Abbott Laboratories Inc on Wednesday reported lower-than-expected quarterly sales, hurt by generic competition for its Depakote anti-seizure drug, but one-time gains and demand for stents drove profit higher.
We're now seeing for the first time the real impact of the economic downturn (on) healthcare, Abbott Chief Executive Miles White told investors in a conference call. But White said Abbott was being dented rather than hammered by the downturn.
The drugmaker, whose shares fell 4.6 percent, said net income rose to $1.44 billion, or 92 cents per share, from $938 million, or 60 cents per share, a year earlier.
The results included a gain of $797 million after it was released from an obligation to make a payment to longtime partner Takeda Pharmaceutical Co Ltd <4502.T>.
Excluding special items, the company earned 73 cents per shares. Analysts on average expected 70 cents, according to Reuters Estimates.
Global sales fell slightly to $6.72 billion, below the Reuters Estimates forecast of $7.07 billion.
Abbott said a stronger dollar, which reduces the value of overseas sales, crimped total revenue by 6.1 percentage points.
Most of the sales shortfall came from U.S. pharmaceuticals, led by Humira, reflecting not only weaker markets, but a drawdown in inventories at the wholesaler and pharmacy level, JPMorgan analyst Michael Weinstein said in a research note.
Revenue from one-time blockbuster Depakote plunged by almost two thirds as U.S. doctors began opting for cheaper copycats. Sales of Abbott's Kaletra treatment for HIV were also significantly lower, hurt by new competition.
The revenue trend represents at least a temporary reversal of fortune for Abbott, whose sales jumped 10 percent in the fourth quarter and made the company an industry standout in terms of profit growth.
Despite the new challenges, Abbott said it still expects full-year earnings of $3.65 to $3.70 per share, excluding special items. That would represent profit growth of as much as 11.4 percent over last year.
The suburban Chicago company forecast earnings of 87 cents to 89 cents per share for the second quarter.
Abbott does not need to make major acquisitions to prop up its revenue and profits, White said.
I don't feel the need to run out and do a deal to sustain what we've promised to shareholders, said White, who noted Abbott will remain opportunistic about small and mid-sized deals. Recent reports that Abbott had competed to acquire U.S. drugmaker Wyeth
Abbott's global pharmaceutical sales fell 5.7 percent to $3.64 billion in the first quarter. Depakote sales fell 65 percent to $129 million, while Kaletra revenue shrank 17 percent to $292 million. Abbott's thyroid replacement hormone, Synthroid, fell 9 percent to $105 million.
Humira sales rose 17 percent to $1.02 billion, below some analyst forecasts. Abbott said it expected the drug's full-year sales to rise 15 percent to 20 percent, which JPMorgan's Weinstein said was well below Wall Street expectations of growth north of 25 percent.
Tim Nelson, a healthcare analyst with First American Funds, said Abbott shares were being hit on Wednesday mostly by undue concern over Humira's growth potential.
Although hefty insurance co-payments have deterred many U.S. patients from using Humira and wholesalers cut back on purchases in the first-quarter, Nelson said annual sales of the arthritis drug could more than double to $10 billion within the next three years because of its impressive effectiveness.
The product is best in its class, and there's no question it has huge additional growth potential, Nelson said.
Sales of Abbott's core laboratory diagnostics slumped 3.9 percent to $695 million, while diabetes care products fell almost 13 percent to $284 million.
But sales of coronary stents, which prop open heart arteries that have been cleared of plaque, more than doubled to $402 million as Xience continued to outsell older products sold by Johnson & Johnson
Abbott shares fell 4.6 percent to $42.65 in late morning trading on the New York Stock Exchange.
(Reporting by Ransdell Pierson; Editing by Lisa Von Ahn and Derek Caney)