Abbott Reports Strong Second Quarter Results; Confirms Double-Digit Ongoing Earnings Growth Outlook for 2010

Second Quarter Ongoing EPS Growth of 13.5 Percent - - Worldwide Sales Increased 17.8 Percent - - Strong Performance Across Diverse Businesses - - Accelerated Emerging Markets Leadership - - Enhanced Broad-Based Pipeline -

ABBOTT PARK, Ill., July 21 /PRNewswire-FirstCall/ -- Abbott (NYSE:ABT) today announced financial results for the second quarter ended June 30, 2010.
 

  --  Diluted earnings per share, excluding specified items, were $1.01,
      reflecting 13.5 percent growth, exceeding Abbott's previously issued
      guidance range of $0.98 to $1.00. Diluted earnings per share under
      Generally Accepted Accounting Principles (GAAP) were $0.83.
  --  Worldwide sales increased 17.8 percent to $8.8 billion, including a
      favorable 2.7 percent effect of exchange rates.
  --  Worldwide pharmaceutical sales increased 24.5 percent, including a
      favorable 2.8 percent effect of exchange rates and a full quarter of
      sales contribution from the Solvay Pharmaceuticals acquisition.
  --  Worldwide vascular products sales increased 26.9 percent, including a
      favorable 2.3 percent effect of exchange rates, driven by strong
      international growth.
  --  Worldwide diagnostics sales increased 8.0 percent, including a
      favorable 3.5 percent effect of exchange rates.
  --  Worldwide nutritional sales increased 10.1 percent, including a
      favorable 2.8 percent effect of exchange rates, driven by strong
      double-digit growth in international nutritionals.


"Abbott's diverse sources of earnings growth led to strong financial results again this quarter, continuing Abbott's record of steady, reliable performance," said Miles D. White, chairman and chief executive officer, Abbott. "We also strengthened our emerging markets presence with the announced acquisition of Piramal Healthcare Solutions, giving Abbott the number-one position in the fast-growing Indian pharmaceutical market. This follows several other strategic actions that provide Abbott critical mass to capture the significant growth expected in emerging markets."
 

  The following is a summary of second-quarter 2010 sales.  
  Quarter Ended 6/30/10





  (dollars in
   millions)                                  % Change vs. 2Q09
                                              -----------------
                                                 Foreign
                       Sales       Reported     Exchange        Operational
                       -----       --------     --------        -----------

  Total Sales           $8,826          17.8            2.7            15.1

      Total
       International
       Sales            $5,035          28.1            5.2            22.9

      Total U.S.
       Sales            $3,791           6.4             --             6.4

  Worldwide
   Pharmaceutical
   Sales                $4,914 (a)      24.5            2.8            21.7

      International
       Pharmaceuticals  $2,798 (a)      40.4            5.5            34.9

      U.S.
       Pharmaceuticals  $2,116 (a)       8.4             --             8.4

  Worldwide
   Nutritional
   Sales                $1,414          10.1            2.8             7.3

      International
       Nutritionals       $734          19.3            5.9            13.4

      U.S.
       Nutritionals       $680           1.7             --             1.7

  Worldwide
   Diagnostics
   Sales                  $948           8.0            3.5             4.5

      International
       Diagnostics        $708          10.3            4.8             5.5

      U.S.
       Diagnostics        $240           1.6             --             1.6

  Worldwide
   Vascular
   Sales                  $835          26.9            2.3            24.6

       International
        Vascular          $399          51.6            5.8            45.8

       U.S. Vascular      $436          10.5             --            10.5

  Other Sales             $715          (2.0)           1.7            (3.7)





  Note:  See "Consolidated Statement of Earnings" for more information.

  (a) Includes impact from the acquisition of Solvay Pharmaceuticals,
  which closed on Feb. 15, 2010.




  The following is a summary of first-half 2010 sales.

  First-Half Ended 6/30/10

  (dollars in millions)                    % Change vs. 1H09
                                           -----------------
                                              Foreign
                           Sales       Reported  Exchange    Operational
                           -----       --------  --------    -----------

  Total Sales              $16,524          16.3         3.4        12.9

      Total International
       Sales                $9,481          24.0         6.3        17.7

      Total U.S. Sales      $7,043           7.3          --         7.3

  Worldwide
   Pharmaceutical Sales     $9,018 (a)      18.9         3.6        15.3

      International
       Pharmaceuticals      $5,193 (a)      26.6         6.6        20.0

