US drug major Abbott Laboratories saw its share price swell 5.3% to close at $42.17 yesterday, after a flurried batch of trading throughout the day came on the back of a rather pleasing set of fourth-quarter results and news that medical device maker Guidant has accepted Boston Scientific’s acquisition bid of $27 billion.
Abbott helped Boston Scientific outbid rival suitor Johnson & Johnson by agreeing to buy Guidant’s vascular business for around $6.4 billion should the bid be successful, and investors obviously view this as a welcome addition to Abbott’s vascular product mix.
Cost-cutting measures during the fourth quarter helped Abbott generate earnings in line with analysts’ general expectations. The group posted earnings of $1.2 billion, or $0.76 a share, excluding special items, marking respectable growth of 12.7% over the year-ago period.
Sales fell short of Wall Street forecasts, but still grew 7% to $6.0 billion, driven by a stellar performance by the rheumatoid arthritis therapy Humira (adalimumab), which leapt 61.8% to $441 million. This launched Humira to blockbuster status, bringing annual turnover to $1.4 billion. The drug is the first to be developed by UK group Cambridge Antibody Technology to become a blockbuster, and sales look set to hit $1.9 billion this year, of which CAT is due to receive around 2.7% in royalties.
Solid growth during the period was also supported by: the cholesterol-buster TriCor (fenofibrate), up 37.5% to $312 million; the antibiotic Omnicef (cefdinir), rising 27.5% to $189 million; and the osteoarthritis drug Mobic (meloxicam), sold by the group for German drugmaker Boehringer Ingelheim, which grew 18.4% to $306 million. On the down side, Biaxin (clarithromycin) revenues dropped 26.4% to $281 million, as immediate-release versions of the drug are subjected to mounting generic competition, although extended-release formulations are still under patent protection.
Commenting on the results, Abbott’s Chairman and chief executive, Miles White, said: “Our balanced, broad-based businesses delivered strong results once again in 2005, in-line with our expectations. With a breadth of opportunities across medical technology, biologics, nutritionals and pharmaceuticals, we have the earnings power and stability to continue to deliver consistent earnings-per-share growth.”
Looking forward, the group is sticking with its original earnings per share forecasts of $0.62-$0.64 for the first quarter of 2006 and $2.66-$2.72 for the full year, excluding special items.