Abbott’s Collaboration With Department Of Defense Could Boost Diagnostics Sales

+12.89%
Upside
112
Market
127
Trefis
ABT: Abbott Laboratories logo
ABT
Abbott Laboratories

Abbott Laboratories (NYSE:ABT) recently announced a collaboration with the United States Department of Defense (DoD) to develop portable blood tests for the evaluation of mild traumatic brain injuries (TBIs). The tests would be specifically developed to address the problem of inadequate TBI testing mechanisms for members of the U.S. military, where this is a significant health concern. The DoD has awarded $19.5 million to the healthcare giant in a multi-phase contract to assess TBI biomarkers which can be used for the quick testing of concussions. A quick and accurate test is important for injured soldiers to prevent further injury and aid in recovery. The tests would be developed for Abbott’s handheld diagnostic system called i-STAT, which is already being used by the military for other point-of-care tests. [1] [2]

The deal is expected to boost Abbott’s point-of-care diagnostics business in the medium to long term considering that the TBI diagnostics market was estimated to be worth $1.54 billion in 2010, and is expected to grow to about $2 billion by 2017. [3] The company’s point-of-care business reported year-over-year growth of about 4% in the last quarter, generating sales of over $100 million on a constant currency basis. The business is part of Abbott’s fastest growing division, Diagnostics, which generated operational sales of $2.3 billion in the first six months this year.

We have a price estimate of $42 for Abbott Labs, which is roughly in line with the current market price.

Relevant Articles
  1. What’s Next For Abbott Stock After A 6% Rise This Year?
  2. Is Abbott Stock Undervalued At $95?
  3. Which Is A Better Pick – Abbott Stock Or Amgen?
  4. Is Abbott Stock A Better Healthcare Pick Over Thermo Fisher Scientific?
  5. Lower Testing Demand To Weigh On Abbott’s Q2?
  6. Will Abbott Stock Rebound To Its 2022 Highs?

See our full analysis for Abbott Labs

TBI Market Size and Opportunity

A traumatic brain injury (TBI) is caused when an external force injures the brain. The injuries are classified based on the severity of the trauma, but it has been observed that TBIs are mild in most cases. TBIs are a serious health concern in the U.S., with 2.5 million cases reported in 2010. [4] TBIs contribute to a large number of disabilities and even deaths every year, depending on the severity of the injury. The U.S. military alone has reported about 300,000 TBI cases in the last 14 years, with 84% occurring in non-combat and training assignments. [2]

Considering that the TBI tests are expected to run on Abbott’s i-STAT diagnostic machine, which is already in use for both military and civilian cases, the company should be able to expand its commercial presence outside the U.S. fairly quickly. The global TBI market is expected to grow to $2 billion by 2017 and even with a high single-digit or low double-digit share, Abbott could add substantially to its existing $200 million a year point-of-care diagnostics business.

See More at TrefisView Interactive Institutional Research (Powered by Trefis)

Get Trefis Technology

Notes:
  1. Press release, Abbott, Aug 18 2014 []
  2. Abbott gets $20M from DOD to develop portable concussion test, Fierce Medical Devices, Aug 18 2014 [] []
  3. Traumatic Brain Injury (TBI) Therapeutics – Pipeline Assessment and MarketForecasts to 2017, Research and Markets []
  4. TBI, Center For Disease Control and Prevention, March 6 2014 []