      U.S. Pharmaceuticals  $3,825 (a)       9.9          --         9.9

  Worldwide Nutritional
   Sales                    $2,734          10.9         2.7         8.2

      International
       Nutritionals         $1,412          18.7         5.7        13.0

      U.S. Nutritionals     $1,322           3.7          --         3.7

  Worldwide Diagnostics
   Sales                    $1,863           9.9         4.5         5.4

      International
       Diagnostics          $1,381          11.7         6.1         5.6

      U.S. Diagnostics        $482           5.3          --         5.3

  Worldwide Vascular
   Sales                    $1,581          21.4         2.8        18.6

       International
        Vascular              $731          42.6         7.1        35.5

       U.S. Vascular          $850           7.7          --         7.7

  Other Sales               $1,328          13.5         2.4        11.1


  Note:  See "Consolidated Statement of Earnings" for more information.

  (a) Includes impact from the acquisition of Solvay Pharmaceuticals,
  which closed on Feb. 15, 2010.



  The following summarizes the impact of foreign exchange on global
  sales for selected products.

  Quarter Ended 6/30/10
  (dollars in millions)

                                            Global Sales
                           Global        % Change vs. 2Q09
                                         -----------------
                                             Foreign
                           Sales    Reported   Exchange    Operational
                           -----    --------   --------    -----------
  Pharmaceutical
   Products

    HUMIRA                   $1,593      21.5          3.0        18.5

    TriCor/TRILIPIX            $388      15.6           --        15.6

    Kaletra                    $294     (14.2)         1.9       (16.1)

    Niaspan                    $211       1.6           --         1.6

    Lupron                     $187      (5.0)         2.9        (7.9)

    Synthroid                  $129      11.1          3.3         7.8

  Nutritional Products

    Pediatric Nutritionals     $763      11.7          2.8         8.9

    Adult Nutritionals         $639       8.8          2.9         5.9

  Medical Products

    Core Laboratory
     Diagnostics               $793       6.1          3.8         2.3

    Coronary Stents            $533      34.2          2.7        31.5

    Diabetes Care              $325       5.4          2.8         2.6

    Medical Optics             $269       1.4          1.5        (0.1)

    Molecular Diagnostics       $89      22.6          1.7        20.9





  The following is a summary of Abbott's second-quarter 2010 sales for
  selected products.

  Quarter Ended 6/30/10





  (dollars in millions)
                                     U.S.
                                     ----
                                       % Change
                            Sales      vs. 2Q09
                            -----      --------
  Pharmaceutical
   Products

    HUMIRA                    $696          9.6

    TriCor/TRILIPIX           $318         (5.3)

    Kaletra                    $93        (16.0)

    Niaspan                   $211          1.6

    Lupron                    $121        (11.9)

    Synthroid                 $103          6.8

  Nutritional Products

    Pediatric Nutritionals    $334          1.5

    Adult Nutritionals        $334          2.5

  Medical Products

    Core Laboratory
     Diagnostics              $145         (5.5)

    Coronary Stents           $279          9.0

    Diabetes Care             $127         (0.4)

    Medical Optics            $100         (0.3)

    Molecular Diagnostics      $43         18.5





  (dollars in millions)                   International
                                          -------------
                                              % Change vs. 2Q09
                                              -----------------
                                                 Foreign
                           Sales  Reported      Exchange      Operational
                           -----  --------      --------      -----------
  Pharmaceutical
   Products

    HUMIRA                   $897      32.7           5.8            26.9

    TriCor/TRILIPIX           $70       n/m           n/m             n/m

    Kaletra                  $201     (13.4)          2.8           (16.2)

    Niaspan                    --        --            --              --

    Lupron                    $66      10.7           9.6             1.1

    Synthroid                 $26      32.7          20.0            12.7

  Nutritional Products

    Pediatric Nutritionals   $429      21.3           5.4            15.9

    Adult Nutritionals       $305      16.7           6.5            10.2

  Medical Products

    Core Laboratory
     Diagnostics             $648       9.1           4.8             4.3

    Coronary Stents          $254      80.3           7.7            72.6

    Diabetes Care            $198       9.5           4.8             4.7

    Medical Optics           $169       2.5           2.3             0.2

    Molecular Diagnostics     $46      26.6           3.4            23.2





  n/m = Not meaningful



  The following summarizes the impact of foreign exchange on global
  sales for selected products.

