- Worldwide Pharmaceutical Sales Increased 19.6 Percent - ABBOTT
PARK, Ill., Oct. 17 /PRNewswire-FirstCall/ -- Abbott today
announced financial results for the third quarter ended Sept. 30,
2007. * Diluted earnings per share, excluding specified items, were
$0.67, above Abbott's previously announced guidance range of $0.64
to $0.66. Diluted earnings per share under Generally Accepted
Accounting Principles (GAAP) were $0.46. * Based on its strong
results year to date, Abbott is confirming its 2007
earnings-per-share outlook and raising the lower end of its
previous guidance range. In addition, the company is confirming its
outlook for an accelerating rate of earnings-per-share growth in
2008 compared to 2007. * Worldwide sales increased 14.4 percent to
$6.4 billion, including a favorable 2.8 percent effect of exchange
rates. * U.S. pharmaceutical sales increased 17.5 percent and
International pharmaceutical sales increased 22.2 percent, driven
by double-digit growth in HUMIRA(R), Kaletra(R) and TriCor(R), and
included $167 million of Niaspan(R) sales. Based on the continued
strong sales performance of HUMIRA, which contributed more than
$800 million in worldwide sales in the third quarter, Abbott
estimates 2007 global sales of $3 billion. * Worldwide medical
products sales increased 12.0 percent, driven by 13.8 percent
growth in worldwide Diabetes Care sales, 14.9 percent growth
worldwide in Abbott Vascular, and 14.4 percent growth in
International diagnostics sales. * Worldwide nutritional products
sales were led by 15.6 percent growth in International
nutritionals, with continued strong performance in key emerging
growth markets. "Abbott's strong performance this quarter was again
balanced across our major broad-based businesses," said Miles D.
White, chairman and chief executive officer, Abbott. "We expect
this momentum to continue in the fourth quarter and into 2008, when
the strength of our diversity will drive an accelerating rate of
earnings-per-share growth compared to 2007." The following is a
summary of third-quarter 2007 sales. Impact of Sales Summary - 3Q07
% Change Exchange on Quarter Ended 9/30/07 ($ millions) vs. 3Q06 %
Change Total Sales $6,377 14.4 2.8 Total U.S. Sales $3,125 10.2 ---
Total International Sales $3,252 18.8 5.7 Worldwide Pharmaceutical
Sales $3,531 19.6 3.0 U.S. Pharmaceuticals $1,896 17.5 ---
International Pharmaceuticals $1,635 22.2 6.5 Worldwide Nutritional
Sales $1,102 4.4 (a) 1.8 U.S. Nutritionals $587 (3.8)(a) ---
International Nutritionals $515 15.6 4.4 Worldwide Diagnostics
Sales (b) $790 9.8 3.9 U.S. Diagnostics $201 (1.7) ---
International Diagnostics $589 14.4 5.5 Worldwide Vascular Sales
$403 14.9 2.4 U.S. Vascular $201 1.2 --- International Vascular
$202 33.0 5.6 Other Sales (c) $551 10.9 2.3 (a) Reflects the impact
of the completion of the U.S. co-promotion of Synagis in 2006.
Excluding the U.S. sales of Synagis in 2006, Worldwide Nutritional
Sales increased 10.8 percent and U.S. Nutritional sales increased
6.9 percent. (b) Includes sales from the molecular diagnostics and
core laboratory diagnostics businesses, which includes point of
care. (c) Includes sales from diabetes, bulk pharmaceuticals, spine
and animal health businesses. Note: See "Consolidated Statement of
Earnings" for more information. The following is a summary of sales
for the first nine months of 2007. Impact of Sales Summary - 9M07 %
Change Exchange on Nine Months Ended 9/30/07 ($ millions) vs. 9M06
% Change Total Sales $18,693 15.0 2.7 Total U.S. Sales $9,283 12.5
--- Total International Sales $9,410 17.5 5.5 Worldwide
Pharmaceutical Sales $10,435 17.8 2.8 U.S. Pharmaceuticals $5,500
20.3 --- International Pharmaceuticals $4,935 15.1 5.8 Worldwide
Nutritional Sales $3,201 (1.4)(a) 1.4 U.S. Nutritionals $1,733
(12.3)(a) --- International Nutritionals $1,468 15.6 3.6 Worldwide
Diagnostics Sales (b) $2,299 10.5 3.9 U.S. Diagnostics $607 2.5 ---
International Diagnostics $1,692 13.6 5.4 Worldwide Vascular Sales
$1,246 80.0 2.4 U.S. Vascular $667 58.1 --- International Vascular
$579 114.2 6.1 Other Sales (c) $1,512 9.6 3.4 (a) Reflects the
impact of the completion of the U.S. co-promotion of Synagis in
2006. Excluding the U.S. sales of Synagis in 2006, Worldwide
Nutritional Sales increased 9.0 percent and U.S. Nutritional sales
increased 4.0 percent. (b) Includes sales from the molecular
diagnostics and core laboratory diagnostics businesses, which
includes point of care. (c) Includes sales from diabetes, bulk
pharmaceuticals, spine and animal health businesses. Note: See
"Consolidated Statement of Earnings" for more information. The
following is a summary of Abbott's third-quarter 2007 sales for
selected products. Quarter Ended 9/30/07 Percent Percent Percent
(dollars in millions) Change Rest Change Change U.S. vs. of vs.
