Abbott Updates: Niaspan Losing Vigor, But Nutritionals Going Strong

by Trefis Team
+4.87%
Upside
38.60
Market
40.48
Trefis
ABT
Abbott Labs
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Abbott Labs (NYSE:ABT) has a near 7% market share in the lipid regulator drug market with the help of two drugs – Trilipix/Tricor and Niaspan. But this market share is expected to fall in the coming years due to competition from generics. Niaspan, a drug used for generating good cholesterol in patients, is being abandoned by doctors because it doesn’t have any benefit on top of the standard therapy for increasing high-density lipoproteins (HDL) levels, and it does have some side effects. [1] Abbott competes with Pfizer‘s (NYSE:PFE) Lipitor,  Merck’s (NYSE:MRK) Tredaptive and Anacetrapib and Roche’s (PINK:RHHBY) Dalcetrapib in the lipid regulator drug market.

We maintain a $65.83 Trefis price estimate for ABT, nearly 5% above the current market price. Abbott derives nearly 2.5% value from its lipid regulator drugs, according to our estimates.

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Niaspan being neglected

The occurrence of a heart attack can be reduced by either reducing bad cholesterol, also called as low-density lipoprotein (LDL), or increasing HDL, or both together. Niaspan was tested in conjunction with several LDL reducers like Zocor, Lipitor and Crestor, but it failed those tests to increase HDL levels. As a result, the old treatment is preferred, where LDL reducers are used in order to reduce the risk of heart attacks. We expect Niaspan to lose market share in lipid regulator drug market, which is also shrinking after Pfizer’s Lipitor’s patent expiry last year.

SideKicks to help expand Nutritionals segment

Abbott recently introduced PediaSure SideKicks Clear, a nutritional beverage meant for kids who are picky eaters. [2] This will help maintain a balance in their nutrient intake. Abbott has a growing portfolio of products in nutritionals segment as reflected by its market share gain in this segment.

Our price estimate derives nearly 12% value from nutritionals segment and could become a vital source of revenue, going forward, given its expanding presence in emerging markets, where demographics support the evolution of nutritional products.

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Notes:
  1. Doctors Find Less Need For Abbott’s ‘Good Cholesterol’ Pill, Forbes.com, May 17, 2012 []
  2. Abbott Laboratories Launches PediaSure SideKicks Clear For Picky Eaters, rttnews.com, May 16, 2012 []
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