  First-Half Ended 6/30/10
  (dollars in millions)

                                            Global Sales
                           Global        % Change vs. 1H09
                                         -----------------
                                             Foreign
                           Sales    Reported   Exchange    Operational
                           -----    --------   --------    -----------
  Pharmaceutical
   Products

    HUMIRA                   $2,991      28.1          4.7        23.4

    TriCor/TRILIPIX            $679      15.5           --        15.5

    Kaletra                    $586      (7.7)         3.1       (10.8)

    Niaspan                    $416       7.7           --         7.7

    Lupron                     $360      (7.7)         3.2       (10.9)

    Synthroid                  $252      14.4          3.4        11.0

  Nutritional Products

    Pediatric Nutritionals   $1,463      11.3          2.5         8.8

    Adult Nutritionals       $1,245      11.7          3.1         8.6

  Medical Products

    Core Laboratory
     Diagnostics             $1,555       7.8          4.8         3.0

    Coronary Stents            $987      23.6          2.9        20.7

    Diabetes Care              $620       4.7          4.0         0.7

    Medical Optics             $530      70.9          1.3        69.6

    Molecular Diagnostics      $176      26.2          3.1        23.1




  The following is a summary of Abbott's first-half 2010 sales for selected 
  products.
  First-Half 6/30/10





  (dollars in millions)
                                     U.S.
                                     ----
                                       % Change
                            Sales      vs. 1H09
                            -----      --------
  Pharmaceutical
   Products

    HUMIRA                  $1,239         18.5

    TriCor/TRILIPIX           $596          1.4

    Kaletra                   $165        (15.8)

    Niaspan                   $416          7.7

    Lupron                    $229        (15.2)

    Synthroid                 $201         10.6

  Nutritional Products

    Pediatric Nutritionals    $644          3.1

    Adult Nutritionals        $652          6.2

  Medical Products

    Core Laboratory
     Diagnostics              $292         (2.2)

    Coronary Stents           $540          3.0

    Diabetes Care             $250          1.1

    Medical Optics            $200         38.2

    Molecular Diagnostics      $87         25.1





  (dollars in millions)                   International
                                          -------------
                                              % Change vs. 1H09
                                              -----------------
                                                 Foreign
                           Sales  Reported      Exchange      Operational
                           -----  --------      --------      -----------
  Pharmaceutical
   Products

    HUMIRA                 $1,752      35.8           8.6            27.2

    TriCor/TRILIPIX           $83       n/m           n/m             n/m

    Kaletra                  $421      (4.1)          4.5            (8.6)

    Niaspan                    --        --            --              --

    Lupron                   $131       9.4          10.3            (0.9)

    Synthroid                 $51      32.9          19.7            13.2

  Nutritional Products

    Pediatric Nutritionals   $819      18.8           4.8            14.0

    Adult Nutritionals       $593      18.6           6.8            11.8

  Medical Products

    Core Laboratory
     Diagnostics           $1,263      10.5           6.1             4.4

    Coronary Stents          $447      62.7           8.4            54.3

    Diabetes Care            $370       7.3           6.9             0.4

    Medical Optics           $330      99.5           2.3            97.2

    Molecular Diagnostics     $89      27.2           6.1            21.1





  n/m = Not meaningful




  Business Highlights

  --         Abbott Accelerates Emerging Markets Presence:  Announced a
             number of strategic actions to further accelerate Abbott's
             presence and capture growth opportunities in key emerging
             markets, including the acquisition of Piramal's Healthcare
             Solutions business, giving Abbott the number-one position
             in the Indian pharmaceutical market. Additionally,
             announced a license and supply agreement with Zydus
             Cadila, providing a complementary portfolio of branded
             generics that Abbott will commercialize in 15 fast-
             growing emerging markets. Created a new stand-alone
             Established Products Division to provide focus, structure
             and resources to optimize the global market opportunity
             for its leading branded generics portfolio.

  --         Added Late-Stage Pipeline Compound for Endometriosis:
             Announced a collaboration agreement to develop and
             commercialize elagolix for the treatment of endometriosis-
             related pain. Elagolix is a novel, first-in-class oral
             gonadotropin-releasing hormone (GnRH) antagonist, which
             has recently completed a Phase IIb study in endometriosis.
             Endometriosis is associated with a multitude of symptoms,
             including pain related to menstruation (dysmenorrhea), as
             well as chronic pelvic pain throughout the menstrual cycle
             and infertility. In addition to endometriosis, elagolix
             will be evaluated for the treatment of uterine fibroids.

