Abbott net rises more than expected on Humira sales
Abbott Laboratories said Wednesday it beat its own expectations for the third quarter as sales of its drug Humira continued to climb, along with sales of medical products and nutritional formula for children.
The Libertyville Township-based company said strong sales of Humira, an injection for rheumatoid arthritis and other inflammatory diseases, made up for weaker sales of other drugs. Humira revenue climbed 24 percent to $1.49 billion, and nutritional sales grew 10 percent to $1.39 billion.
The better-than-expected results for its lead product sent Abbott shares higher in morning trading as the company raised its earnings outlook for the year. Abbott forecast a profit of $3.70 to $3.72 per share, up from $3.65 to $3.70 per share. Analysts expect $3.69 per share, according to Thomson Reuters.
"It looks like Humira continues to grow strongly in the U.S. and we're confident, and obviously we put that into our thinking when we raised the number for the year," said Chief Financial Officer Tom Freyman in a conference call.
Analysts and investors have been concerned growth of Humira revenue would slow in the face of market saturation and competition from new products from Johnson & Johnson and other companies. Abbott relies on humira for roughly 35 percent of its revenue.
"Abbott fundamentals and key investment debates appear answered on the surface," wrote Morgan Stanley's David Lewis, in an investment note. "We expect investors to be encouraged by quarterly results."
For the quarter, Abbott's profit rose 16 percent, to $1.43 billion, or 92 cents per share, from $1.24 billion, or 79 cents per share. Excluding one-time costs, Abbott earned 95 cents per share, five cents above Wall Street estimates. Revenue grew 4 percent, to $7.76 billion from $7.5 billion.
Abbott's positive results came one day after its rival Johnson & Johnson reported a disappointing 5 percent drop in revenue for the third quarter. The company, the world's most diversified health health-products maker, blamed the performance on generic competition to its drugs and reduced spending on consumer items such as contact lenses.
"Abbott's numbers are of better quality than what J&J delivered yesterday and we expect investors may move money from J&J to Abbott," said Credit Suisse analyst Catherine Arnold in a research note.
Abbott's stock rose $1.61, or 3.2 percent, to $51.26 in midday trading.
Total drug sales fell 2 percent to $4.06 billion in the quarter, though that decline slowed from over 4 percent in the prior period. Seizure drug Depakote, which is now facing competition from low cost generics, suffered the steepest decline, and sales of HIV treatment Kaletra and cancer drug Lupron also skidded. Foreign currency exchanges hurt Abbott's sales as well.
Medical products revenue increased after Abbott bought eye care products maker Advanced Medical Optics in February. That deal contributed $263 million in revenue in the third quarter. Sales of molecular diagnostic products rose 15 percent to $82 million. Sales of stents also increased, but revenue from lab diagnostic products and diabetes care items decreased.
Abbott gets almost half its drug revenue from Humira, Kaletra and Depakote. The company has made a series of acquisitions recently in an effort to bring in new sources of revenue. That includes Abbott's agreement to buy Solvay Pharmaceuticals of Belgium for $6.6 billion, announced in September, along with the purchases of Advanced Medical Optics and heart repair equipment maker Evalve.