ABBOTT LABORATORIES 
By ABBOTT PARK, Ill., Jan. 27 /PRNewswire-FirstCall/ -- Abbott (NYSE: ABT) today announced financial results for the fourth quarter ended Dec. 31, 2009.
-- Diluted earnings per share, excluding specified items, were $1.18,
reflecting 11.3 percent growth, at the high end of Abbott's previous
forecast. Diluted earnings per share under Generally Accepted Accounting
Principles (GAAP) were $0.98, up 10.1 percent.
-- Worldwide sales increased 10.6 percent to nearly $8.8 billion, including
a favorable 2.4 percent effect of exchange rates. Excluding the expected
decline in Depakote® sales due to generic competition, worldwide
reported sales increased 12.7 percent. Full-year 2009 sales were $30.8
billion.
-- Worldwide pharmaceutical sales increased 5.2 percent, including a
favorable 2.5 percent effect of exchange rates. Excluding the impact of
Depakote, worldwide pharmaceutical sales increased 8.9 percent.
International pharmaceutical sales increased 22.1 percent, including a
favorable 5.6 percent effect of exchange rates.
-- Worldwide medical products sales increased 23.4 percent, including a
favorable 3.2 percent effect of exchange rates.
-- Worldwide nutritional sales increased 8.8 percent, including a favorable
0.9 percent effect of exchange rates.
-- Abbott is issuing ongoing earnings-per-share guidance for the full-year
2010 of $4.20 to $4.25, excluding specified items. The midpoint of this
range reflects growth of approximately 13.5 percent over 2009, including
an expected February 2010 close of the Solvay Pharmaceuticals
acquisition.
"Abbott's 2009 results demonstrated the sustainable strength and balance of our broad-based businesses," said Miles D. White, chairman and chief executive officer, Abbott. "We took decisive long-term strategic actions in 2009 to ensure our strong results continue for years to come. As a result, we're positioned to deliver another year of top-tier performance in 2010."
The following is a summary of fourth-quarter 2009 sales.
Quarter
Ended
12/31/09
(dollars in millions) % Change vs. 4Q08
-----------------
Sales Operational Foreign Exchange Reported
----- ----------- ---------------- --------
Total Sales $8,790 8.2 2.4 10.6
Total International
Sales $4,756 16.7 4.8 21.5
Total U.S. Sales $4,034 -- (a) -- --
Worldwide Pharmaceutical
Sales $4,849 2.7 (a) 2.5 5.2
International
Pharmaceuticals $2,528 16.5 5.6 22.1
U.S. Pharmaceuticals $2,321 (8.6) (a) -- (8.6)
Worldwide Nutritional
Sales $1,433 7.9 0.9 8.8
International
Nutritionals $733 9.3 1.7 11.0
U.S. Nutritionals $700 6.6 -- 6.6
Worldwide Diagnostics
Sales $975 4.9 3.9 8.8
International
Diagnostics $727 4.1 5.3 9.4
U.S. Diagnostics $248 7.1 -- 7.1
Worldwide Vascular Sales $723 6.5 2.6 9.1
International Vascular $309 9.3 6.4 15.7
U.S. Vascular $414 4.6 -- 4.6
Other Sales $810 (b) 72.6 2.0 74.6
Note: See "Consolidated Statement of Earnings" for more information.
(a) Sales comparison reflects the expected impact of generic Depakote
competition. See Q&A Answer 1 for further discussion.
(b) Includes the acquisition of Advanced Medical Optics, which closed
on Feb. 25, 2009.
The following is a summary of full-year 2009 sales.