Global vs. Sales 3Q06 World 3Q06 Sales 3Q06 Pharmaceutical Products
HUMIRA $427 40.0 $376 59.6 (a) $803 48.5 Depakote $358 12.3 $25
27.2 $383 13.1 Kaletra $136 (0.5) $202 28.8 (b) $338 15.2 TriCor
$300 12.8 --- --- $300 12.8 Ultane/Sevorane $49 (12.7) $139 3.9 (c)
$188 (1.0) Niaspan $167 n/a --- --- $167 n/a Biaxin
(clarithromycin) $9 (43.0) $122 (0.4) (d) $131 (5.2) Synthroid $110
(16.5) $20 18.7 $130 (12.6) Nutritional Products Pediatric
Nutritionals $326 14.2 $275 18.5 $601 16.1 Adult Nutritionals $253
(1.1) $240 12.6 (e) $493 5.1 Medical Products Abbott Diabetes Care
$146 10.0 $176 17.2 (f) $322 13.8 Coronary Stents $68 89.4 $95 81.3
$163 84.6 Other Coronary $69 (21.7) $75 1.9 $144 (11.0)
Endovascular $63 (15.3) $33 23.3 $96 (5.2) (a) Without the positive
impact of exchange of 10.5 percent, HUMIRA sales increased 49.1
percent internationally. (b) Without the positive impact of
exchange of 6.7 percent, Kaletra sales increased 22.1 percent
internationally. (c) Without the positive impact of exchange of 5.8
percent, Sevorane sales decreased 1.9 percent internationally. (d)
Without the positive impact of exchange of 3.4 percent,
clarithromycin sales decreased 3.8 percent internationally. (e)
Without the positive impact of exchange of 4.3 percent, Adult
Nutritionals sales increased 8.3 percent internationally. (f)
Without the positive impact of exchange of 7.0 percent, Abbott
Diabetes Care sales increased 10.2 percent internationally. n/a =
Percent change is not applicable due to the acquisition of Niaspan
in the fourth-quarter 2006. The following is a summary of sales for
the first nine months of 2007 for selected products. Nine Months
Ended 9/30/07 Percent Percent Percent (dollars in millions) Change
Rest Change Change U.S. vs. of vs. Global vs. Sales 9M06 World 9M06
Sales 9M06 Pharmaceutical Products HUMIRA $1,123 39.3 $986 59.8 (a)
$2,109 48.2 Depakote $1,045 23.5 $69 20.2 $1,114 23.3 Kaletra $385
2.7 $569 22.6 (b) $954 13.7 TriCor $826 14.4 --- --- $826 14.4
Ultane/Sevorane $150 (26.2) $409 1.9 (c) $559 (7.6) Biaxin
(clarithromycin) $21 (78.4) $504 3.9 (d) $525 (9.6) Niaspan $480
n/a --- --- $480 n/a Synthroid $325 (8.6) $55 15.4 $380 (5.8)
Nutritional Products Pediatric Nutritionals $908 8.9 $792 18.5
$1,700 13.2 Adult Nutritionals $797 (0.9) $677 12.4 (e) $1,474 4.8
Medical Products Abbott Diabetes Care $419 1.8 $496 14.1 (f) $915
8.1 Coronary Stents $229 n/m $260 n/m $489 n/m Other Coronary $238
33.8 $223 87.4 $461 55.3 Endovascular $201 11.8 $95 51.8 $296 22.1
(a) Without the positive impact of exchange of 11.7 percent, HUMIRA
sales increased 48.1 percent internationally. (b) Without the
positive impact of exchange of 7.0 percent, Kaletra sales increased
15.6 percent internationally. (c) Without the positive impact of
exchange of 5.1 percent, Sevorane sales decreased 3.2 percent
internationally. (d) Without the positive impact of exchange of 3.9
percent, clarithromycin sales were flat internationally. (e)
Without the positive impact of exchange of 4.0 percent, Adult
Nutritionals sales increased 8.4 percent internationally. (f)
Without the positive impact of exchange of 7.2 percent, Abbott
Diabetes Care sales increased 6.9 percent internationally. n/a =
Percent change is not applicable due to the acquisition of Niaspan
in the fourth-quarter 2006. n/m = Percent change is not meaningful.