  --         Announced Positive New Data at EuroPCR:  Presented
             additional data from the MitraClip(R) pivotal trial, EVEREST
             II, which demonstrated consistent performance of the
             MitraClip system for the two causes of mitral
             regurgitation (MR) - functional MR (FMR) or degenerative
             MR (DMR). The 30-day major adverse event rate for
             MitraClip was similar for the FMR and DMR patient
             subgroups, both lower than the surgical control group.
             Preliminary two-year results indicated the durability of
             MitraClip was maintained at two years. Mitral
             regurgitation is the most common structural heart defect
             in the world.

             Presented data from two late-breaking clinical trials that
             reinforced the outstanding safety data supporting Abbott's
             market-leading XIENCE V Everolimus Eluting Coronary Stent
             System. In addition, announced positive six-month results
             from the first 45 patients enrolled in the second stage of
             the ABSORB trial demonstrating a low rate of major adverse
             cardiac events (MACE) and no blood clots (thromboses) for
             Abbott's bioresorbable vascular scaffold (BVS).

  --         New Molecular Diagnostic Test Approved by FDA:  Gained
             approval from the U.S. Food and Drug Administration (FDA)
             to market a new, sensitive molecular diagnostic test and
             instrument to simultaneously detect two of the nation's
             most prevalent sexually transmitted diseases, gonorrhea
             and chlamydia, including a new variant strain of chlamydia
             recently discovered in Sweden.

  --         Received FDA Approval for Two Core Laboratory Diagnostic
             Tests: Received approval from the FDA for Abbott's
             ARCHITECT HIV Ag/Ab Combo assay, which is the first test
             approved in the United States that can simultaneously
             detect both HIV antigen and antibodies. Studies have
             demonstrated that Abbott's new test may detect HIV days
             earlier than antibody-only tests. The FDA has also
             cleared a new diagnostic test to monitor ovarian cancer, a
             disease that will strike an estimated one out of every 71
             women in the United States in their lifetimes. Abbott's
             new ARCHITECT HE4 (human epididymis protein 4) assay, the
             first automated test of its kind available in the United
             States, uses a simple blood test to aid in monitoring for
           the recurrence or progression of this disease.

  --         Completed Acquisition of Facet Biotech; Advanced MS
             Compound into Phase III:  Completed the acquisition of
             Facet Biotech Corporation, strengthening Abbott's
             pharmaceutical pipeline in neuroscience and oncology. The
             acquisition provides Abbott with daclizumab, a promising
             biologic that recently advanced into Phase III trials for
             multiple sclerosis (MS), as well as compounds that
             complement its existing diverse oncology program.


  Abbott confirms double-digit earnings-per-share growth outlook for 2010

Abbott is confirming previously issued earnings-per-share guidance for the full-year 2010 of $4.13 to $4.18, excluding specified items. The midpoint of this guidance range reflects growth of approximately 12 percent over 2009.
 

Abbott forecasts specified items for the full-year 2010 of approximately $0.55 per share, primarily associated with the impact of health care reform on deferred tax assets, acquisition integration, previously announced cost reduction initiatives, a litigation reserve, in-process research and development related to the Neurocrine collaboration, and the one-time impact of the devaluation of the Venezuelan bolivar on balance sheet translation. Including these specified items, projected earnings per share under Generally Accepted Accounting Principles (GAAP) would be $3.58 to $3.63 for the full-year 2010. As previously indicated, this forecast excludes additional integration costs associated with the Solvay Pharmaceuticals acquisition that are expected to be quantified in the third quarter.
 

Abbott declares quarterly dividend
 

On June 11, 2010, the board of directors of Abbott declared the company's quarterly common dividend of 44 cents per share, an increase of 10 percent over the prior period. The cash dividend is payable Aug. 15, 2010, to shareholders of record at the close of business on July 15, 2010. This marks the 346th 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 approximately 83,000 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 second-quarter earnings conference call through its Investor Relations Web site at www.abbottinvestor.com at 8 a.m. Central time today. An archived edition of the call will be available after 11 a.m. Central time.
 

  -- Private Securities Litigation Reform Act of 1995 --
  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, 2009, in Item 1A, "Risk Factors," to our quarterly report on Securities and Exchange Commission Form 10-Q for the quarter ended March 31, 2010, and are incorporated by reference. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments.
 

