Abbott profit dips on charges, generic competition
Drug developer and medical device maker Abbott Laboratories said Wednesday its second-quarter profit fell 3 percent on a mix of buyout charges and lower drug sales, but the results still met Wall Street forecasts.
Pharmaceutical sales fell 4.3 percent as the company’s anti-seizure drug Depakote lost market share to generic competition. But analysts were pleased to see the company’s blockbuster arthritis drug Humira regain sales momentum after slowing in the first quarter.
“Humira performance was very strong this quarter,” said John Thomas, vice president of investor relations. “We look forward to a full year of continued strong growth with that product as well as some of our other major operating businesses.”
Abbott Labs earned $1.29 billion, or 83 cents per share, down from profit of $1.32 billion, or 85 cents per share, a year earlier.
Revenue rose 2.5 percent to $7.5 billion from $7.31 billion. Sales were hurt by an 8 percent headwind from unfavorable currency rates.
Excluding charges for the buyout of Advanced Medical Optics and for cost reduction initiatives, the company said it earned 89 cents per share. Analysts polled by Thomson Reuters expected profit of 89 cents per share on revenue of $7.55 billion.
Abbott shares fell $1.21, or 2.6 percent, to close at $45.28.
Sales of its blockbuster drug Humira rose 20 percent to $1.3 billion in the U.S.
Humira has been a key to the Abbott success story in recent years, racking up approvals for half a dozen uses, including arthritis, psoriasis and Crohn’s disease. Shares of Abbott fell after the first quarter when the company reported disappointing sales for the drug, due to tighter wholesale inventories and cost-cuttinf efforts from patients.
The drug is facing competition from new competitors, including Johnson & Johnson’s Simponi, which can be injected on a monthly versus weekly basis.
“While we have seen several new competitors launch into the market this year, we haven’t seen much of an impact given Humira’s impressive profile in what continues to be an efficacy driven market,” said Thomas.
The company forecast full-year Humira sales growth between 15 and 20 percent.
Gains for Humira were offset by losses for Depakote, with sales plunging 80 percent as the drug lost ground to cheaper generic versions. Sales rose for the company’s franchise of three cholesterol drugs: Tricor, Trilipix and Niaspan.
Last week analysts speculated about the cause for a halted study comparing Abbott’s cholesterol drug Niaspan against another drug made by Merck & Co. and Schering-Plough Corp.
Some on Wall Street say the trial was stopped because Niaspan was found to control cholesterol levels better than Merck and Schering’s drug Zetia. The posting on a government Web site did not give details about why the study was halted.
Company management told analysts Wednesday they did not know why the study was halted, but pointed to previous research indicating the benefits of Niaspan.
“So that’s encouraging but we don’t know the study results and we will probably find out when you do,” Thomas told analysts.
Sales in Abbott’s vascular division grew 34 percent, helped by sales of the company’s Xience drug-coated stents.
Leerink Swann analyst Rick Wise said questions remain about “lackluster” sales from the recently acquired American Medical Optics, which makes contact lenses and eye care products. Abbott acquired the company in February following a series of high-profile recalls of contact lens solution.
Looking ahead, the company expects third-quarter profit between 88 cents and 90 cents per share. That guidance could put the company’s performance below Wall Street expectations of 90 cents per share. For the full year, the company reaffirmed its forecast for a profit between $3.65 and $3.70 per share, while Wall Street expects profit of $3.69 per share.
The company also boosted its quarterly dividend by 11 percent to 40 cents per share. The dividend is payable Aug. 15 to shareholders of record at the close of business on July 15.
AP Business Writer Damian Troise contributed to this story from New York
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