Twelve
Months
Ended
12/31/09
(dollars
in millions) % Change vs. 12M08
------------------
Sales Operational Foreign Exchange Reported
----- ----------- ---------------- --------
Total Sales $30,765 8.2 (4.0) 4.2
Total International
Sales $16,545 15.3 (7.6) 7.7
Total U.S. Sales $14,220 0.4 (a) -- 0.4
Worldwide Pharmaceutical
Sales $16,486 2.9 (a) (4.2) (1.3)
International
Pharmaceuticals $8,692 14.4 (8.6) 5.8
U.S. Pharmaceuticals $7,794 (8.3) (a) -- (8.3)
Worldwide Nutritional
Sales $5,284 10.1 (2.8) 7.3
International
Nutritionals $2,648 14.0 (5.7) 8.3
U.S. Nutritionals $2,636 6.3 -- 6.3
Worldwide Diagnostics
Sales $3,578 5.1 (5.0) 0.1
International
Diagnostics $2,639 5.3 (6.7) (1.4)
U.S. Diagnostics $939 4.4 -- 4.4
Worldwide Vascular
Sales $2,692 23.1 (3.0) 20.1
International
Vascular $1,093 12.0 (6.5) 5.5
U.S. Vascular $1,599 32.7 -- 32.7
Other Sales $2,725 (b) 34.9 (3.8) 31.1
Note: See "Consolidated Statement of Earnings" for more information.
(a) Sales comparison reflects the expected impact of generic Depakote
competition.
(b) Includes the acquisition of Advanced Medical Optics, which closed on
Feb. 25, 2009.
The following summarizes the impact of foreign exchange on global sales for selected products.
Quarter Ended 12/31/09
(dollars in millions)
Global Sales
% Change vs. 4Q08
Global -----------------
Sales Operational Foreign Exchange Reported
----- ----------- ---------------- --------
Pharmaceutical Products
HUMIRA $1,662 19.7 3.3 23.0
TriCor/TRILIPIX $419 (8.0) -- (8.0)
Kaletra $378 (1.7) 1.8 0.1
Niaspan $254 14.9 -- 14.9
Lupron $215 (0.2) 1.4 1.2
Synthroid $148 2.9 1.0 3.9
Depakote(a) $102 (62.2) (a) 0.2 (62.0)
Nutritional Products
Pediatric Nutritionals $786 8.2 0.4 8.6
Adult Nutritionals $630 9.8 1.5 11.3
Medical Products
Core Laboratory
Diagnostics $820 2.3 4.2 6.5
Coronary Stents $430 2.4 2.4 4.8
Diabetes Care $332 (4.0) 2.7 (1.3)
Medical Optics $317 n/m n/m n/m
Molecular Diagnostics $94 29.2 3.4 32.6
(a) Sales comparison reflects the expected impact of generic Depakote
competition.
n/m = Not meaningful
The following is a summary of Abbott's fourth-quarter 2009 sales for selected products.
Quarter
Ended
12/31/09
(dollars
in millions) International
-------------
U.S. % Change vs. 4Q08
---- -----------------
% Change Foreign
Sales vs. 4Q08 Sales Operational Exchange Reported
----- -------- ----- ----------- -------- --------
Pharmaceutical
Products
HUMIRA $774 3.1 (a) $888 40.6 7.4 48.0
TriCor/
TRILIPIX $419 (8.0) -- -- -- --
Kaletra $137 (9.9) $241 3.7 3.0 6.7
Niaspan $254 14.9 -- -- -- --
Lupron $141 (3.6) $74 7.7 4.4 12.1
Synthroid $123 2.2 $25 6.7 6.7 13.4
Depakote(b) $75 (69.5) (b) $27 11.4 2.0 13.4
Nutritional
Products
Pediatric
Nutritionals $359 7.7 $427 8.7 0.7 9.4
Adult
Nutritionals $324 9.5 $306 10.0 3.2 13.2
Medical
Products
Core
Laboratory
Diagnostics $159 (0.5) $661 3.0 5.3 8.3
Coronary
Stents $261 (2.3) $169 11.5 6.8 18.3
Diabetes
Care $126 (12.6) $206 2.4 4.7 7.1
Medical
Optics $96 n/m $221 n/m n/m n/m
Molecular
Diagnostics $42 43.3 $52 19.5 5.7 25.2
(a) Reflects comparison to prior year when sales increased 42.4 percent.
