreeStyle Freedom Lite no-
calibration meter was launched internationally last year and
was launched in the United States in the first quarter of 2008.
Abbott's FreeStyle Navigator Continuous Glucose Monitoring
System was launched in Europe last year and was approved and
launched in the United States in the first quarter of 2008.
Also in development is a fully-integrated blood glucose
monitoring system combining a meter, test strips and lancing
capabilities in one device.
* XIENCE V in Japan -- Recently submitted a marketing
authorization license application in Japan to gain approval for
XIENCE V to treat coronary artery disease. The application for
XIENCE V consisted of safety and efficacy data from the SPIRIT
III clinical trial, including data from a Japanese patient
population.
* Core Laboratory Diagnostics -- In April, Abbott introduced the
ARCHITECT i1000SR immunochemistry analyzer in the United
States, expanding its ARCHITECT family of diagnostic instrument
systems for clinical laboratories. In 2009, we plan to
introduce the ARCHITECT c4000(TM), a clinical chemistry
analyzer designed for small-to-medium-sized labs. The c4000 is
compatible with the i1000, which will allow seamless
integration of clinical chemistry and immunoassay testing on
one platform.
Q8) What are some early and mid-stage opportunities in Abbott's
broad-based pipeline?
A8) With the recent productivity of the late-stage pipeline, Abbott is
now focused on advancing leading-edge scientific discoveries from
its early-to-mid-stage development pipeline across the company,
where we continue to advance a number of compounds that have
breakthrough potential.
Our pharmaceutical pipeline has increased in size, novelty and
number of phase transitions. This year, Phase I or Phase II trial
initiations are nearly double 2007 levels. We continue to focus our
investment to discover new treatments across a spectrum of
therapeutic areas. Select highlights include:
* Oncology
o Abbott's Oncology pipeline includes targeted therapies
that represent promising, unique scientific approaches to
treating cancer. Our collaboration with Genentech to
develop two Abbott-discovered compounds including a
multi-targeted kinase inhibitor and Bcl-2 family protein
antagonist, continues to progress.
o Oncology compounds in Abbott's pipeline that are not part
of the collaboration include: a PARP-inhibitor, which
prevents DNA repair in cancer cells, enhancing the
effectiveness of current cancer therapies; an oral
anti-mitotic in Phase II for non-small cell lung cancer
and neuroblastoma; and a biologic anti-tumor agent with a
novel mechanism of action.
* Neuroscience
o Abbott is conducting innovative research in neuroscience,
where we've developed compounds that target receptors in
the brain that help regulate pain, mood, memory and other
neurological functions to address conditions, such as
attention deficit hyperactivity disorder, Alzheimer's
disease and schizophrenia. Our work in neuroscience is
focused on several promising investigational platforms
including NNRs, H3, Calpain and TRPV1, among others.
o Abbott is also working to advance compounds that have the
potential to meet the market need for a non-opioid pain
therapy.
* Immunology
o Abbott's scientific experience with the anti-TNF biologic
HUMIRA serves as a strong foundation for our continuing
research in immunology. Products in development for the
treatment of immune-mediated diseases are designed to
selectively inhibit proteins that are responsible for
inflammation. In addition to our work with IL-12/23, we
are working to advance development of our early discovery
programs, including oral therapies for rheumatoid
arthritis, JAK kinase and P38, as well as other potential
biologic targets.
o Additionally, our proprietary DVD-ig technology represents
a promising approach that could lead to combination
biologic therapies.
* Hepatitis C
o Abbott's antiviral program is focused on the treatment of
hepatitis C, a disease that affects more than 170 million
people worldwide. Abbott has two active hepatitis C
programs including our partnership with Enanta
Pharmaceuticals to develop protease inhibitors as well as
an internal polymerase program.
* Bioabsorbable Drug-Eluting Stent
o At the TCT meeting this week, Abbott presented encouraging
two-year data from the world's first clinical trial for a
fully-bioabsorbable DES to treat coronary artery disease.
The bioabsorbable DES is designed to be slowly metabolized
by the body and completely absorbed over time.
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/
Ticker Symbol: (NYSE:ABT)
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