                       Abbott Laboratories and Subsidiaries
                        Consolidated Statement of Earnings
                    Second Quarter Ended June 30, 2010 and 2009
                       (in millions, except per share data)
                                    (unaudited)





                                                                  %
                                                 2010    2009  Change
                                               ----     ----   ------

  Net Sales                                    $8,826  $7,495    17.8
                                               ------  ------

  Cost of products sold                         3,544   3,129    13.3
  Research and development                        858     670    28.0
  Acquired in-process research and development     75       -   n/m
  Selling, general and administrative           2,743   2,025    35.5
                                                -----   -----
  Total Operating Cost and Expenses             7,220   5,824    24.0
                                                -----   -----

  Operating earnings                            1,606   1,671    (3.9)

  Net interest expense                             96     103    (6.6)
  Net foreign exchange (gain) loss                (41)     14   n/m
  Other (income) expense, net                      (8)    (13)  n/m
                                                  ---     ---
  Earnings before taxes                         1,559   1,567    (0.5)
  Taxes on earnings                               267     279    (4.3)
                                                  ---     ---
  Net Earnings                                 $1,292  $1,288     0.3
                                               ======  ======


  Net Earnings Excluding Specified Items, as
   described below                             $1,578  $1,388    13.6  1)
                                               ======  ======

  Diluted Earnings per Common Share             $0.83   $0.83      --
                                                =====   =====

  Diluted Earnings Per Common Share, Excluding
   Specified Items,
    as described below                          $1.01   $0.89    13.5  1)
                                                =====   =====

  Average Number of Common Shares Outstanding
   Plus Dilutive
       Common Stock Options and Awards          1,552   1,551





  1)     2010 Net Earnings Excluding Specified Items excludes after-tax
         charges of $75 million, or $0.05 per share, for acquired
         in-process research and development related to the Neurocrine
         collaboration, $106 million, or $0.07 per share, for a
         litigation reserve, $83 million, or $0.05 per share, for closing 
         and integration costs associated with the acquisition of
         Solvay Pharmaceuticals and other recent acquisitions and $22 
         million, or $0.01 per share, for cost reduction initiatives
         and other.

         2009 Net Earnings Excluding Specified Items excludes after-tax
         charges of $33 million, or $0.02 per share, primarily for
         costs associated with the acquisition of Advanced Medical Optics
         (AMO) and $67 million, or $0.04 per share, for cost
         reduction initiatives and other.

  NOTE: See attached questions and answers section for further
  explanation of Consolidated Statement of Earnings line items.

  n/m = Percent change is not meaningful.















                       Abbott Laboratories and Subsidiaries
                        Consolidated Statement of Earnings
                      First-Half Ended June 30, 2010 and 2009
                       (in millions, except per share data)
                                    (unaudited)





                                             2010     2009  % Change
                                             ----     ----  --------

  Net Sales                               $16,524  $14,213      16.3
                                          -------  -------

  Cost of products sold                     6,879    6,065      13.4
  Research and development                  1,588    1,321      20.2
  Acquired in-process research and
   development                                 75        -     n/m
  Selling, general and administrative       4,906    4,095      19.8
                                            -----    -----
  Total Operating Cost and Expenses        13,448   11,481      17.1
                                           ------   ------

  Operating earnings                        3,076    2,732      12.6

  Net interest expense                        185      191      (3.3)
  Net foreign exchange (gain) loss             29       29       1.1
  Other (income) expense, net                 (19)    (988)    n/m    1)
                                              ---     ----
  Earnings before taxes                     2,881    3,500     (17.7)
  Taxes on earnings                           586      773     (24.1)
                                              ---      ---
  Net Earnings                             $2,295   $2,727     (15.8) 1)
                                           ======   ======

  Net Earnings Excluding Specified Items,
   as described below                      $2,845   $2,531      12.4  2)
                                           ======   ======

  Diluted Earnings per Common Share         $1.47    $1.75     (16.0) 1)
                                            =====    =====

  Diluted Earnings Per Common Share,
   Excluding Specified Items,
    as described below                      $1.82    $1.62      12.3  2)
                                            =====    =====

  Average Number of Common Shares
   Outstanding Plus Dilutive
       Common Stock Options and Awards      1,557    1,554