(b) Sales comparison reflects the expected impact of generic Depakote
competition.
n/m = Not meaningful
The following summarizes the impact of foreign exchange on global sales for selected products.
Twelve
Months
Ended
12/31/09
(dollars
in millions)
Global Sales
% Change vs. FY08
Global -----------------
Sales Operational Foreign Exchange Reported
----- ----------- ---------------- --------
Pharmaceutical
Products
HUMIRA $5,488 27.7 (6.3) 21.4
Kaletra $1,366 (1.5) (5.8) (7.3)
TriCor/
TRILIPIX $1,337 (0.3) -- (0.3)
Niaspan $855 8.8 -- 8.8
Lupron $800 27.5 (4.7) 22.8
Synthroid $502 (2.2) (2.1) (4.3)
Depakote(a) $425 (67.8) (a) (1.0) (68.8)
Nutritional
Products
Pediatric
Nutritionals $2,849 10.2 (2.4) 7.8
Adult
Nutritionals $2,375 9.8 (3.4) 6.4
Medical
Products
Core
Laboratory
Diagnostics $3,027 3.0 (5.3) (2.3)
Coronary
Stents $1,618 37.9 (2.9) 35.0
Diabetes
Care $1,242 (2.6) (5.6) (8.2)
Medical
Optics $890 n/m n/m n/m
Molecular
Diagnostics $316 22.9 (4.6) 18.3
(a) Sales comparison reflects the expected impact of generic Depakote
competition.
n/m = Not meaningful
The following is a summary of Abbott's full-year 2009 sales for selected products.
Twelve Months
Ended 12/31/09
(dollars
in millions) International
-------------
U.S. % Change vs. FY08
---- -----------------
% Change Foreign
Sales vs. FY08 Sales Operational Exchange Reported
----- -------- ----- ----------- -------- --------
Pharmaceutical
Products
HUMIRA $2,519 11.7 $2,969 43.5 (12.5) 31.0
Kaletra $446 (12.9) $920 4.5 (8.8) (4.3)
TriCor/
TRILIPIX $1,337 (0.3) -- -- -- --
Niaspan $855 8.8 -- -- -- --
Lupron $540 43.2 $260 5.9 (11.2) (5.3)
Synthroid $415 (4.5) $87 9.0 (12.1) (3.1)
Depakote(a) $331 (73.8) (a) $94 6.1 (13.6) (7.5)
Nutritional
Products
Pediatric
Nutritionals $1,306 3.0 $1,543 17.0 (4.7) 12.3
Adult
Nutritionals $1,269 9.2 $1,106 10.4 (7.1) 3.3
Medical
Products
Core
Laboratory
Diagnostics $605 (1.9) $2,422 4.3 (6.7) (2.4)
Coronary
Stents $1,029 53.8 $589 18.0 (6.7) 11.3
Diabetes
Care $498 (11.0) $744 3.3 (9.6) (6.3)
Medical
Optics $337 n/m $553 n/m n/m n/m
Molecular
Diagnostics $150 23.5 $166 22.4 (8.4) 14.0
(a) Sales comparison reflects the expected impact of generic Depakote
competition.
n/m = Not meaningful
Business Highlights
-- Completed Acquisitions of Evalve, Inc. and Visiogen, Inc.: Completed
the acquisition of Evalve, Inc., the global leader in the development of
devices for minimally invasive repair of mitral valves. In addition,
completed the acquisition of privately-held eye care company, Visiogen,
Inc., expanding our vision care business with a next-generation
accommodating intraocular lens (IOL) technology to address presbyopia
for cataract patients.
-- Acquired Novel Biologic to Treat Chronic Pain: We completed the
acquisition of global rights to PanGenetics' PG110, a novel biologic in
development for the treatment of chronic pain. This fully humanized
antibody to Nerve Growth Factor (NGF) expands Abbott's early stage pain
care pipeline and leverages our biologics platform. NGF is released at
sites of tissue damage and inflammation, and plays a significant role in
the transmission of pain signals by the central nervous system.