Business Highlights * Abbott and AstraZeneca to Advance ABT-335 in
Fixed-Dose Combination -- Abbott and AstraZeneca announced the
decision to advance Abbott's next-generation fenofibrate, ABT-335,
as part of the fixed-dose combination program with Crestor. The
combination program is proceeding on schedule and a regulatory
application for the new combination therapy remains on target for
submission in 2009. * Clinical Study Initiated for Renal Artery
Stenosis (RAS) -- Abbott enrolled its first patient in a clinical
study to evaluate the use of the investigational RX Herculink(R)
Elite(TM) Renal Stent System to treat patients with RAS. Patients
with RAS have plaque buildup in the renal arteries that can lead to
high blood pressure. Approximately 5 million people in the United
States, most often men age 50 to 70, are affected by RAS. * Abbott
Submits Kaletra(R) for Approval for Pediatric Use -- In July,
Abbott submitted global regulatory applications for a new,
lower-strength version of its leading HIV protease inhibitor tablet
known as Kaletra and Aluvia(R). Kaletra/Aluvia would be the only
co-formulated protease inhibitor tablet that could be used in
children. More than 2 million children worldwide are living with
HIV/AIDS. * Psoriasis Data for HUMIRA(R) and ABT-874 -- At the
World Congress of Dermatology, Abbott presented Phase III study
results for HUMIRA in the treatment of psoriasis. HUMIRA represents
a major advancement in the treatment of psoriasis, with exceptional
skin clearance and a well-established safety profile that has been
demonstrated in more than 10 years of patient use. Abbott has
submitted its global regulatory application for HUMIRA in the
treatment of psoriasis and expects a response from regulatory
agencies in the first quarter of 2008. Abbott also presented
psoriasis data from ABT-874, its fully-human monoclonal antibody
designed to target and neutralize interleukin-12 and interleukin-23
(IL-12/23). These data are excellent, demonstrating a significant
reduction of psoriasis symptoms in the majority of patients
treated. Abbott expects to advance ABT-874 into final Phase III
psoriasis studies before year-end. * HUMIRA Wins Scientific
Innovation Award -- Abbott's leading anti-TNF therapy, HUMIRA, has
been honored with the 2007 Galen Prize for Best Biotechnology
Product. The Galen Prize, considered equivalent to the Nobel Prize
and awarded by Prix Galien USA, is one of the highest accolades in
the pharmaceutical and biomedical industry, recognizing excellence
in medical and scientific research and innovation. * Abbott
Launches NutriPals(TM) Fruit Bars -- Abbott launched PediaSure(R)
NutriPals Fruit Bars, the only kids' snack bar made with one
serving of real fruit in every bar. With 9 times more fruit than a
leading cereal bar, NutriPals Fruit Bars are a good source of
protein, fiber and more than 20 vitamins and minerals. * U.S. Food
and Drug Administration (FDA) Waiver Allows Broader Use of the
i-STAT Handheld Analyzer -- The FDA granted waived status under the
Clinical Laboratory Improvement Amendments of 1988 (CLIA) for its
handheld i-STAT CHEM8+ test cartridge, making it more widely
available for use beyond the hospital setting. The waiver indicates
the device can be made more broadly available to health care
providers where fast results are needed. Abbott confirms
earnings-per-share outlook for 2007 and 2008 Based on the company's
strong results year to date, Abbott is confirming its 2007
earnings-per-share outlook and raising the lower end of its
previous guidance range. As a result, Abbott's earnings-per-share
guidance for 2007 is now $2.82 to $2.84 and for the fourth quarter
is $0.91 to $0.93, both excluding specified items. Abbott forecasts
specified items for the full-year 2007 of approximately $0.44 per
share, primarily associated with acquisition integration, cost
reduction initiatives, a write-down of Omnicef inventory and
adjustments related to Abbott's ownership of Boston Scientific
stock, as previously disclosed. Including specified items,
projected earnings per share under GAAP would be $2.38 to $2.40 for
the full-year 2007. Abbott forecasts specified items for the
fourth-quarter 2007 of approximately $0.07 per share, primarily
associated with acquisition integration and cost reduction
initiatives. Including these specified items, projected earnings
per share under GAAP would be $0.84 to $0.86 for the fourth-quarter
2007. For 2008, Abbott continues to forecast an accelerating rate
of earnings-per-share growth over 2007. Abbott declares quarterly
dividend On Sept. 14, 2007, the board of directors of Abbott
declared the company's quarterly common dividend of 32.5 cents per
share. The cash dividend is payable Nov. 15, 2007, to shareholders
of record at the close of business on Oct. 15, 2007. This marks the
335th consecutive dividend paid by Abbott since 1924. About Abbott
Abbott is a global, broad-based health care company devoted to the
discovery, development, manufacture and marketing of
pharmaceuticals and medical products, including nutritionals,
devices and diagnostics. The company employs 65,000 people and
markets its products in more than 130 countries. Abbott's news
releases and other information are available on the company's Web
site at http://www.abbott.com/. Abbott will webcast its live
third-quarter earnings conference call through its Investor
Relations Web site at http://www.abbottinvestor.com/ at 8 a.m.
