Abbott Laboratories, which is selling two of its core laboratory diagnostic businesses to General Electric in a $8.13 billion deal, has seen its earnings for the fourth quarter take a hammering as a result of a charge linked to its own $3.7 billion acquisition of Kos Pharmaceuticals.
The company reported a net loss of $476.2 million, compared with a profit of $976.4 million a year earlier. However those numbers include charges of $1.3 billion which mostly relate to the Kos purchase and excluding the latter, Abbott earned $1.15 billion.
Group sales were up 2.8% to $6.22 billion and pharmaceutical revenues made up $3.54 billion of that total. This represented an 8.2% decline on the like, year-earlier period, but Abbott noted that the fall was due to the impact on sales of the firm’s terminated agreement with Germany’s Boehringer Ingelheim for the US distribution of three drugs – the anti-inflammatory Mobic (meloxicam), Flomax/Alna (tamsulosin) for benign prostatic hyperplasia and blood pressure drug Micardis (telmisartan).
Humira drives sales again
Once again it was Abbott's rheumatology product Humira (adalimumab) that was the main driver of sales, rising 40.6% to $620 million in the quarter, thanks in part to the drug being granted additional US approval as a treatment for psoriatic arthritis and ankylosing spondylitis, a rheumatological disease of the spine. Sales are set to rise even further as Abbott is hoping to secure approval of Humira in Crohn's disease in the USA and Europe later this year.
Other big earners included Depakote (divalproex sodium) for epilepsy increased 15.2% to $339 million, while the antibiotic Omnicef (cefdinir), brought in $259 million, up 36.9%. HIV/AIDS drug Kaletra (lopinavir/ritonavir) gained 9.1% to $297 million, but sales of the thyroid hormone replacement drug Synthroid (levothyroxine) slid 15.5% to $132 million, battered by generic competition. Sales of the antibiotic Biaxin (clarithromycin) plunged 16.4% to $235 million, again as a result of losing patent protection in the USA last year.
Abbott is forecasting 2007 sales growth of 13%-15% and earnings will certainly be boosted by proceeds from the diagnostics divestment. Following the sale, pharmaceuticals will account for 80% of the firm's operating profit and analyst Milena Izmirlieva at Global Insights said that despite the move towards a more high-risk area, “the company has remained true to its strategy of not putting all of its eggs in one basket.” She added that “the very fact that two key diagnostics units were excluded from the current GE deal indicates that Abbott will remain as broad-based as strategy dictates, while at the same time moving up the profitability ladder.”