-- Presented Three-Year Bioabsorbable Stent Data at AHA: Announced
three-year data from its fully bioabsorbable drug-eluting stent clinical
trial, ABSORB. These results showed that patients experienced no stent
thrombosis out to three years and no new major adverse cardiac events
(MACE) between six months and three years. In addition, Abbott announced
a large-scale trial called ABSORB EXTEND, which will enroll up to 1,000
patients with more complex coronary artery disease from approximately
100 centers around the world.
-- Announced Acquisition of STARLIMS Technologies Ltd.: Announced a
definitive agreement to acquire STARLIMS Technologies Ltd., a leading
provider of laboratory information management systems. The acquisition
strengthens Abbott's competitive position in the global diagnostics
market, providing advanced web-based software applications to help
laboratories efficiently store, retrieve and analyze clinical,
managerial and administrative data.
-- Announced Regulatory Filing for Simcor® 40mg and Arbiter-6 HALTS Data
Presented at AHA: Announced U.S. regulatory filing for two new 40mg
dosage strengths of Simcor, Abbott's fixed dose combination of niacin
extended-release and simvastatin. In addition, the Arbiter-6 HALTS
study, presented at AHA, showed that adding Abbott's Niaspan to statin
therapy resulted in significant carotid atherosclerosis regression and
significantly fewer major adverse cardiac events (MACE) than ezetimibe
(Zetia).
-- Received Approval for Two New HUMIRA® Indications in Japan: Recently
received regulatory approval in Japan for two new HUMIRA indications,
psoriasis and psoriatic arthritis. HUMIRA was approved for rheumatoid
arthritis in Japan in 2008. In addition, Abbott has completed regulatory
submissions in Japan for Crohn's disease and ankylosing spondylitis, and
review is currently underway.
-- Received Approval for XIENCE V® in Japan and Mexico: Abbott recently
received regulatory approval for XIENCE V in Japan, the second largest
DES market in the world. XIENCE V was also approved in Mexico in
January. The launches of XIENCE V in Japan and Mexico are expected to
begin shortly. In addition, the COMPARE trial results were published in
The Lancet. These results showed XIENCE V demonstrated superior safety
and efficacy outcomes compared to Boston Scientific's TAXUS® Liberte
drug-eluting stent.
Abbott issues earnings-per-share outlook for 2010
Abbott is issuing ongoing earnings-per-share guidance for the full-year 2010 of $4.20 to $4.25, excluding specified items. The midpoint of this range reflects growth of approximately 13.5 percent over 2009, including an expected February 2010 close of the Solvay Pharmaceuticals acquisition.
Abbott forecasts specified items for the full-year 2010 of approximately $0.28 per share, primarily associated with previously announced acquisitions and cost reduction initiatives, as well as the one-time impact of the devaluation of the Venezuelan Bolivar on translation of the balance sheet. Including these specified items, projected earnings per share under Generally Accepted Accounting Principles (GAAP) would be $3.92 to $3.97 for the full-year 2010. This forecast excludes integration costs associated with the Solvay Pharmaceuticals acquisition, which will be quantified at a later date.