Central time today. An archived edition of the call will be
available after 11 a.m. Central time. - Private Securities
Litigation Reform Act of 1995 - A Caution Concerning
Forward-Looking Statements Some statements in this news release may
be forward-looking statements for the purposes of the Private
Securities Litigation Reform Act of 1995. We caution that these
forward-looking statements are subject to risks and uncertainties
that may cause actual results to differ materially from those
indicated. Economic, competitive, governmental, technological and
other factors that may affect Abbott's operations are discussed in
Item 1A, "Risk Factors," to our Annual Report on Securities and
Exchange Commission Form 10-K for the year ended Dec. 31, 2006, and
are incorporated by reference. We undertake no obligation to
release publicly any revisions to forward-looking statements as a
result of subsequent events or developments. Abbott Laboratories
and Subsidiaries Consolidated Statement of Earnings Third Quarter
Ended September 30, 2007 and 2006 (unaudited) Percent 2007 2006
Change Net Sales $6,376,706,000 $5,573,770,000 14.4 Cost of
products sold 2,864,030,000 2,391,218,000 19.8 Research and
development 640,718,000 617,625,000 3.7 Acquired in-process
research and development --- 214,000,000 n/m Selling, general and
administrative 1,945,404,000 1,661,761,000 17.1 Total Operating
Cost and Expenses 5,450,152,000 4,884,604,000 11.6 Operating
earnings 926,554,000 689,166,000 34.4 Net interest expense
106,224,000 86,884,000 22.3 Net foreign exchange (gain) loss
4,959,000 10,231,000 (51.5) (Income) from TAP Pharmaceutical
Products Inc. joint venture (114,084,000) (121,469,000) (6.1) Other
(income) expense, net 36,036,000 (12,797,000) n/m 1) Earnings
before taxes 893,419,000 726,317,000 23.0 Taxes on earnings
176,414,000 10,475,000 n/m 2) Net Earnings $717,005,000
$715,842,000 0.2 Net Earnings Excluding Specified Items, as
described below $1,046,437,000 $898,838,000 16.4 3) Diluted
Earnings Per Common Share $0.46 $0.46 -- Diluted Earnings Per
Common Share, Excluding Specified Items, as described below $0.67
$0.58 15.5 3) Average Number of Common Shares Outstanding Plus
Dilutive Common Stock Options and Awards 1,557,758,000
1,541,988,000 1) Other (income) expense, net in 2007 and 2006 is
primarily associated with adjustments related to Abbott's ownership
of Boston Scientific stock. These items have been reflected as
specified items in both periods as discussed in Q&A Answer 6.
