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Abbott Reports Double-Digit Sales and Earnings Growth in Fourth Quarter; Confirms Strong Outlook for 2009 Earnings- Worldwide Sales Increased 10.1 Percent -- Adjusted EPS Growth of 14.0 Percent (GAAP EPS up 27.3 Percent) -- Delivers Double-Digit Sales Growth in Each Major Global Business in 2008 -- Concludes Successful 2008 with Nine New Major Regulatory Approvals -- Confirms Double-Digit Earnings-Per-Share Growth in 2009 -
ABBOTT PARK, Ill., Jan. 21 /PRNewswire-FirstCall/ -- Abbott (NYSE: ABT) today announced financial results for the fourth quarter ended Dec. 31, 2008.
-- Diluted earnings per share, excluding specified items, were $1.06,
reflecting 14.0 percent growth, in line with Abbott's previous
forecast. Diluted earnings per share under Generally Accepted
Accounting Principles (GAAP) were $0.98, up 27.3 percent.
-- Worldwide sales increased 10.1 percent to $8 billion, including an
unfavorable 2.5 percent effect of exchange rates. Full-year 2008
sales were nearly $30 billion.
-- Worldwide pharmaceutical sales increased nearly 10 percent driven by
double-digit growth in HUMIRA(R), Niaspan(R), and the
TriCor(R)/TRILIPIX(TM) franchise. Global HUMIRA sales in the quarter
exceeded $1.3 billion; full-year 2008 global HUMIRA sales were more
than $4.5 billion.
-- Worldwide medical products sales increased 15.6 percent; with 58.9
percent growth in global vascular sales driven by the continued
success of the XIENCE V(TM) drug-eluting stent (DES), which became
the market-leading DES in the U.S. during the fourth quarter. Last
week, Abbott announced the acquisition of Advanced Medical Optics
(AMO), strengthening and expanding Abbott's medical device business
with a global market leader in ophthalmology.
-- Global nutritional sales increased 11.0 percent, up more than 15
percent internationally and nearly 7 percent in the U.S.
-- Abbott is confirming previously issued earnings-per-share guidance
for the full-year 2009 of $3.65 to $3.70 under both Generally
Accepted Accounting Principles (GAAP) and on a non-GAAP basis. The
midpoint of this 2009 guidance range reflects double-digit growth
over 2008 earnings per share.
"2008 was another highly productive and successful year for Abbott," said Miles D. White, chairman and chief executive officer, Abbott. "We significantly outperformed our original growth expectations for the year and added to our diverse portfolio with a significant number of major new product launches. The strategic actions we've taken and our ongoing business momentum position Abbott to deliver continued double-digit growth in 2009."
The following is a summary of fourth-quarter 2008 sales.
Impact of
Sales Summary - 4Q08 % Change Exchange
Quarter Ended 12/31/08 ($ millions) vs. 4Q07 on % Change
Total Sales $7,950 10.1 (2.5)
Total U.S. Sales $4,035 12.4 ---
Total International Sales $3,915 7.8 (4.9)
Worldwide Pharmaceutical Sales $4,610 9.8 (2.6)
U.S. Pharmaceuticals $2,540 10.2 ---
International Pharmaceuticals $2,070 9.5 (5.9)
Worldwide Nutritional Sales $1,317 11.0 (1.4)
U.S. Nutritionals $656 6.6 ---
International Nutritionals $661 15.6 (2.9)
Worldwide Diagnostics Sales $896 4.4 (3.3)
U.S. Diagnostics $231 8.8 ---
International Diagnostics $665 2.9 (4.3)
Worldwide Vascular Sales $663 58.9 (2.8)
U.S. Vascular $396 102.3 ---
International Vascular $267 20.5 (5.2)
Other Sales $464 (17.4) (2.2)
Note: See "Consolidated Statement of Earnings" for more information.
The following is a summary of sales for the full-year 2008.