Abbott declares quarterly dividend; double-digit increase over prior year
On Dec. 11, 2009, the board of directors of Abbott declared the company's quarterly common dividend of 40 cents per share, an increase of 11 percent over the prior period. The cash dividend is payable Feb. 15, 2010, to shareholders of record at the close of business on Jan. 15, 2010. This marks the 344th 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 72,000 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 fourth-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, 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, 2009 and 2008
(in millions, except per share data)
(unaudited)
2009 2008 % Change
---- ---- --------
Net Sales $8,790 $7,950 10.6
------ ------
Cost of products sold 3,784 3,178 19.1
Research and development 747 732 2.1
Acquired in-process
research and development 170 -- n/m
Selling, general and
administrative 2,225 2,297 (3.1)
----- -----
Total Operating Cost and
Expenses 6,926 6,207 11.6
----- -----
Operating earnings 1,864 1,743 6.9
Net interest expense 94 81 16.5
Net foreign exchange
(gain) loss 7 47 n/m
Other (income) expense,
net (60) (71) (14.8)
--- ---
Earnings from continuing
operations before taxes 1,823 1,686 8.1
Taxes on earnings from
continuing operations 284 296 (4.2)
--- ---
Earnings from continuing
operations 1,539 1,390 10.7
Gain on sale of
discontinued operations,
net of tax -- 146 (100.0)
--- ---
Net Earnings $1,539 $1,536 0.2
====== ======
Net Earnings from Continuing
Operations Excluding Specified
Items, as described below $1,845 $1,655 11.5 1)
====== ======
Diluted Earnings per
Common Share from
Continuing Operations $0.98 $0.89 10.1
===== =====
Diluted Earnings per Common Share
from Gain on Sale of
Discontinued Operations $-- $0.09 (100.0)
=== =====
Diluted Earnings Per
Common Share $0.98 $0.98 --
===== =====
Diluted Earnings Per Common Share
from Continuing Operations,
Excluding Specified Items,
as described below $1.18 $1.06 11.3 1)
===== =====
Average Number of Common Shares
Outstanding Plus Dilutive
Common Stock Options and
Awards 1,560 1,564
1) 2009 Net Earnings Excluding Specified Items excludes after-tax
charges of $170 million, or $0.11 per share, for acquired in-process
research and development associated with the PanGenetics acquisition,
$99 million, or $0.07 per share, primarily for acquisition integration
and cost reduction initiatives, and $37 million, or $0.02 per share,
primarily related to inventory write-offs associated with the
suspension of sibutramine in certain countries following the European
regulatory recommendation.
2008 Net Earnings Excluding Specified Items excludes after-tax charges of
$183 million, or $0.12 per share, for litigation settlements related to
TriCor and $82 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 $146 million, or $0.09 per
share, related to the sale of the spine business.
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
Twelve Months Ended December 31, 2009 and 2008
(in millions, except per share data)
(unaudited)
2009 2008 % Change
---- ---- --------
Net Sales $30,765 $29,528 4.2
------- -------
Cost of products sold 13,209 12,612 4.7
Research and development 2,744 2,689 2.0
Acquired in-process
research and development 170 97 n/m
Selling, general and
administrative 8,406 8,436 (0.4)
----- -----
Total Operating Cost and
Expenses 24,529 23,834 2.9
------ ------
Operating earnings 6,236 5,694 9.5
Net interest expense 382 328 16.7
Net foreign exchange (gain)
loss 35 84 (57.8)
(Income) from TAP
Pharmaceutical Products
Inc. joint venture -- (119) (100.0)
Other (income) expense, net (1,375) (455) n/m 1)
------ ----
Earnings from continuing
operations before taxes 7,194 5,856 22.8
Taxes on earnings from
continuing operations 1,448 1,122 29.0
----- -----
Earnings from continuing
operations 5,746 4,734 21.4
Gain on sale of discontinued
operations, net of tax -- 146 (100.0)
--- ---
Net Earnings $5,746 $4,880 17.7
====== ======
Net Earnings Excluding
Specified Items, as
described below $5,805 $5,186 11.9 2)
====== ======
Diluted Earnings per Common
Share from Continuing
Operations $3.69 $3.03 21.8
===== =====
Diluted Earnings per Common Share
from Gain on Sale of
Discontinued Operations $-- $0.09 (100.0)
=== =====
Diluted Earnings Per Common
Share $3.69 $3.12 18.3 3)
===== =====
Diluted Earnings Per Common Share
from Continuing Operations
Excluding Specified Items,
as described below $3.72 $3.32 12.0 2)
===== =====
Average Number of Common Shares
Outstanding Plus Dilutive
Common Stock Options and
Awards 1,555 1,561
1) Other (income) expense, net, in 2009 includes the derecognition of a
contingent liability that was recorded in connection with the conclusion
of the TAP joint venture and a patent litigation settlement. Other
(income) expense, net, in 2008 includes a gain associated with the
closing of the TAP Pharmaceutical Products Inc. joint venture transaction
and a gain from the sale of an equity investment in Millennium
Pharmaceuticals. These items have been treated as specified items in both
periods.