2) 2006 Taxes on earnings includes a favorable adjustment to tax
expense of $132 million, or $0.09 per share, as a result of the
resolution of prior years' tax audits, which was classified as a
specified item and excluded from ongoing results. 3) 2007 Net
Earnings Excluding Specified Items excludes after-tax charges of
$111 million, or $0.07 per share, for a contract termination and
other litigation, $79 million, or $0.05 per share, for
reestablishment of suspended depreciation and amortization expense
on the long-term assets of the core laboratory diagnostics
business, $52 million, or $0.03 per share, for acquisition
integration, $21 million, or $0.01 per share, for fair value loss
adjustments related to Boston Scientific stock, and $66 million, or
$0.05 per share, for cost reduction initiatives and other. 2006 Net
Earnings Excluding Specified Items excludes after-tax charges of
$133 million, or $0.09 per share, for acquired in-process research
and development related to the Guidant acquisition, $69 million, or
$0.05 per share for costs associated with Abbott's decision to
discontinue the commercial development of the ZoMaxx drug-eluting
stent, $53 million or $0.03 per share, for a philanthropic
contribution to the Abbott Fund, $52 million, or $0.03 per share,
for acquisition integration and $25 million, or $0.02 per share,
for cost reduction/integration activities and other. These
specified items were partially offset by an after-tax gain of ($17
million), or ($0.01) per share, for a fair-value adjustment for the
gain-sharing aspect of the Boston Scientific stock purchase and a
favorable adjustment to tax expense of ($132 million), or ($0.09)
per share, as a result of the resolution of the prior years' tax
audits. NOTE: See attached questions and answers section for
further explanation of Consolidated Statement of Earnings line
items. n/m = Percent change is not meaningful. Abbott Laboratories
and Subsidiaries Consolidated Statement of Earnings Nine Months
Ended September 30, 2007 and 2006 (unaudited) Percent 2007 2006
Change Net Sales $18,692,887,000 $16,258,353,000 15.0 Cost of
products sold 8,260,366,000 6,949,535,000 18.9 Research and
development 1,843,248,000 1,659,104,000 11.1 Acquired in-process
and collaborations research and development --- 707,000,000 n/m
Selling, general and administrative 5,528,729,000 4,646,573,000
19.0 Total Operating Cost and Expenses 15,632,343,000
13,962,212,000 12.0 Operating earnings 3,060,544,000 2,296,141,000
33.3 Net interest expense 355,245,000 203,086,000 74.9 Net foreign
exchange (gain) loss 16,058,000 17,638,000 (9.0) (Income) from TAP
Pharmaceutical Products Inc. joint venture (376,442,000)
(357,283,000) 5.4 Other (income) expense, net 78,960,000
(85,770,000) n/m 1) Earnings before taxes 2,986,723,000
2,518,470,000 18.6 Taxes on earnings 583,436,000 325,501,000 79.2
Net Earnings $2,403,287,000 $2,192,969,000 9.6 Net Earnings
Excluding Specified Items, as described below $2,976,580,000
$2,727,860,000 9.1 2) Diluted Earnings Per Common Share $1.54 $1.43
7.7 Diluted Earnings Per Common Share, Excluding Specified Items,
as described below $1.91 $1.77 7.9 2) Average Number of Common
Shares Outstanding Plus Dilutive Common Stock Options and Awards
1,559,074,000 1,537,780,000 1) Other (income) expense, net in 2007
and 2006 is primarily associated with adjustments related to
Abbott's ownership of Boston Scientific (BSX) stock. 2007 also
includes realized gains on the sales of the BSX stock. These items
have been reflected as specified items in both periods. 2) 2007 Net
Earnings Excluding Specified Items excludes after-tax charges of
$164 million, or $0.11 per share, for acquisition integration, $111
million, or $0.07 per share, for a contract termination and other
litigation, $41 million, or $0.03 per share, for fair value loss
adjustments, net of realized gains, related to Boston Scientific
stock, $34 million, or $0.02 per share, for write-down of Omnicef
inventory, $19 million, or $0.01 per share, for transaction and
separation costs relating to the terminated sale of the core
laboratory diagnostics business, and $204 million, or $0.13 per
share, for cost reduction initiatives and other. 2006 Net Earnings
Excluding Specified Items excludes after-tax charges of $438
million, or $0.29 per share, for acquired in-process and
collaborations research and development, $69 million, or $0.05 per
share, for costs associated with Abbott's decision to discontinue
the commercial development of the ZoMaxx drug-eluting stent, $53
million or $0.03 per share, for a philanthropic contribution to the
Abbott Fund and $178 million, or $0.12 per share, for cost
reduction/integration activities and other, primarily related to
the Guidant acquisition. These specified items were partially
offset by an after-tax gain of ($71 million), or ($0.05) per share
for fair-value adjustments for the gain-sharing aspect of the
Boston Scientific stock purchase and a favorable adjustment to tax
expense of ($132 million), or ($0.09) per share, as a result of the
resolution of prior years' tax audits. NOTE: See attached questions
and answers section for further explanation of Consolidated
Statement of Earnings line items. n/m = Percent change is not
meaningful. Questions & Answers Q1) What drove the 19.6 percent
worldwide pharmaceutical sales growth? A1) U.S. pharmaceutical
sales growth of 17.5 percent was led by TriCor, Niaspan and HUMIRA,
which increased 40.0 percent. HUMIRA prescription trends are
growing at nearly twice the rate of the self-injectable biologics
market, as HUMIRA continues to gain share across rheumatology,
dermatology and gastroenterology market segments. The Crohn's
launch is proceeding ahead of schedule, with HUMIRA market share
exceeding 30 percent in just six months since launch. As a result,
Abbott estimates 2007 full-year global HUMIRA sales of $3 billion.