Impact of
Sales Summary - FY08 % Change Exchange
Twelve Months Ended 12/31/08 ($ millions) vs. FY07 on % Change
Total Sales $29,528 13.9 3.2
Total U.S. Sales $14,170 10.1 ---
Total International Sales $15,358 17.8 6.3
Worldwide Pharmaceutical Sales $16,708 14.2 3.2
U.S. Pharmaceuticals $8,497 8.9 ---
International Pharmaceuticals $8,211 20.3 6.9
Worldwide Nutritional Sales $4,924 12.2 1.9
U.S. Nutritionals $2,479 5.6 ---
International Nutritionals $2,445 19.8 4.0
Worldwide Diagnostics Sales $3,575 13.2 5.1
U.S. Diagnostics $899 9.6 ---
International Diagnostics $2,676 14.5 6.9
Worldwide Vascular Sales $2,241 34.7 3.5
U.S. Vascular $1,205 39.6 ---
International Vascular $1,036 29.4 7.2
Other Sales $2,080 0.3 2.6
Note: See "Consolidated Statement of Earnings" for more information.
The following is a summary of Abbott's fourth-quarter 2008 sales for
selected products.
Quarter Ended 12/31/08
Percent Percent Percent
(dollars in U.S. Change Rest of Change Global Change
millions) Sales vs. 4Q07 World vs. 4Q07 Sales vs. 4Q07
Pharmaceutical
Products
HUMIRA $751 42.4 $600 40.5 a $1,351 41.6
TriCor/TRILIPIX $455 16.0 --- --- $455 16.0
Kaletra $152 (0.7) $226 3.5 b $378 1.8
Depakote $244 (43.8) $24 (9.1) $268 (41.8)
Niaspan $221 23.8 --- --- $221 23.8
Lupron $147 n/m $66 (9.6)c $213 n/m
Ultane/Sevorane $58 15.7 $140 (6.8)d $198 (1.2)
Biaxin
(clarithromycin) $3 n/m $151 (17.8)e $154 (22.6)
Synthroid $120 (9.4) $22 7.4 $142 (7.1)
Nutritional Products
Pediatric
Nutritionals $333 2.5 $390 29.4 f $723 15.4
Adult Nutritionals $295 5.3 $270 0.2 g $565 2.8
Medical Products
Abbott Diabetes
Care $144 7.1 $193 (3.5)h $337 0.7
Coronary Stents $267 245.9 $143 35.5 i $410 124.5
Other Coronary $72 15.0 $83 3.1 j $155 8.3
Endovascular $57 1.3 $41 15.3 k $98 6.7
a Without the negative impact of exchange of 9.3 percent, HUMIRA sales
increased 49.8 percent internationally.
b Without the negative impact of exchange of 4.9 percent, Kaletra sales
increased 8.4 percent internationally.
c Without the negative impact of exchange of 7.5 percent, Lupron sales
decreased 2.1 percent internationally.
d Without the negative impact of exchange of 6.2 percent, Sevorane sales
decreased 0.6 percent internationally.
e Without the negative impact of exchange of 2.3 percent, clarithromycin
sales decreased 15.5 percent internationally.
f Without the negative impact of exchange of 1.3 percent, Pediatric
Nutritionals sales increased 30.7 percent internationally.
g Without the negative impact of exchange of 4.6 percent, Adult
Nutritionals sales increased 4.8 percent internationally.
h Without the negative impact of exchange of 5.9 percent, Abbott Diabetes
Care sales increased 2.4 percent internationally.
i Without the negative impact of exchange of 5.2 percent, Coronary Stents
sales increased 40.7 percent internationally.
j Without the negative impact of exchange of 4.5 percent, Other Coronary
sales increased 7.6 percent internationally.
k Without the negative impact of exchange of 6.7 percent, Endovascular
sales increased 22.0 percent internationally.
n/m = Not meaningful
The following is a summary of Abbott's full-year 2008 sales for selected products.
