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
