Abbott medical device, diagnostic units drive Q3 growth
- Abbott said strong growth in its medical device and diagnostics units drove third quarter sales of $7.7 billion, an increase of 7.8% on an organic basis. Investors drove the stock down 2% in early trading, however, perhaps because the medical device giant stuck to its forecast, Leerink analysts said.
- The call comes shortly after Abbott issued study results that its MitraClip device for minimally invasive repair of the mitral heart valve in patients with advanced heart failure significantly reduced hospitalizations and deaths. CEO Miles White says Abbott plans to submit that data to FDA in coming weeks to support expanded use.
- Other quarterly highlights included approvals of its FreeStyle Libre 14 day system from FDA and its FreeStyle Libre 2 system in Europe. It also received FDA approval for the third generation of its MitraClip device and a CE Mark for its High Sensitive Troponin-I blood test in Europe.
Abbott's medical device unit posted organic sales growth of 9.8%, while its diagnostics unit posted an increase of 7.5%.
"We achieved another quarter of strong growth and our new product pipeline continues to be highly productive," White said in a statement. "In spite of increasing currency headwinds, we're well-positioned to achieve the upper end of our initial full-year guidance."
One area of sizable growth opportunity may come from its MitraClip device once the COAPT study is reviewed by FDA. White said the company has not built in impact from an expanded indication for MitraClip into next year, but said the upside is a sizable opportunity for Abbott.
"Obviously the performance of MitraClip in that study was a real homerun, it's not often that studies are so definitively positive and so good in terms of their impact for patients," White said. "Our objective is to move through the regulatory process as rapidly as can be done and make it available for that use as rapidly as we can."
Abbott says that its FreeStyle Libre system has seen increasing uptake with Q3 sales of $304 million, 101% more compared to last year. White said Abbott will be investing heavily in capacity expansion for the product.
"In a relatively short period of time, FreeStyle Libre now has more than 1 million users across the globe," White said. "I can assure you we're making a nice healthy return on Libre," he added.
Company executives said on the call there is no timeline for introducing the second generation of the product in the U.S., but it will eventually be brought to the market.
"It should take a lot less time than it seems to. The U.S. lags Europe and the rest of the world on some of these approvals in a way that I find hard to explain, but it is what it is," White said.
On the M&A front, White said the company hasn't seen an acquisition opportunity that benefits Abbott more than investment into its existing products. He added that share buybacks do not appear to pose a good enough return for the company, but did not rule out the possibility.
"We haven't seen a lot on the M&A front that interests us. We always keep our ear to the ground, we always do our homework. But right now, we haven't seen anything that draws our attention," White said. "Right now, our best investment is us."
The company's organic growth measure excludes prior year results from Abbott Medical Optics and St. Jude Medical, as well as both current and prior year results for its rapid diagnostics unit due to the acquisition of Alere. It also excludes foreign exchange impact, which executives pegged as a potential headwind moving forward due to uncertainty.
"To us, ABT is an execution story as the company integrates 2 recent major acquisitions and drives a new product cycle through its Medical Devices business while sustaining mid-single-digit growth across its other legacy businesses," Leerink analysts wrote.
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