Twelve Months Ended 12/31/08
Percent Percent Percent
(dollars in U.S. Change Rest of Change Global Change
millions) Sales vs. FY07 World vs. FY07 Sales vs. FY07
Pharmaceutical
Products
HUMIRA $2,255 36.6 $2,266 60.4 a $4,521 47.6
Kaletra $513 (4.7) $961 22.1 b $1,474 11.2
Depakote $1,262 (14.8) $102 7.4 $1,364 (13.4)
TriCor/TRILIPIX $1,341 10.1 --- --- $1,341 10.1
Ultane/Sevorane $193 (3.4) $594 6.2 c $787 3.7
Niaspan $786 19.4 --- --- $786 19.4
Biaxin
(clarithromycin) $14 n/m $637 (7.4)d $651 (10.1)
Lupron $377 n/m $274 6.5 e $651 n/m
Synthroid $435 (5.0) $89 19.2 $524 (1.6)
Nutritional Products
Pediatric
Nutritionals $1,268 2.8 $1,374 25.7 f $2,642 13.6
Adult
Nutritionals $1,162 7.8 $1,070 13.0 g $2,232 10.3
Medical Products
Abbott Diabetes
Care $559 1.1 $794 14.2 h $1,353 8.4
Coronary Stents $669 118.5 $530 44.8 i $1,199 78.4
Other Coronary $298 (0.5) $344 13.4 j $642 6.5
Endovascular $238 (7.6) $162 24.1 k $400 3.1
a Without the positive impact of exchange of 9.7 percent, HUMIRA sales
increased 50.7 percent internationally.
b Without the positive impact of exchange of 6.7 percent, Kaletra sales
increased 15.4 percent internationally.
c Without the positive impact of exchange of 5.0 percent, Sevorane sales
increased 1.2 percent internationally.
d Without the positive impact of exchange of 6.2 percent, clarithromycin
sales decreased 13.6 percent internationally.
e Without the positive impact of exchange of 6.1 percent, Lupron sales
increased 0.4 percent internationally.
f Without the positive impact of exchange of 3.6 percent, Pediatric
Nutritionals sales increased 22.1 percent internationally.
g Without the positive impact of exchange of 4.5 percent, Adult
Nutritionals sales increased 8.5 percent internationally.
h Without the positive impact of exchange of 7.1 percent, Abbott Diabetes
Care sales increased 7.1 percent internationally.
i Without the positive impact of exchange of 8.0 percent, Coronary Stents
sales increased 36.8 percent internationally.
j Without the positive impact of exchange of 6.4 percent, Other Coronary
sales increased 7.0 percent internationally.
k Without the positive impact of exchange of 7.0 percent, Endovascular
sales increased 17.1 percent internationally.
n/m = Not meaningful
Business Highlights
-- Abbott to Acquire Advanced Medical Optics (AMO) - Abbott announced
an agreement to acquire AMO, an established global leader in the
large and growing eye care market. This acquisition strengthens and
expands Abbott's current medical device business, providing further
diversification for the long term. AMO participates in three
segments: cataract surgery, refractive surgery, or LASIK laser
vision correction, and eye care products, such as contact lens
solutions. AMO holds the number-one market position in LASIK, the
number-two position in cataract surgery and the number-three
position in eye care products. The ophthalmology market is supported
by strong demographic trends, including a large population of people
60 years of age and older, and increased demand for advanced vision
care procedures and products.
-- Abbott Receives FDA Approval for TRILIPIX(TM) - The U.S. FDA
approved Abbott's TRILIPIX (fenofibric acid), the first fibrate to
be approved for use in combination with a statin. The FDA approval
of TRILIPIX was based on the largest clinical trial program designed
to evaluate the efficacy and safety of a fibrate in combination with
various statins.
-- Abbott Begins U.S. Study of XIENCE V(TM) Designed for Small Vessels
- Abbott began SPIRIT Small Vessel, a clinical trial evaluating a
2.25 mm size of the XIENCE V Everolimus Eluting Coronary Stent
System. The 2.25 mm stent system, to be called Xience Nano(TM) in
the United States upon FDA approval, would offer physicians an
option for treating coronary artery disease in narrower vessels that
is based on the proven efficacy, safety and deliverability of XIENCE
V. Last year, the XIENCE V 2.25 mm stent system received CE Mark
approval and was launched in various countries in Europe, Asia and
Latin America.
