Tags: Abbott | Buckles | Competition | injectable | rheumatoid | arthritis | drug

Abbott Buckles Down as Competition Heats Up

Friday, 08 Apr 2011 02:09 PM

What do you do if a big chunk of your money comes from just one blockbuster drug, one that rivals have in their crosshairs?

Abbott Laboratories (ABT) is going to find out. For six years now, the company's blockbuster injectable rheumatoid arthritis drug Humira, known as an anti-TNF, has pumped in billions in revenue, approaching $7 billion this year, about 20 percent of total income.

Competitor Pfizer (PFE), meanwhile, is set to compete with a similar drug that can be administered orally, much easier than Humira, as Abbott wraps up an acquisition spree, having bought the pharma businesses of Belgian chemical company Solvay and Indian generic drugmaker Piramal to maintain its market position.

"ABT's success over the last six years can largely be attributed to surging sales of its largest drug, Humira," Deutsche Bank says in a report after initiating coverage on the company at Hold, cited by Dividend.com.

"ABT has further expanded its dominant pharma segment via acquisitions, and is diversified into Medical Products and Nutritionals. However, slowing Humira sales, impending new competitors, and an absence of new drugs, have depressed ABT's multiple," the bank said.

The ratings agency Moody's points out that on top of being too reliant on Humira, Abbott's late-stage pipeline has been relatively weak when compared to similarly rated peers.

"While Abbott's diverse product offerings, together with the Solvay and Piramal acquisitions, should help reduce dependence on its top selling pharmaceuticals, reliance on Humira cannot be downplayed, especially in light of strong competition as well as any impact in the event of a regulatory, litigation, or safety matters. Longer term, oral drugs for rheumatoid arthritis, including those in both Pfizer's and Celgene's pipelines, could hurt the anti-TNF market," Moody’s said in a recent report.

Nevertheless, Abbott's expected rest from acquisitions will give it time to prepare itself for fresh purchases in the future, should the need arise, Moody's added.

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What do you do if a big chunk of your money comes from just one blockbuster drug, one that rivals have in their crosshairs? Abbott Laboratories (ABT) is going to find out. For six years now, the company's blockbuster injectable rheumatoid arthritis drug Humira, known as an...
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2011-09-08
 

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