  1)     In 2009, other (income) expense, net earnings, and diluted earnings
         per common share included the one time favorable
         impact of the derecognition of a contingent liability associated 
         with the conclusion of the TAP joint venture ($797 million
         pre-tax, $505 million after-tax, or $0.32 per share).  Since this
         did not recur in 2010, this results in a 2010 decline in net
         earnings and diluted earnings per common share on a GAAP basis when
         compared to 2009.  For ongoing purposes, in
         2009, as discussed in footnote 2 below, this item was excluded from
         net earnings and diluted earnings per common
         share.
  2)     2010 Net Earnings Excluding Specified Items excludes after-tax
         charges of $115 million, or $0.07 per share, for the one-
         time impact of the devaluation of the Venezuelan bolivar on balance
         sheet translation, $75 million, or $0.05 per share,
         relating to acquired in-process research and development related to
         the Neurocrine collaboration, $106 million, or $0.07
         per share, for a litigation reserve, $136 million, or $0.09 per
         share, for closing and integration costs associated with the
         acquisition of Solvay Pharmaceuticals and other recent 
         acquisitions, $60 million, or $0.04 per share, for specific health
         care reform impact on deferred tax assets, and $58 million, or 
         $0.03 per share, for cost reduction initiatives and other.
         2009 Net Earnings Excluding Specified Items excludes an after-tax
         gain of $505 million, or $0.32 per share, relating to
         the derecognition of a contingent liability that was recorded in
         connection with the conclusion of the TAP joint venture.
         This was partially offset by $108 million, or $0.07 per share,
         primarily relating to costs associated with the acquisition of
         Advanced Medical Optics, $41 million, or $0.02 per share, for
         litigation settlements and $160 million, or $0.10 per share,
         for cost reduction initiatives and costs associated with a delayed
         product launch.

  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 growth of Worldwide Pharmaceutical sales?

A1) Worldwide Pharmaceutical sales increased 24.5 percent, including a favorable 2.8 percent effect of exchange rates, driven by strong international pharmaceutical sales growth of more than 40 percent. Sales included the first full-quarter contribution from the Solvay acquisition, which closed in February 2010.
 

Growth in the quarter was driven by HUMIRA global sales growth of 21.5 percent, with reported international growth of 32.7 percent. International anti-TNF market growth trends remain strong, and HUMIRA maintains a market-leading position in many of the international markets. U.S. HUMIRA sales increased approximately 10 percent, in-line with underlying prescription trends for the product. Global lipid franchise sales growth was 10.3 percent, including the international TriCor sales contribution from the Solvay acquisition.
 

Q2) What drove the strong performance in Worldwide Vascular, Worldwide Nutritional and Worldwide Diagnostics sales?
 

A2) Double-digit growth in Worldwide Vascular sales were driven by international vascular sales growth of more than 50 percent. Abbott holds the number-one global position in drug-eluting stents, metallic stents and guidewires. Abbott's drug-eluting stent franchise, which includes XIENCE V and XIENCE PRIME, continues to perform well, including strong international performance in Europe and Japan.
 

Worldwide nutritional products sales increased 10.1 percent, including a favorable 2.8 percent impact from exchange and driven by more than 19 percent growth internationally. Both pediatric and adult international nutritional sales were up double-digits in the quarter. Abbott continues to perform well in key emerging markets, including China, Southeast Asia and Latin America. In the United States, Abbott continues to hold its leadership position in infant formula and adult nutritionals.
 

High single-digit growth in Worldwide Diagnostics reflects continued double-digit growth in Abbott's Molecular and Point of Care diagnostics businesses as well as strong growth in its international Core Laboratory Diagnostics business.
 

Q3) What was the second-quarter gross margin ratio?
 

A3) The gross margin ratio before and after specified items is shown below (dollars in millions):
 

                                          2Q10
                                          ----
                             Cost of     Gross     Gross
                             Products   Margin    Margin
                               Sold     ------       %
                               ----                 ---
  As reported                  $3,544    $5,282      59.8%
  Adjusted for specified items:
  Acquisition related            ($38)      $38       0.4%
  Cost reduction
   initiatives and other         ($30)      $30       0.4%
                                 ----       ---       ---
  As adjusted                  $3,476    $5,350      60.6%


The adjusted gross margin ratio of 60.6 percent, above Abbott's previous forecast, was driven by strong performance across several businesses, including vascular, diagnostics, diabetes and nutrition, as well as a favorable impact from foreign exchange.
 

Q4) What drove SG&A and R&D investment in the quarter?
 

A4) In the second quarter, both SG&A and R&D investment increased strong double-digits, reflecting Abbott's continued investment in programs to drive future growth, as well as increases associated with the addition of Solvay Pharmaceuticals. R&D expense reflected continued investment in Abbott's broad-based pipeline, including programs in vascular devices, immunology, neuroscience, oncology and HCV.
 

Q5) What was the tax rate for the second-quarter 2010?
 