-- HUMIRA(R) May Help Prevent Further Joint Damage For Up To Five Years
- Presented new HUMIRA data demonstrating half of patients with
moderate to severe early rheumatoid arthritis (RA) showed no
progression of joint damage at five years. These results were seen
in patients who initially received HUMIRA in combination with
methotrexate (MTX) for two years and continued on HUMIRA for an
additional three years in an open-label extension study. Five-year
results of the PREMIER study found that patients with early RA
achieved the best results with an initial combination of HUMIRA and
methotrexate.
-- HUMIRA Demonstrates Fistula Healing for Up to Three Years in Crohn's
Patients - Presented new HUMIRA data in the long-term treatment of
fistulas, with more than half of patients with moderate to severe
Crohn's disease experiencing fistula healing at three years. Data
also showed response to HUMIRA in difficult-to-treat patients -
those with fistulas who had failed to respond, lost response to, or
were intolerant of infliximab.
-- TCT Data Presentations - Presented results from a new meta-analysis
of XIENCE V drug-eluting stent clinical trials, SPIRIT II and SPIRIT
III, which showed XIENCE V outperformed Boston Scientific's 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.
-- Abbott Exercises Its Option to Acquire IBIS Biosciences - Abbott
completed the purchase of the remaining equity ownership in IBIS
Biosciences, Inc.
Abbott confirms double-digit earnings-per-share growth outlook for 2009 Abbott is confirming previously issued earnings-per-share guidance for the full-year 2009 of $3.65 to $3.70 under both Generally Accepted Accounting Principles (GAAP) and on a non-GAAP, or adjusted basis. The midpoint of this 2009 guidance range reflects double-digit growth over 2008 earnings per share. Abbott declares quarterly dividend; double-digit increase over prior year On Dec. 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 Feb. 15, 2009, to shareholders of record at the close of business on Jan. 15, 2009. This marks the 340th 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 fourth-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, 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 in Item 1A, "Risk Factors," to Abbott's Quarterly Report on Securities and Exchange Commission Form 10-Q for the quarter ended September 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
Fourth Quarter Ended December 31, 2008 and 2007
(unaudited)
Percent
2008 2007 Change
Net Sales $7,950,268,000 $7,221,351,000 10.1
Cost of products sold 3,178,381,000 3,161,680,000 0.5
Research and development 731,631,000 662,401,000 10.5
Selling, general and
administrative 2,297,360,000 1,879,269,000 22.2
Total Operating Cost and
Expenses 6,207,372,000 5,703,350,000 8.8
Operating earnings 1,742,896,000 1,518,001,000 14.8
Net interest expense 81,045,000 101,145,000 (19.9)
Net foreign exchange
(gain) loss 46,395,000 (1,061,000) n/m
(Income) from TAP
Pharmaceutical Products
Inc. joint venture --- (121,574,000) n/m
Other (income) expense,
net (70,750,000) 56,566,000 n/m 1)
Earnings from continuing
operations before taxes 1,686,206,000 1,482,925,000 13.7
Taxes on earnings from
continuing operations 296,483,000 279,898,000 5.9
Earnings from Continuing
Operations $1,389,723,000 $1,203,027,000 15.5
Gain on sale of
discontinued operations,
net of tax 146,503,000 --- n/m 2)
Net Earnings $1,536,226,000 $1,203,027,000 27.7
Net Earnings from
Continuing Operations
Excluding Specified Items,
as described below $1,654,756,000 $1,452,565,000 13.9 3)
Diluted Earnings per
Common Share from
Continuing Operations $0.89 $0.77 15.6
Diluted Earnings per
Common Share from Gain on
Sale of Discontinued Operations $0.09 --- n/m 2)
Diluted Earnings per Common Share $0.98 $0.77 27.3
Diluted Earnings per Common
Share from Continuing Operations
Excluding Specified Items,
as described below $1.06 $0.93 14.0 3)
Average Number of Common
Shares Outstanding Plus
Dilutive Common Stock
Options and Awards 1,564,235,000 1,562,664,000
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) Gain on sale of discontinued operations, net of tax, reflects the
after-tax gain on the sale of the spine business, which closed during
the quarter. This gain has been treated as a specified item and
excluded from ongoing earnings as noted below.
