Abbott LaboratoriesABT

Morningstar Rating

Stock Research and Analysis

by Damien Conover, CFA

On the foundation of a wide lineup of patent-protected drugs, a leading diagnostics business, a strong nutritional division, and an emerging vascular group, Abbott Laboratories has dug a wide economic moat. We expect these operating lines will continue Read more

Bulls Say

Strong clinical data from SPIRIT II and SPIRIT III give Xience a leg up in the drug-eluting stent market.

Xience significantly outperformed another of Abbott's drug-eluting stents, Zomaxx, which used the same drug coating as Medtronic's MDT new Endeavor stent. Thus, Xience could outperform Endeavor.

New indications in Crohn's disease and psoriasis for Humira should further propel sales growth for the company's leading pharmaceutical product.

In an industry plagued by patent exposure, Abbott faces only one major patent loss with the recent patent loss on Depakote. Further, the extended-release version accounts for 50% of Depakote sales and may hold off generics for several years with additional patents.

The acquisition of Solvay's pharmaceutical unit brings in several new drugs, which could see dramatically increased sales potential with Abbott's powerful salesforce behind it. Read more

Bears Say

The acquisitions of Advanced Medical Optics, Kos Pharmaceuticals, and the drug unit of Solvay as well as the failed divestiture of the diagnostics division to General Electric GE may cause integration disruptions as the company digests the multiple operating lines.

Lack of robust internal development casts a shadow on the company's ability to create blockbusters in-house.

Clinical data on drug-eluting stents have recently presented unclear benefits versus bare metal stents and other treatments. Stent operations and use of drug-eluting stents could fall without supportive new data.

In an increasingly strict regulatory environment, the company's weak pipeline lacks the high number of shots on goal needed to increase the success probability of new product approvals.

Pfizer's JAK-3 inhibitor for rheumatoid arthritis has shown strong efficacy in Phase II trials relative to Humira. If the drug holds up well in late-stage trials, it could take significant market share from Humira. Read more

Strategy

Through a combination of acquisitions and internal growth, Abbott strives to build a leadership position across diverse heath-care businesses. Abbott has gained solid operating assets through external Read more

Management

Miles White took the helm as CEO in 1998 and chairman of the board the following year. His tenure with the company dating back to 1984 provides the experience needed in wielding the many operating lines of the company. Under his leadership, the company Read more

Profile

Abbott manufactures and markets pharmaceuticals, medical devices, blood glucose monitoring kits, and nutritional health-care products. Products include prescription drugs, Read more

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