A5) The ongoing tax rate this quarter was 16.3 percent, in line with Abbott's previous forecast. The reported second-quarter tax rate is reconciled to the ongoing rate below (dollars in millions):
 

                                      2Q10
                                      ----
                         Pre-Tax   Taxes on    Tax
                          Income   Earnings    Rate
                          ------   --------    ----

  As reported              $1,559      $267     17.1%
  Specified items            $326       $40     12.3%
                             ----       ---     ----
  Excluding specified
   items                   $1,885      $307     16.3%


  Q6)  How did specified items affect reported results?

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






                                                   2Q10
                                                   ----
  (dollars in millions, except
   earnings-per-share)                       Earnings
                                             --------
                                          Pre-   After-    EPS
                                          tax      tax     ---
                                          ---      ---
  As reported                            $1,559  $1,292   $0.83
  Adjusted for specified items:
  Acquired IPR&D                            $75     $75   $0.05
  Litigation reserve                       $126    $106   $0.07
  Acquisition related                       $99     $83   $0.05
  Cost reduction initiatives and other      $26     $22   $0.01
  As adjusted                            $1,885  $1,578   $1.01



Acquired in-process research and development is related to the agreement with Neurocrine Biosciences to develop and commercialize elagolix for the treatment of endometriosis. Litigation reserve relates to a settlement reached in principle for which a reserve was established during the quarter. Acquisition related is associated with closing and integration costs related to the Solvay Pharmaceuticals and other recent acquisitions. Cost reduction initiatives include actions to improve efficiencies, including the previously announced efforts in the core laboratory diagnostic business.
 

The impact of specified items by Consolidated Statement of Earnings line item is as follows (dollars in millions):
 

                                                 2Q10
                                                 ----
                              Cost of    R&D   Acquired   SG&A      Other
                              Products   ---     IPR&D            (Income)/
                                Sold             -----            Expense
                                ----                              -------
  As reported                   $3,544   $858       $75  $2,743         ($8)
  Adjusted for specified items:
  Acquired IPR&D                    --     --      ($75)     --          --
  Litigation reserve                --     --        --  ($126)          --
  Acquisition related             ($38)   ($2)       --    ($54)        ($5)
  Cost reduction
   initiatives and other          ($30)    --        --     ($3)         $7
                                  ----    ---       ---     ---         ---
  As adjusted                   $3,476   $856        --  $2,560         ($6)




  Q7)  What are the key areas of focus in Abbott's broad-based pipeline?

A7) Abbott is conducting leading-edge research across the company and is focused on competing in attractive growth markets where R&D-based product differentiation drives success. Today, across its businesses, Abbott has more than 350 clinical trials underway and expects to deliver more than 75 new products or indications over the next five years. This includes a drug-eluting stent in the United States for small vessels; many new diagnostic assays; advances in the vision care portfolio; improvements across the global nutritional product line; several new pharmaceutical products in late-stage development; and a new heart-valve technology called MitraClip. Following are select highlights from breakthrough research across both pharmaceuticals and medical products pipelines:
 