3) 2008 Net Earnings Excluding Specified Items excludes after-tax charges
of $183 million, or $0.12 per share, for previously announced
litigation settlements related to TriCor and $83 million, or $0.05 per
share, for cost reduction initiatives, acquisition integration and
other, including actions to improve efficiencies in the core diagnostic
business. These charges were partially offset by an after-tax gain of
$147 million, or $0.09 per share, related to the sale of the spine
business.
2007 Net Earnings Excluding Specified Items excludes after-tax charges
of $42 million, or $0.03 per share, for acquisition integration, $34
million, or $0.02 per share, for fair-value loss adjustments related to
Boston Scientific stock, $26 million, or $0.02, for write-down of
Omnicef inventory and $148 million, or $0.09 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
Year Ended December 31, 2008 and 2007
(unaudited)
Percent
2008 2007 Change
Net Sales $29,527,552,000 $25,914,238,000 13.9
Cost of products sold 12,612,022,000 11,422,046,000 10.4
Research and development 2,688,811,000 2,505,649,000 7.3
Acquired in-process
research and development 97,256,000 --- n/m
Selling, general and
administrative 8,435,624,000 7,407,998,000 13.9
Total Operating Cost
and Expenses 23,833,713,000 21,335,693,000 11.7
Operating earnings 5,693,839,000 4,578,545,000 24.4
Net interest expense 327,245,000 456,390,000 (28.3)
Net foreign exchange
(gain) loss 84,244,000 14,997,000 n/m
(Income) from TAP
Pharmaceutical Products
Inc. joint venture (118,997,000) (498,016,000) (76.1)
Other (income) expense,
net (454,939,000) 135,526,000 n/m 1)
Earnings from continuing
operations before taxes 5,856,286,000 4,469,648,000 31.0
Taxes on earnings from
continuing operations 1,122,070,000 863,334,000 30.0
Earnings from Continuing
Operations 4,734,216,000 3,606,314,000 31.3
Gain on sale of
discontinued operations,
net of tax 146,503,000 --- n/m 2)
Net Earnings $4,880,719,000 $3,606,314,000 35.3
Net Earnings from
Continuing Operations
Excluding Specified
Items, as described
below $5,186,030,000 $4,429,146,000 17.1 3)
Diluted Earnings per
Common Share from Continuing
Operations $3.03 $2.31 31.2 3)
Diluted Earnings per Common
Share from Gain of Sale of
Discontinued Operations $0.09 --- n/m 2)
Diluted Earnings per Common
Share $3.12 $2.31 35.1
Diluted Earnings per Common
Share from Continuing Operations
Excluding Specified Items, as
described below $3.32 $2.84 16.9 3)
Average Number of Common Shares
Outstanding Plus Dilutive
Common Stock Options and
Awards 1,560,753,000 1,560,057,000
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) Gain on sale of discontinued operations, net of tax, reflects the
after-tax gain on the sale of the spine business, which closed during
the fourth quarter. This gain has been treated as a specified item and
excluded from ongoing earnings as noted below.
3) 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, an
after-tax gain of $49 million, or $0.03 per share, relating to sales of
equity investments in Millennium Pharmaceuticals and Boston Scientific,
and an after-tax gain of $147 million, or $0.09 per share, related to
the sale of the spine business. 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, $283
million, or $0.18 per share, for cost reduction initiatives, $183
million, or $0.12 per share, for previously announced litigation
settlements related to TriCor and $84 million, or $0.05 per share, for
acquisition integration, TAP separation and other.
2007 Net Earnings Excluding Specified Items excludes after-tax charges
of $206 million, or $0.13 per share, for acquisition integration, $92
million, or $0.06 per share, for a contract termination, $75 million,
or $0.05 per share, for fair-value loss adjustments, net of realized
gains, related to Boston Scientific stock, $60 million, or $0.04 per
share, for write-down of Omnicef inventory, $17 million, or $0.01 per
share, for transaction and separation costs relating to the terminated
sale of the core laboratory diagnostics business, and $373 million, or
$0.24 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 9.8 percent increase in global pharmaceutical sales in
the quarter?
