Abbott 2Q profit edges past Wall Street estimates

Abbott Laboratories said Wednesday its net income edged past Wall Street expectations for the second quarter as sales of drugs and medical devices offset increased operational costs.

Sales of the company's biotech drugs and artery-opening stents saw double-digit gains, and the company reported higher international sales from its recently acquired Solvay division.

"Our diversity allows us to deliver stable more predictable financial performance," said Chief Financial Officer Tom Freyman on an analyst call. "We're focused on further diversifying into emerging markets and in the quarter integrating and building critical mass."

The company said its profit held steady at $1.29 billion, or 83 cents per share. Excluding one-time costs, Abbott earned $1.01 per share. That was one cent higher than analyst expectations, according to a survey by Thomson Reuters.

Analysts expected $1 per share and $8.84 billion in revenue. Abbott's revenue rose 18 percent to $8.83 billion from $7.5 billion.

Abbott shares rose $1.21, or 2.6 percent, to $48.68.

The Libertyville Township-based company's pharmaceutical sales climbed 24.5 percent to $4.91 billion, aided by the acquisition of Solvay Pharmaceuticals in February. Sales of Abbott's top-selling inflammatory disease drug Humira rose 21.5 percent to $1.59 billion. The injectable drug is used to treat rheumatoid arthritis, Crohn's disease and other diseases in which the body's immune system attacks itself.

Wall Street analysts have kept a close eye on Humira sales because the drug has historically contributed more than one-third of Abbott's revenue. Some analysts question whether the Humira success story can hold up in the face of new competition from rival drugs made by Johnson & Johnson and Belgian drug maker UCB.

But Leerink Swann analyst Rick Wise said the drug's better-than-expected performance suggests "Abbott's operational top-line growth story may still have legs."

"International sales also outperformed, potentially suggesting a solid contribution from recently acquired Solvay," Wise added.

Earlier this year Abbott completed a $6.6 billion deal for Solvay, which is based in Belgium and markets drugs in Eastern Europe and Russia.

Abbott's total international sales increased 28 percent to $5 billion.

Compared to a year ago, selling, general and administrative spending jumped by more than a third, partially due to the integration of Solvay.

But Freyman told analysts the combination of the two companies will eventually lead to streamlined operations and reduced costs.

"As we go through this integration process over the next few months and complete it, that's when we're going to start to see some of the reductions and efficiencies that are really help our 2011 outlook," Freyman said.

Heart and artery implant sales climbed 27 percent to $835 million, with sales of coronary stents up 34 percent to $533 million. Stents are mesh-wire tubes that are used to prop arteries open after they have been surgically cleared of fatty plaque.

Nutritional revenue rose 10 percent to $1.41 billion, including pediatric nutritional revenue growth of 12 percent. Diagnostics sales rose 8 percent to $948 million.

Spending on research and development grew 28 percent.

The company has embarked on a series of acquisitions over the last year as it tries to diversify its sources of revenue beyond Humira. Abbott's purchases include contact lens solution maker Advanced Medical Optics and heart valve maker Evalve. In May, the company agreed to buy part of Piramal Healthcare for $3.72 billion. That deal will make Abbott the biggest seller of branded generic drugs in India.

The company also backed its annual profit forecast of $4.13 to $4.18 per share, excluding one-time costs. Analysts expect $4.15 per share.

Abbott said the one-time costs will total about 55 cents per share. Those expenses include charges related to health care reform costs, integration of assets, cost cuts, legal reserves, and in-process research and development costs.