2) 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 and an after-tax gain of $182 million, or $0.12 per
share, relating to a patent litigation settlement. This was offset by
$170 million, or $0.11 per share, for acquired in-process research and
development, $164 million, or $0.10 per share, primarily relating to
costs associated with the acquisition of Advanced Medical Optics, $68
million, or $0.04 per share, for litigation settlements and $344
million, or $0.22 per share, primarily for cost reduction initiatives and
costs associated with a delayed product launch.
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, and an after-tax gain of $146 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 litigation settlements related to TriCor
and $83 million, or $0.05 per share, for acquisition integration, TAP
separation and other.
3) Effective January 1, 2009, Abbott adopted FSP EITF 03-6-1,
"Determining Whether Instruments Granted in Share-Based Payment
Transactions Are Participating Securities." As a result, net earnings
allocated to common shares for the twelve months ended December 31, 2009
was $5.733 billion. Net earnings allocated to common shares in 2008 was
not significantly different than net income.
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) Reported HUMIRA global sales growth was 21.4 percent for the full-year 2009, exceeding our previous full-year sales guidance for the product. International pharmaceutical sales in the fourth quarter increased 22.1 percent, including a 5.6 percent favorable impact from exchange. Internationally, growth for HUMIRA was 48.0 percent, with reported sales of $888 million. International anti-TNF market growth trends remain strong, and HUMIRA maintains a market-leading position in many of the international markets, including the number one share position in Western Europe.
U.S. pharmaceutical sales declined 1.9 percent, excluding the expected decline of Depakote sales due to generic competition, which reduced U.S. pharmaceutical sales growth by 6.7 percentage points. Reported U.S. pharmaceutical sales declined 8.6 percent.
U.S. pharmaceutical sales were led by Niaspan, with sales of $254 million, up 14.9 percent. The release of the Arbiter-6 HALTS study data at AHA in November is having a favorable impact on Niaspan prescribing trends. TriCor/TRILIPIX franchise growth this quarter was impacted by the comparison to prior year, when sales were up 16 percent, including the initial launch of TRILIPIX. Total prescriptions for the TriCor/TRILIPIX franchise continue to grow in the mid-to high-single digits, exceeding the growth rate of the cholesterol market.
In line with our expectations, U.S. HUMIRA sales growth was impacted by the comparison to the fourth quarter of 2008, when sales growth was 42 percent. Underlying demand for HUMIRA continues to outpace the market, with particularly strong growth in the dermatology and gastroenterology segments. During 2009, HUMIRA gained total prescription share in the U.S. anti-TNF market, with 42 percent share at year end.
Q2) What drove the strong performance in worldwide medical products and worldwide nutritional products sales?
A2) Medical products sales increased 23.4 percent, including a favorable 3.2 percent impact from exchange and sales from Abbott Medical Optics (AMO), which was acquired during the first quarter of 2009. Medical Products strength in the quarter reflects 9.1 percent growth in worldwide vascular sales and strong growth in U.S. Diagnostics, including continued double-digit growth in Abbott's molecular and point of care diagnostics businesses.