A1) U.S. pharmaceutical sales increased 10.2 percent, reflecting
double-digit growth for HUMIRA, Niaspan, Ultane and the
TriCor/TRILIPIX franchise. U.S. HUMIRA sales increased more than 40
percent, as strong market demand continued across the three major
market segments of rheumatology, gastroenterology and dermatology.
Also in the quarter, Abbott's lipid franchise performed well, with
growth outpacing the overall cholesterol market as both Niaspan and
the TriCor/TRILIPIX franchise achieved double-digit growth. Niaspan
increased 23.8 percent with sales of $221 million. TriCor/TRILIPIX
franchise sales increased 16.0 percent with sales of $455 million,
including the launch of TRILIPIX.
International pharmaceutical sales increased 9.5 percent, including a
5.9 percent negative impact from exchange. International growth was
driven by HUMIRA, which increased more than 40 percent, and was up
nearly 50 percent excluding the negative impact of foreign exchange,
consistent with the performance in previous quarters. Kaletra sales
also contributed to growth in the quarter, driven by continued
success of the tablet launch in international markets.
Q2) What drove the 15.6 percent increase in global medical products sales
and strong global nutritional products sales?
A2) Medical products sales increased 15.6 percent, reflecting 58.9
percent growth in worldwide vascular. In the diagnostic segment, the
molecular business delivered continued double-digit sales growth.
Abbott Vascular achieved record sales of $663 million, driven by
drug-eluting stent (DES) franchise sales of $332 million. The
substantial increase in vascular sales was due to the U.S. approval
and successful launch of XIENCE V that began in July 2008. XIENCE V
is now the market-leading DES in the U.S. and Europe. We have seen
continued steady improvement in the U.S. DES market, with DES
penetration in the mid-70s, up more than 15 percentage points from
late 2007.
Worldwide nutritional products sales increased 11 percent, led by
15.6 percent growth in international nutritionals, including a 2.9
percent negative impact from exchange. This reflects continued strong
growth in key emerging markets, including Latin America and Asia,
where Abbott is opening a new 500,000 square foot state-of-the-art
nutritionals manufacturing facility in Singapore in the first
quarter. U.S. nutritional sales increased nearly 7 percent, driven
primarily by the successful launch of improved formulations of infant
nutritionals.
Q3) How did specified items affect reported results?
A3) Specified items impacted fourth-quarter results as follows:
4Q08
(dollars in millions, except
earnings-per-share) Earnings
Pre-tax After-tax EPS
As reported $1,686 $1,536 $0.98
Adjusted for specified items:
Litigation settlements $226 $183 $0.12
Cost reduction initiatives and other $101 $83 $0.05
Gain on sale of spine business, net
of tax --- ($147) ($0.09)
As adjusted $2,013 $1,655 $1.06
Litigation settlements relate to previously announced TriCor litigation
that was resolved during the fourth quarter. Cost reduction initiatives
includes previously announced actions to improve efficiencies, including
efforts in the core diagnostic business. These charges were partially
offset by a gain resulting from the sale of the spine business, which
closed in the fourth quarter.
The pre-tax impact of specified items by Consolidated Statement of
Earnings line item is as follows (dollars in millions):
4Q08
Gain on
Cost of Sale of
Products Discontinued
Sold R&D SG&A Operations
As reported $3,178 $732 $2,297 $147
Adjusted for specified items:
Litigation settlements --- --- ($226) ---
Cost reduction initiatives and other ($69) ($13) ($19) ---
Gain on sale of spine business, net
of tax --- --- --- ($147)
As adjusted $3,109 $719 $2,052 ---
Q4) What drove the investment spending in the quarter?
A4) Combined investment in R&D and SG&A was up 14.3 percent, excluding
specified items, and 19.2 percent on a reported basis.
Higher-than-expected growth in SG&A included new and ongoing
promotional initiatives across multiple businesses, including
spending to support the nine new product approvals in 2008. This
accelerated level of investment will support continued growth in
2009. 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 vascular devices.
