Abbott fourth quarter worldwide sales increase 13.4% to nearly $10 billion

Abbott (NYSE: ABT) today announced financial results for the fourth quarter ended Dec. 31, 2010.

• Diluted earnings per share, excluding specified items, were $1.30, reflecting 10.2 percent growth. Diluted earnings per share under Generally Accepted Accounting Principles (GAAP) were $0.92, primarily reflecting costs associated with recently announced restructuring actions for the integration of the Solvay Pharmaceuticals acquisition and in process R&D related to the Reata collaboration.
• Worldwide sales increased 13.4 percent to nearly $10 billion, including an unfavorable 0.4 percent effect of foreign exchange rates. Growth in the quarter was driven by worldwide pharmaceutical sales, which increased 22.5 percent, including the contribution from the Solvay and Piramal acquisitions, as well as worldwide vascular products sales, which increased 13.7 percent.
• Fourth quarter results included strong investment spending, with an increased level of R&D spending, as well as an adjusted gross margin ratio of 60.6 percent, which increased 230 basis points over the prior year.
• In response to changes in the healthcare industry, including U.S. Health Care Reform and the challenging regulatory environment, today Abbott announced a restructuring in its U.S. pharmaceutical business to streamline commercial and manufacturing operations, improve efficiencies and reduce costs.
• Abbott is issuing ongoing earnings-per-share guidance for the full-year 2011 that reflects double-digit growth over 2010 at the midpoint of the range.

"Despite a very challenging environment, 2010 was another productive year for Abbott, resulting in strong financial performance," said Miles D. White, chairman and chief executive officer, Abbott. "We also took decisive long-term strategic actions to expand our emerging markets presence and late-stage pipeline to better position Abbott for sustainable long-term growth. We anticipate delivering another year of double-digit ongoing earnings-per-share growth in 2011."

Business Highlights

• Encouraging Results Presented in Chronic Kidney Disease (CKD):  New Phase 2b pivotal data presented at the Annual American Society of Nephrology (ASN) suggests bardoxolone methyl, an investigational treatment for CKD, reverses disease progression and improves measures of kidney function in patients with CKD and type 2 diabetes. In the study, the majority of patients treated with bardoxolone experienced a reduction in disease severity and an improvement in kidney function. To date, no treatment has been shown to reverse the progression of CKD. We expect bardoxolone to enter Phase 3 clinical trials in early 2011. Also presented data from a Phase 2 study of atrasentan, in development to help slow CKD progression in patients with type 2 diabetic nephropathy (diabetic kidney disease).
• New Results Presented on Abbott HCV Compound:  Presented positive results from a Phase 2 study of ABT-450/r, an investigational, oral protease inhibitor being developed for the treatment of hepatitis C (HCV) infection. Initial results suggest that ABT-450/r demonstrates potent antiviral activity in treatment-naïve adults with HCV genotype 1 infection. Results show that more than 90 percent of patients on study drug, administered with pegylated interferon/ribavirin, achieved HCV-RNA levels <25 IU/mL (a measure of rapid virologic response) at four weeks.
• Positive Oncology Data Presented at ASH:  Presented Phase 2 data at the Annual Meeting of the American Society of Hematology (ASH) for elotuzumab, a late-stage compound in development for multiple myeloma, the second-most common blood cancer in the United States. Interim results from the Phase 2 portion of a Phase 1b/2 study, showed a high objective response rate (ORR) among patients with relapsed multiple myeloma who received elotuzumab plus lenalidomide and low-dose dexamethasone. We anticipate initiating Phase 3 clinical trials with our partner company in early 2011.
• Announced a Collaboration to Develop New Anti-cancer Drugs:  Announced a collaboration agreement with EpiTherapeutics to develop new anti-cancer drugs by making small-molecule inhibitors against selected epigenetic oncology targets.
• Received CE Mark for World's First Drug Eluting Bioresorbable Vascular Scaffold (BVS):  Announced CE Mark in Europe for the world's first drug eluting BVS for the treatment of coronary artery disease. Abbott's ABSORB™ BVS device restores blood flow by opening a clogged vessel and providing support to the vessel until it dissolves, leaving patients with a treated vessel free of a permanent metallic implant.
• Announced CE Mark for XIENCE PRIME™ for Critical Limb Ischemia (CLI):  Received CE Mark for XIENCE PRIME Everolimus Eluting Coronary Stent System for the treatment of critical limb ischemia (CLI) or severe claudication (pain) of the lower leg. CLI is the most advanced form of peripheral artery disease that can ultimately lead to limb amputation. With this expanded indication, XIENCE PRIME can be marketed to treat CLI or severe claudication in European Union countries and others that recognize CE Mark.
• Introduced New Vitamin D Diagnostic Test in Europe:  Introduced a new diagnostic test in Europe to measure levels of vitamin D in blood using Abbott's ARCHITECT automated instrument system. According to the International Osteoporosis Foundation, vitamin D deficiency is a worldwide health issue and the percentage of the European population that is vitamin D insufficient is high, with some countries exceeding 75 percent. The ARCHITECT 25-OH Vitamin D assay is a fully automated immunoassay that can help laboratories manage the increasing vitamin D testing volumes. 

Abbott issues earnings-per-share outlook for 2011  

Abbott is issuing ongoing earnings-per-share guidance for the full-year 2011 of $4.54 to $4.64. The midpoint of this guidance range reflects growth of 10 percent over 2010. Abbott's 2011 outlook reflects the previously outlined incremental impact of costs associated with U.S. Healthcare Reform, as well as the impact of European austerity measures.

Abbott forecasts specified items for the full-year 2011 of approximately $0.78 per share, primarily associated with acquisition integration and cost reduction initiatives, including restructuring actions announced today to streamline commercial and manufacturing operations in Abbott's U.S. pharmaceutical business (see Q&A 3), and in-process R&D related to the Reata collaboration. Including these specified items, projected earnings per share under Generally Accepted Accounting Principles (GAAP) would be $3.76 to $3.86 for the full-year 2011.

Abbott declares quarterly dividend

On Dec. 10, 2010, the board of directors of Abbott declared the company's quarterly common dividend of 44 cents per share, an increase of 10 percent over the prior year. The cash dividend is payable Feb. 15, 2011, to shareholders of record at the close of business on Jan. 14, 2011. This marks the 348th consecutive dividend paid by Abbott since 1924.