Vascular sales were driven by the continued market uptake of XIENCE V, which remains the number one drug-eluting stent (DES) in the United States and Europe. In January, we received approval for XIENCE V in Japan and expect to launch upon final reimbursement authorization, which we anticipate in early February. Japan is the second-largest drug-eluting stent market. XIENCE PRIME, our next-generation drug-eluting stent, is off to a strong start in Europe, where it was launched in September 2009. XIENCE PRIME is gaining market share given its improved deliverability and additional long-lesion sizes. In addition, XIENCE V was approved in Mexico in January.
Worldwide nutritional products sales increased 8.8 percent, including a favorable 0.9 percent impact from exchange. International nutritional product sales increased 11.0 percent, reflecting strong growth in key emerging markets, including Latin America and Asia.
Q3) What was the fourth-quarter gross margin ratio?
A3) The gross margin ratio before and after specified items is shown below (dollars in millions):
4Q09
----
Cost of
Products Gross Gross
Sold Margin Margin %
---- ------ ---------
As reported $3,784 $5,006 56.9%
Adjusted for specified items:
Acquisition related ($3) $3 --
Sibutramine suspension ($34) $34 0.4%
Cost reduction
initiatives and other ($83) $83 1.0%
As adjusted $3,664 $5,126 58.3%
The adjusted gross margin ratio was 58.3 percent, consistent with our previous forecast, reflecting the expected reduction in Depakote sales resulting from generic competition and the negative impact of foreign exchange on the ratio.
Q4) What was the tax rate for the full-year 2009 and in the quarter?
A4) The full-year 2009 ongoing tax rate of 16.8 percent reflects continuing favorable trends. We expect these trends to continue into 2010. The fourth-quarter ongoing tax rate was 14.5 percent, reflecting the mix of income by taxing jurisdiction. The reported fourth-quarter tax rate is reconciled to the ongoing rate below (dollars in millions):
4Q09
----
Pre-Tax Income Tax
Income Tax Rate
------ --- ----
As reported $1,823 $284 15.6%
Specified items $334 $28 8.3%
---- --- ---
Excluding specified items $2,157 $312 14.5%
Q5) What drove SG&A and R&D investment in the quarter?
A5) In the fourth quarter, Abbott increased investment in programs to drive future growth, resulting in ongoing SG&A expense that was above previous expectations. R&D investment was in line with our forecasts, reflecting continued investment in our broad-based pipeline, including programs in vascular devices, immunology, neuroscience, oncology and HCV.
Q6) How did specified items affect reported results?
A6) Specified items impacted fourth-quarter results as follows:
4Q09
----
(dollars in millions, except
earnings-per-share) Earnings
--------
After-
Pre-tax tax EPS
------- ------- ---
As reported $1,823 $1,539 $0.98
Adjusted for specified items:
Acquired in-process R&D $170 $170 $0.11
Acquisition related $49 $42 $0.03
Sibutramine suspension $43 $37 $0.02
Cost reduction initiatives and other $72 $57 $0.04
--- --- -----
As adjusted $2,157 $1,845 $1.18
Acquired in-process R&D is related to the acquisition of global rights to PanGenetics' PG110, a novel biologic in development for the treatment of chronic pain. Product suspension primarily relates to inventory write-offs associated with the suspension of sibutramine by certain countries following the European regulatory recommendation. Acquisition related is primarily associated with integration costs related to the acquisitions of AMO, Evalve and Visiogen. Cost reduction initiatives include actions to improve efficiencies, including the previously announced efforts in the core laboratory diagnostic business.
The pre-tax impact of specified items by Consolidated Statement of Earnings line item is as follows (dollars in millions):
4Q09
----
Cost of
Products
Sold R&D IP R&D SG&A
-------- --- ------ ----
As reported $3,784 $747 $170 $2,225
Adjusted for specified items:
Acquired in-process R&D -- -- ($170) --
Acquisition related ($3) -- -- ($46)
Sibutramine suspension ($34) ($9) -- --
Cost reduction initiatives
and other ($83) ($1) -- $11
---- --- --- ---
As adjusted $3,664 $737 -- $2,190
Q7) What are the key areas of focus in Abbott's broad-based pipeline?
