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Abbott 1Q profit rises despite slipping drug sales

http://finance.yahoo.com/news/Abbott-1Q-profit-rises-on-apf-14931670.html

Abbott Labs 1Q profit rises, but slower sales growth of top drug Humira worries investors

* Matthew Perrone, AP Business Writer
* Wednesday April 15, 2009, 12:09 pm EDT

WASHINGTON (AP) -- Abbott Laboratories reported a first-quarter profit that edged past Wall Street expectations, though analysts focused on weaker sales growth of its blockbuster drug Humira, sending shares lower in Wednesday trading.

The North Chicago-based company's revenue slipped about 1 percent and was weaker than analysts expected, as unfavorable currency exchange rates and slower purchasing in the U.S. led to a drop in drug spending.

Abbott shares fell $2.09, or 4.7 percent, to $42.62 in midday trading.

The company reported lower-than-expected sales of $1.02 billion for its best-selling drug Humira, which used to treat rheumatoid arthritis and a number of other diseases. Analysts were expecting sales of over $1.10 billion.

Company executives blamed the shortfall on tighter wholesale inventories and financial hardships facing patients, who are reconsidering their medication copayments as the economy struggles. The company scaled back its 2009 growth guidance for the drug to between 15 and 20 percent from 25 percent, a move that "suggests the product's growth may be starting to slow," according to Credit Suisse analyst Catherine Arnold.

But Chief Executive Miles White brushed off those concerns, saying "the reaction by some analysts and investors just boggles my mind." He said the drug is still positioned to add billions of dollars in revenue in coming years.

Humira has been a key to Abbott's success story in recent years, racking up approvals for half a dozen uses, including psoriasis, Crohn's disease and other immune-system disorders.

For the first quarter ended March 31, Abbott said it earned $1.44 billion, or 92 cents per share, up from $988 million, or 60 cents per share, a year ago.

Earnings benefited from the breakup of a partnership with Japanese drugmaker Takeda Pharmaceuticals.

Abbott and Takeda ended a 31-year-old joint venture called TAP Pharmaceutical Products last year. Takeda received the TAP product pipeline, and Abbott agreed to pay Takeda if some TAP product candidates did not advance through clinical testing. The products have reached their goals, which freed Abbott from the obligation to pay and resulted in a one-time gain of $505 million after taxes.

Excluding that payment and other one-time items, Abbott said it earned 73 cents per share. That was 3 cents above analyst expectations.

The company's sales slipped 1 percent to $6.72 billion from $6.77 billion, and Abbott said foreign exchange rates were worse than expected, lowering results by 6.1 percent. Analysts expected higher revenue of $7.06 billion, according to Thomson Reuters.

Sales of Abbott's Humira rose 17 percent to over $1 billion, but the strong dollar hurt sales abroad by about 20 percentage points.

Overall drug sales fell 5.7 percent, to $3.63 billion, pressured 6.6 percent lower because of exchange rates. Generic competition for the company's Depakote, which is used to treat seizures and bipolar disorder, contributed more than $230 million of the sales decline, the company said.

That weaker performance was partially offset by higher sales of the company's Xience drug-coated stents, which boosted the company's vascular business more than 42 percent to $645 million in sales. Stents are used to prop open clogged arteries after they have been cleared of plaque.

Nutritional product revenue grew 6.4 percent to $1.18 billion and diagnostic revenue fell 1.8 percent to $816 million.

Abbott maintained its full-year profit forecast of $3.65 to $3.70 per share and said it expects to earn 80 to 82 cents per share in the second quarter, or 87 to 89 cents per share excluding one-time items.

Analysts expect $3.67 per share for the year, and 88 cents per share in the second quarter, on average. The estimates typically exclude one-time items.