Abbott's lipid franchise also had a strong quarter, with TriCor
sales increasing 12.8 percent and Niaspan contributing $167 million
in sales. International pharmaceutical sales increased 22.2 percent
during the quarter, including a 6.5 percent favorable impact from
exchange. International growth was driven by HUMIRA, which grew
59.6 percent, and Kaletra, which grew 28.8 percent, based on the
continued strength of the international launch of Kaletra Tablets.
Q2) What drove the 15.6 percent increase in international
nutritionals? What drove the 12.0 percent increase in worldwide
medical products sales? A2) Global Nutritional sales performance
was led by 15.6 percent growth in International nutritionals, with
particularly strong growth in Latin American and Asian markets.
Partially offsetting this growth was an expected decline in U.S.
nutritional sales, consistent with previous forecasts and
reflecting the completion of the co-promotion of Synagis in the
United States during 2006. Excluding the impact of Synagis, U.S.
nutritional sales increased 6.9 percent, driven by 14.2 percent
growth in pediatric nutritional sales. Medical products sales
growth of 12.0 percent was led by global Diabetes Care sales, which
increased 13.8 percent, 10.0 percent in the United States, driven
by the successful launch of Abbott's next-generation FreeStyle Lite
blood glucose meter. In addition, the core laboratory diagnostics
business performed well with sales of immunochemistry and
hematology products up 9.2 percent and point of care sales up 21.6
percent. Abbott Vascular achieved sales of more than $400 million,
up nearly 15 percent in the first full quarter with Guidant sales
in both periods. This performance was driven by international sales
of Xience V and continued growth in bare metal stents, partially
offset by other coronary sales, reflecting lower third-party
catheter sales. Q3) What drove increased investment spending in the
quarter? A3) The company remains on track for a record number of
major new product launches and regulatory submissions supported by
continued strong investment spending in R&D and SG&A this
quarter and year to date. R&D investment reflects continuing
progress in our pharmaceutical and medical products pipelines,
including new HUMIRA indications, ABT-335, ABT-335/Crestor
fixed-dose combination, ABT-874, controlled-release Vicodin and
Xience V, as well as several promising Phase I and Phase II
clinical programs in neuroscience and oncology. SG&A expense
included new and ongoing promotional initiatives, including the
launch of the Crohn's indication for HUMIRA, and the international
launch of Xience V. Q4) How does the third-quarter gross margin
profile compare to the prior year? A4) The gross margin ratio
before and after specified items is shown below (dollars in
millions): 3Q07 3Q06 Cost of Gross Cost of Gross Products Gross
Margin Products Gross Margin Sold Margin % Sold Margin % As
reported $2,864 $3,513 55.1% $2,391 $3,183 57.1% Adjusted for
specified items: Reestablishment of depreciation and amortization
expense (Diagnostics) ($83) $83 1.3% - - - Product discontinuation
- - - ($44) $44 0.9% Cost reduction initiatives and other ($67) $67
1.0% ($21) $21 0.3% Acquisition integration ($20) $20 0.3% ($21)
$21 0.3% As adjusted $2,694 $3,683 57.7% $2,305 $3,269 58.6% The
third-quarter 2007 adjusted gross margin ratio was 57.7 percent.
The comparison to 2006 was favorably impacted by improved product
mix, offset by the reduction in the contribution from Synagis in
the United States and generic competition for Omnicef. Q5) Why did
Net Interest Expense increase from the prior year? A5) Net Interest
Expense increased over the prior year primarily as a result of debt
related to the Guidant Vascular and Kos Pharmaceuticals
acquisitions. Q6) How did specified items affect reported results?