A7) Abbott is conducting leading-edge research across the company. In 2010, we expect to see continued advancement in our broad-based pipeline, including the anticipated approval for five new products or indications and data for numerous Phase I and Phase II compounds. Our pipeline is comprised of breakthrough research across both pharmaceuticals and medical devices. Following are select highlights:
-- Lipid Management
-- We continue to anticipate U.S. FDA approval for CERTRIAD during the
first half of 2010. CERTRIAD is the fixed-dose combination of
TRILIPIX and CRESTOR that Abbott is developing with AstraZeneca.
-- Oncology
-- Abbott's oncology pipeline includes therapies that represent
promising, unique scientific approaches to treating cancer. Abbott
is focused on the development of targeted, less-toxic treatments
that inhibit tumor growth and improve response to common cancer
therapies.
-- Our mid-stage oncology pipeline includes: ABT-263, a Bcl-2 family
protein antagonist; ABT-869, a multi-targeted kinase inhibitor; and
ABT-888, a PARP-inhibitor. Abbott is also evaluating a number of
additional promising mechanisms in our pre-clinical pipeline.
-- Neuroscience
-- Abbott is conducting innovative research in neuroscience, where we
have 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 recently advanced two compounds into Phase II development for
Alzheimer's disease.
-- Abbott is also pursuing compounds that could provide relief across a
broad spectrum of pain states, such as osteoarthritis, postoperative
pain and cancer pain. We recently expanded our early-stage pain
portfolio with the addition of an anti-nerve growth factor (NGF)
biologic for chronic pain.
-- Immunology
-- Abbott's scientific experience with the anti-TNF biologic HUMIRA
serves as a strong foundation for our continuing research in
immunology. In our pipeline, we continue to explore additional
indications for HUMIRA and have ongoing studies for ABT-874,
Abbott's anti-IL 12/23 biologic. We are also working to advance
development of our early discovery programs, including oral DMARD
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. 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, 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 hepatitis C development programs include our
partnership with Enanta Pharmaceuticals to discover protease
inhibitors, as well as our internal programs focused on additional
viral targets, including polymerase inhibitors.
-- Abbott currently has three HCV compounds in human trials, spanning
multiple mechanisms of action, with additional compounds in
pre-clinical development. 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.
-- Vascular Devices
-- MitraClip - Abbott's MitraClip is on the market in Europe and in
development in the United States for the treatment of mitral
regurgitation. Abbott anticipates presenting the MitraClip pivotal
trial, EVEREST II, at the upcoming ACC medical meeting in March.
-- 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 off to a strong start in Europe, where it was launched in
September. XIENCE PRIME is in clinical trials in the United States.
-- 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.
-- "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.
-- Bioabsorbable Stent - Abbott is developing a bioabsorbable stent
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 clinical
program, with an opportunity to reach the market years ahead of
competitors.
-- Core products - Abbott recently received CE Mark for its
next-generation bare metal stent, MULTI-LINK 8. We expect approval
for this product in the United States later this year. Other devices
in active development include next-generation frontline and
high-pressure balloons, and new guidewires.
-- Molecular Diagnostics
-- In the fourth quarter, Abbott launched its first RealTime cancer
test on the m2000 platform to detect a gene linked to colorectal
cancer. Abbott also continues to partner with pharmaceutical
companies to develop automated molecular tests to screen for
non-small cell lung cancer.
-- Diagnostics
-- Abbott recently received CE Mark for an important ARCHITECT
immunoassay, which can help in the assessment of ovarian cancer in
women. Abbott has also submitted the test to the FDA for 510(k)
clearance.
-- Abbott has also submitted a Premarket Approval (PMA) application to
the FDA for its ARCHITECT HIV Ag/Ab Combo assay. The assay has been
shown to detect acute and chronic HIV infection earlier than
currently approved antibody tests. Upon approval, the test is
expected to be the first of its kind available for patients in the
United States.
SOURCE Abbott