Q5) How does the fourth-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):
4Q08
Cost of
Products Gross Gross
Sold Margin Margin %
As reported $3,178 $4,772 60.0%
Adjusted for specified items:
Cost reduction initiatives and other ($69) $69 0.9%
As adjusted $3,109 $4,841 60.9%
The adjusted gross margin ratio was 60.9 percent, above our previous
forecast, reflecting improved product mix and a favorable impact of
foreign exchange on the ratio.
Q6) What was the tax rate in the quarter?
A6) The tax rate this quarter, excluding specified items, was 17.8
percent. The tax rate for the full-year 2008, excluding specified
items, was 20.0 percent, consistent with our previous guidance for
the full year. As a reminder, the fourth-quarter tax rate included
the full-year benefit of the U.S. R&D tax credit since it was enacted
retroactively to the beginning of the year during the fourth quarter.
The tax rate in the fourth quarter is expected to continue at
approximately the same level into 2009. The reported tax rate is
reconciled to the ongoing rate below:
4Q08
Pre-tax Income Tax
Income Tax Rate
From continuing operations, as reported $1,686 $296 17.6%
Specified items $327 $63 19.0%
From continuing operations, excluding
specified items $2,013 $359 17.8%
Q7) What are some near-term opportunities from Abbott's broad-based
pipeline?
A7) Abbott's late-stage pipeline generated nine new regulatory approvals
in 2008. Many of these products are in the early stages of launch.
Highlights of the near-term opportunities include:
-- HUMIRA
-- Psoriasis -- Launched in Europe and the U.S. in 2008.
-- RA Japan -- Launched in 2008.
-- Psoriasis Japan -- Indication filed, under regulatory review.
-- Ulcerative colitis -- Currently in Phase III development.
-- TRILIPIX - Received fourth-quarter approval of TRILIPIX, Abbott's
next-generation fenofibrate. To support TRILIPIX, Abbott executed the
largest clinical program to date to evaluate the efficacy and safety of
a fibrate in combination with statins. Development 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 this
year.
-- Flutiform -- Flutiform, a combination asthma treatment in Phase III
development, is targeted for an NDA filing in the first quarter of
2009.
-- ABT-874 -- In Immunology, Abbott's anti-IL-12/23 biologic, ABT-874, has
demonstrated promising results in early studies for psoriasis and is
also being explored as a treatment for Crohn's disease. ABT-874 is
currently in Phase III development for psoriasis.
-- Diabetes Care Pipeline -- The FreeStyle Freedom Lite no-calibration
meter was launched in the United States in 2008. Abbott's FreeStyle
Navigator Continuous Glucose Monitoring System was also approved and
launched in the United States in the first quarter of 2008.
-- XIENCE V -- In June 2008, Abbott 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. Abbott also expects to launch
its next-generation XIENCE V DES in Europe in 2009.
-- Core Laboratory Diagnostics -- In April 2008, 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 with breakthrough
potential.
Our pharmaceutical pipeline has increased in size, novelty and number
of phase transitions. In 2008, 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
-- 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 continues to progress. These compounds include
ABT-869, a multi-targeted kinase inhibitor and ABT-263, a Bcl-2
family protein antagonist.
-- Abbott's oncology research also includes a PARP-inhibitor, which
prevents DNA repair in cancer cells, enhancing the effectiveness of
current cancer therapies.
-- Neuroscience
-- Abbott is conducting innovative research in neuroscience, where
we've developed compounds that target receptors in the brain that
help regulate mood, memory and other neurological functions to
address conditions such as attention deficit hyperactivity disorder,
Alzheimer's disease and schizophrenia. Abbott is also working to
advance compounds that have the potential to meet the market need
for a non-opioid pain therapy. Our work in neuroscience is focused
on several promising investigational platforms including NNRs, H3,
Calpain and TRPV1, among others.
-- Immunology
-- 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, as well as other
potential biologic targets.
-- Additionally, our proprietary DVD-ig technology represents an
innovative approach that can target multiple disease-causing
antigens with a single biologic agent.
-- Hepatitis C
-- Abbott's antiviral program is focused on the treatment of hepatitis
C, a disease that affects more than 170 million people worldwide.
Abbott has several 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
-- Abbott has 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.
Website: http://www.abbott.com// |
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