Abbott’s profit bolstered by worldwide pharmaceutical sales

Abbott Laboratories swung to a profit in the fourth-quarter from a loss in the prior year’s quarter, and beat analyst expectations on strong global sales of its pharmaceuticals and blockbuster arthritis drug Humira.

The Abbott Park-based company reported $1.2 billion in net income, or 77 cents per diluted share, compared with a $476.2 million loss or 31 cents per diluted share in the year-earlier period, due to hefty charges related to its acquisition of Kos Pharmaceuticals Inc.
Excluding restructuring and acquisition charges in the 2007 fourth quarter, Abbott said earnings were 93 cents per diluted share, one cent more than what Wall Street analysts expected.
Fourth quarter net sales jumped 16 percent to $7.2 billion from the $6.2 billion reported in the same period a year ago.

Abbott Chairman and CEO Miles D. White explained that the company has achieved a consistent performance thanks to the strength and performance of its broad mix of businesses.
"Both our sales and earnings per share increased double digits,” White said.
Morningstar analyst Damien Conover said that Abbott’s strong fourth-quarter earnings were consistent with analyst expectations.

“The company posted 16% total sales growth versus last year with foreign exchange rates kicking in five percentage points,” Conover added.

Domestic pharmaceutical sales increased 17 percent and international pharmaceutical sales increased 21 percent, driven by double-digit growth in such products as Humira – Abbott’s fastest growing product in 2007.

Since its launch in 2003, Humira has grown to more than $3 billion in annual sales. It is currently marketed for the treatment of rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis, Crohn's disease and psoriasis.

According to Abbott spokesman Scott Stoffel, the company expects Humira to continue to grow in 2008. “We're forecasting global sales of approximately $4 billion this year,” Stoffel said.
According to RBC Capital Markets analyst Phillip E. Nalbone “all three of the company's operating units, pharmaceutical, nutritionals, and medical products, contributed their fair share of heavy-lifting to the quarterly performance.”

Total nutritional products sales in the quarter ended Dec. 31 rose 11 percent. Global medical products sales increased 12 percent, driven by 15 percent growth in overseas diabetes care sales and 16 percent growth in international diagnostics sales.
Nalbone said he expects Abbott to reap the benefits of its hard work and research investments undertaken during the past year. “With five major new products being launched this year, 2008 should be another strong year for the company,” he said.

But Abbott’s first-quarter 2008 earnings guidance of 61 cents to 63 cents per diluted share fell short of analysts’ consensus estimate of 65 cents. Analysts surveyed by Yahoo Finance expected full-year 2008 earnings of $3.22 per diluted share, in line with Abbott’s guidance of between $3.20 and $3.25.

Abbott plans to launch a drug-eluting stent called Xience for the treatment of coronary artery disease in the first half of 2008. According to Conover, this new product will help Abbott to generate even more revenues.

On the cost side, “the company's 10% increase in selling and administrative expenses appears high relative to an industry trend of decelerating marketing expenses,” Conover said.
Shares of Abbott reversed an early 3 percent decline to close at $57.97, up 48 cents or 0.83 percent.

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