  --  Oncology
      --  Abbott's oncology pipeline includes therapies that represent
          promising, unique scientific approaches to treating cancer. Abbott
          is focused on the development of targeted treatments that inhibit
          tumor growth and improve response to common cancer therapies.
          Abbott currently has nine new molecular entities in human trials.
      --  The oncology pipeline includes: ABT-263, a Bcl-2 family protein
          antagonist; ABT-869, a multi-targeted kinase inhibitor; and
          ABT-888, a PARP-inhibitor that is on track to move into Phase III
          development for breast cancer by year end. Additionally, Abbott is
          evaluating a number of promising mechanisms in its pre-clinical
          pipeline, including work on an early stage cMET antibody biologic
          for cancer.
      --  The recent acquisition of Facet Biotech brought several oncology
          collaborations, including early- and mid-stage compounds that are
          being studied for difficult to treat types of cancer, including
          multiple myeloma and chronic lymphocytic leukemia.
  --  Neuroscience / Pain
      --  Abbott is conducting innovative research in neuroscience, where it
          has developed compounds that target receptors in the brain that
          help regulate mood, memory and other neurological functions to
          address conditions such as Alzheimer's disease and schizophrenia.
          Abbott has eight new molecular entities in the clinic for
          conditions such as schizophrenia, pain, Alzheimer's disease and
          multiple sclerosis (MS). This includes three compounds in Phase II
          for Alzheimer's.
      --  Abbott's neuroscience pipeline also includes a novel,
          next-generation antibody, daclizumab, which recently entered into
          Phase III development for relapsing remitting MS (RRMS), the most
          common form of the disease.
      --  Abbott is also pursuing compounds that could provide relief across
          a broad spectrum of pain states, such as chronic back pain,
          postoperative pain and cancer pain.
  --  Women's Health
      --  The recent collaboration agreement with Neurocrine to develop and
          commercialize elagolix for the treatment of endometriosis-related
          pain brings Abbott a novel, first-in-class oral
          gonadotropin-releasing hormone (GnRH) antagonist. A Phase IIb
          study in endometriosis was recently completed.
  --  Immunology
      --  Abbott's scientific experience with the anti-TNF biologic HUMIRA
          serves as a strong foundation for its continuing research in
          immunology. In its pipeline, Abbott continues to explore
          additional indications for HUMIRA, and is on track to file
          regulatory applications in the U.S. and Europe for ABT-874, an
          anti-IL 12/23 biologic for psoriasis. Abbott is also working to
          advance development of its early discovery programs, including
          oral DMARD therapies, as well as other potential biologic targets.
      --  Additionally, Abbott's 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 (HCV), 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 HCV development programs
          include its partnership with Enanta Pharmaceuticals to discover
          protease inhibitors, as well as its internal programs focused on
          additional viral targets, including polymerase inhibitors.
      --  Abbott currently has three HCV compounds in Phase II clinical
          trials and expects to advance another promising mechanism of
          action into human studies by year-end.  Abbott is well positioned
          to explore combinations of these new therapies, a strategy with
          the potential to markedly transform current treatment practices by
          shortening therapy duration, improving tolerability and increasing
          cure rates.
  --  Molecular Diagnostics
      --  Abbott expects to launch more than 12 new products over the next
          two to three years, including several novel oncology and
          infectious disease assays, as well as improved instrument systems.
          Abbott recently received approval from the U.S. Food and Drug
          Administration (FDA) to market a new, sensitive molecular
          diagnostic test and instrument to simultaneously detect two of the
          nation's most prevalent sexually transmitted diseases, gonorrhea
          and chlamydia.
  --  Diagnostics
      --  In 2010, Abbott has launched a number of key assays on its
          ARCHITECT immunochemistry platform, which will significantly
          broaden its industry-leading menu. These tests include assays to
          assess Chagas disease, ovarian cancer, acute kidney injury and
          HIV.
      --  Abbott expects to launch several more products this year and also
          has several next generation instrument systems for hematology,
          immunochemistry and blood screening in development.
  --  Vascular Devices
      --  Abbott has the industry's most robust vascular pipeline and
          expects to deliver more than 10 coronary technologies over the
          next five years. Abbott is working on well-staged incremental
          advances, and truly game-changing technologies that have the
          ability to restate the market.
      --  MitraClip - Presented additional data from the pivotal trial,
          EVEREST II, at the EuroPCR conference, which demonstrated
          consistent performance of the MitraClip system for the two causes
          of mitral regurgitation (MR) - functional MR (FMR) or degenerative
          MR (DMR). Abbott's MitraClip is on the market in Europe and under
          regulatory review in the United States.
      --  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.
          XIENCE PRIME is on the market in Europe, and is in clinical trials
          in the United States with an expected launch in 2012.
      --  XIENCE Nano - XIENCE V for small vessels is in clinical trials in
          the United States. This 2.25 mm diameter stent was launched in
          Europe in 2008, and is expected to launch in the United States in
          2011.
      --  "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.
      --  Bioresorbable Vascular Scaffold (BVS) - Abbott is developing a BVS
          that is gradually resorbed 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 BVS
          clinical program in the industry.
      --  Core Coronary products - Abbott is continuing to expand its
          position in the more than $2 billion core coronary market,
          recently launching a next-generation frontline balloon dilatation
          catheter in Europe. Abbott plans to launch several new balloons in
          Europe and the United States over the next year. In addition,
          Abbott is maintaining its worldwide leadership in the metallic
          stent market with its next-generation bare metal stent, MULTI-LINK
          8, which is in development in the United States. Abbott also has a
          new line of guidewires in development.
  --  Vision Care
      --  Abbott expects more than 20 new products and technology
          advancements over the next five years, including the launch of a
          new contact lens solution that is underway in Europe and is
          expected to launch in the United States by year end. In its
          market-leading LASIK business, Abbott is expanding its proprietary
          laser platform into new vision correction applications, including
          cataract surgery, and is developing new diagnostic instruments and
          treatments to improve visual outcomes. Abbott also continues to
          expand its premium and standard intraocular lenses (IOL),
          including Synchrony, its accommodating IOL approved in Europe and
          under FDA review in the United States.

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: July 2010


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