Abbott’s Generic Pharmaceuticals Business To Continue Growth Trajectory Led By Emerging Markets
The generic pharmaceuticals business has been trending well for Abbott Labs (NYSE:ABT) for some time now. It accounts for around 15% of the company’s value, according to our estimates. In Q3 2017, the segment saw double-digit growth in revenues, led by a ramp up in emerging markets, including Brazil, Russia, India and China.
Abbott has a broad line of branded generic pharmaceuticals manufactured worldwide, and marketed and sold outside the U.S. The major products sold through this segment include Creon, Brufen, Biaxin, Influvac and Duphaston, among others. The segment’s revenues grew from $2.8 billion in 2012 to $3.9 billion in 2016. Looking forward, we expect the growth to be in mid-single-digits to over $5 billion by the end of our forecast period in 2024. The chart below shows the historical as well as estimated revenue trajectory for Abbott’s generic pharmaceuticals business.
- Should You Pick Abbott Stock At $105 After An Upbeat Q1?
- After Nearly A 20% Rise In Six Months Will Abbott Stock See Higher Levels Post Q1?
- What’s Next For Abbott Stock After A 6% Rise This Year?
- Is Abbott Stock Undervalued At $95?
- Which Is A Better Pick – Abbott Stock Or Amgen?
- Is Abbott Stock A Better Healthcare Pick Over Thermo Fisher Scientific?
We believe that the revenue growth in the coming years will be led by higher demand for generic medicines in emerging markets. Abbott’s focus remains on emerging markets, and it is expanding its footprint in the aforementioned regions. Emerging markets are likely to grow at a faster pace due to growth in income and healthcare, coupled with a relatively high degree of price-sensitivity among consumers. Abbott is working towards increasing the breadth of its product offerings by launching new and improved formulations with new branded generics, and expand its presence in these key markets. Also, price sensitivity in emerging markets will continue to offer ideal market conditions for generics, and this should bode well for Abbott.
While we remain optimistic about Abbott’s generic pharmaceuticals business, we also acknowledge the fact that the pharmaceutical industry is characterized by intense competition globally, as many companies compete for the same consumer base. Drug prices remain one of the most important factors for any company. The industry is also facing challenges from a number of low-cost generic manufacturers who have entered emerging markets as well.
Our price estimate of $49 for Abbott Laboratories is around 10% below the current market price.
See More at Trefis | View Interactive Institutional Research (Powered by Trefis)