A6) Specified items impacted third-quarter results as follows
(dollars in millions, except earnings-per-share data): 3Q07 3Q06
Earnings Earnings After- After- Pre-tax tax EPS Pre-tax tax EPS As
reported $893 $717 $0.46 $726 $716 $0.46 Adjusted for specified
items: Acquired in-process R&D - - - $214 $133 $0.09
Reestablishment of depreciation and amortization expense
(Diagnostics) $99 $79 $0.05 - - - Contract termination/other
litigation $116 $111 $0.07 - - - Acquisition integration $63 $52
$0.03 $69 $52 $0.03 Fair-value adjustments for BSX stock and gain
on financial instruments $34 $21 $0.01 ($23) ($17) ($0.01)
Philanthropic contribution - - - $70 $53 $0.03 Product
discontinuation - - - $90 $69 $0.05 Tax audit resolution - - - -
($132) ($0.09) Cost reduction initiatives and other $81 $66 $0.05
$33 $25 $0.02 As adjusted $1,286 $1,046 $0.67 $1,179 $899 $0.58 The
reestablishment of depreciation and amortization expense relates to
the core laboratory diagnostics business. As discussed last
quarter, under GAAP, once a decision to divest a business has been
reached and the business is classified as Discontinued Operations,
depreciation and amortization expense on the related long-term
assets is suspended. The proposed diagnostic divestiture was
treated this way in the first half of 2007. Since the business was
subsequently reclassified to Continuing Operations from
Discontinued Operations, cumulative depreciation and amortization
expense previously suspended must be recorded. As a result, the
after-tax impact of suspended depreciation and amortization expense
from the first-half 2007 of $79 million, or $0.05 per share, was
recorded in the third quarter and treated as a specified item. This
fully offsets the favorability of this item in the first half,
resulting in no impact for the full year. The other third-quarter
2007 specified items are primarily related to integration costs
associated with 2006 acquisitions and continuing cost reduction
initiatives in global manufacturing operations. Also included in
specified items are expenses associated with a contract
termination, as noted in the second-quarter 10-Q, and other
litigation. As in prior quarters, specified items include a
fair-value adjustment for the Boston Scientific (BSX) stock. In
accordance with accounting standard SFAS 159, changes to the fair
value of the BSX investment are required to be reflected in the
income statement, which is tracked as a specified item, along with
any related realized gains/losses on disposition of this stock. The
pre-tax impact of the specified items by Consolidated Statement of
Earnings line item is as follows (dollars in millions): 3Q07 Cost
of Other Products (Income)/ Sold R&D SG&A Expense As
reported $2,864 $641 $1,945 $36 Adjusted for specified items:
Reestablishment of depreciation and amortization expense
(Diagnostics) $83 $8 $8 - Contract termination/other litigation - -
$116 - Acquisition integration $20 $6 $37 - Fair-value adjustments
for BSX stock - - - $34 Cost reduction initiatives and other $67
($7) $21 - As adjusted $2,694 $634 $1,763 $2 Q7) What was the tax
rate in the quarter? A7) In line with the previous forecast, the
tax rate this quarter, excluding specified items, was 18.6 percent.
As a result, the tax rate year-to-date, excluding specified items,
is 19.5 percent, consistent with the full-year guidance previously
provided. Q8) How did the TAP joint venture perform this quarter?
A8) Income from the TAP joint venture was in line with previous
forecasts. Prevacid sales were $566 million and Lupron sales were
$152 million. Q9) What are some near-term opportunities in Abbott's
broad-based pipeline? A9) Abbott is making significant progress
across a number of late-stage programs in its broad-based
pharmaceutical and medical products pipeline, including: * HUMIRA o
Crohn's disease -- Launched in the United States and Europe in the
first half of this year. o Psoriasis -- Submitted for global
regulatory approval, expect to launch first-quarter 2008. o
Juvenile RA -- Submitted for global regulatory approval, expect to
launch in early 2008. o Ulcerative colitis -- Entered into Phase
III development in 2006. * Xience V Drug-Eluting Stent (DES) -- In
May, Abbott submitted the final module of its FDA application for
U.S. approval and we continue to expect a U.S. launch in the first
half of 2008. We continue to work toward a Nov. 29 date for the
Xience V advisory panel meeting. As a reminder, Xience V was
launched internationally in 2006. At the Transcatheter
Cardiovascular Therapeutics (TCT) meeting next week, Abbott will
present new data from the Xience V clinical program. Abbott will
host an investor meeting at TCT on October 23. * Controlled-release
Vicodin -- A controlled-release form of Abbott's pain brand,
Vicodin, is currently in Phase III development. Abbott plans to
submit for regulatory approval in the fourth quarter of this year.
* Simcor -- Abbott has submitted its regulatory application for
Simcor, a combination therapy to address both HDL and LDL
cholesterol, and expects to launch early next year. Phase III
Simcor data will be presented at the American Heart Association
meeting in November. * ABT-335 -- Abbott's next-generation
fenofibrate is currently in Phase III development as a stand-alone
therapy. A U.S. regulatory submission is expected in the
fourth-quarter 2007. * ABT-335/Crestor (ABT-143) -- Abbott and
AstraZeneca recently chose to advance ABT-335 in its fixed-dose
combination with Crestor to address all three lipid parameters in a
single pill. This program is on track for a regulatory submission
in 2009. * ABT-874 -- In immunology, Abbott's anti-IL-12/23
biologic, ABT-874, has demonstrated promising results in early
studies for Crohn's disease and psoriasis. The company plans to
move ABT-874 into Phase III development for psoriasis before
year-end. * Flutiform -- A combination asthma treatment in Phase
III development by SkyePharma. Flutiform is expected to launch in
2009 and Abbott will handle promotion in the United States. *
Diabetes Care Pipeline -- Abbott's FreeStyle Navigator Continuous
Glucose Monitoring System was recently launched in Europe and is
under active U.S. FDA review. Also in development is a fully
integrated blood glucose monitoring system combining a meter, test
strips and lancing capabilities in one device. * m2000 Molecular
Diagnostics System -- In May, Abbott received FDA approval for the
RealTime HIV-1 viral load test for use on the m2000 molecular
diagnostics system. Abbott expects to expand its menu of infectious
disease assays over the next few years. * Abbott PRISM -- In July,
Abbott received FDA approval for its hepatitis C (HCV) test for use
on the Abbott PRISM diagnostics system. This approval completes the
PRISM hepatitis panel, which also includes three additional
hepatitis B tests. Additional retrovirus screening tests for use on
Abbott PRISM are currently under FDA review. Q10) What are some
mid- and early-stage opportunities in Abbott's broad- based
pipeline? A10) Abbott is advancing leading-edge scientific
discoveries in its mid- and early-stage pharmaceutical and medical
products pipeline. Following are selected highlights: * Oncology o
In the second quarter, Abbott announced a collaboration with
Genentech to develop and commercialize two Abbott oncology
compounds. Developed by Abbott scientists, ABT-869, a
multi-targeted kinase inhibitor and ABT-263, a Bcl-2 protein
antagonist, represent promising, unique approaches to treating
cancer. Abbott and Genentech will work together on all aspects of
research, development and commercialization. o Additional oncology
compounds in Abbott's pipeline that are not part of the
collaboration include: ABT-888, a PARP-inhibitor, which prevents
DNA repair in cancer cells, enhancing the effectiveness of current
cancer therapies; ABT-751, an oral anti-mitotic in Phase II for
non-small cell lung cancer and neuroblastoma; and, ABT-828, a
biologic anti-tumor agent with a novel mechanism of action. *
Neuroscience o Abbott's neuroscience pipeline includes several
unique approaches for treating a number of diseases including
schizophrenia, ADHD, Alzheimer's disease and pain. Compounds under
development include neuronal nicotinic receptor agonists (NNR's)
and dopamine 3 (D3) receptor antagonists, both of which play a role
in regulating pain, memory and other neurological functions. o
Abbott's neuroscience pipeline includes ABT-089 and ABT-894, two
NNRs in Phase II, ABT-925, a D3 receptor antagonist in Phase II,
and several compounds in earlier stage development. * Hepatitis C o
Abbott has partnered with Enanta Pharmaceuticals to develop
protease inhibitors for the treatment of hepatitis C (HCV), which
affects more than 170 million people worldwide. Abbott also has an
internal HCV polymerase program in early-stage development. *
Bioabsorbable Drug-Eluting Stent o Abbott has presented encouraging
data from the world's first clinical trial (ABSORB) for a
fully-bioabsorbable drug-eluting stent (DES) to treat coronary
artery disease. Abbott will present one-year data from the ABSORB
trial next week at TCT. The bioabsorbable DES is designed to be
slowly and completely metabolized by the body over time.
DATASOURCE: Abbott CONTACT: Financial, John Thomas,
+1-847-938-2655, Larry Peepo, +1-847-935-6722, or Tina Ventura,
+1-847-935-9390, or Media, Melissa Brotz, +1-847-935-3456, or Scott
Stoffel, +1-847-936-9502, all of Abbott Web site:
http://www.abbott.com/
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