What Are Abbott Laboratories’ Key Sources of Revenue?

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Abbott Labs (NYSE:ABT) generates its revenues from Medical Devices, Nutritionals, Diagnostics, and Generic Pharmaceuticals business. Medical Devices is the largest segment, and accounts for more than one-third of the company’s total revenues and profits. The company’s acquisitions of St. Jude Medical, and Alere, has strengthened its Medical Devices and Diagnostics business in the recent years. We forecast mid-single-digit revenue growth for Abbott in 2019, led by steady growth across its businesses.  We have created an interactive dashboard ~ What Are Abbott’s Key Sources of Revenue. You can adjust segment-wise sales to see the impact on the company’s overall revenues. Also, here’s more Healthcare Data.

Expect Revenues To Grow In Mid-Single-Digits

Abbott’s Medical Devices business includes minimally invasive medical devices for heart diseases, stroke, carotid artery disease, and other vascular conditions. In addition, it also contains St. Jude Medical’s business, which Abbott acquired in 2017. The segment revenues grew from $5.3 billion in 2016 to $11.4 billion in 2018, primarily reflecting the impact of the St. Jude acquisition. We forecast the revenues to grow in high single-digits in 2019, and in mid-single-digits thereafter, primarily led by electrophysiology, and neuromodulation business. Electrophysiology refers to a test performed to assess the heart’s activity and is used to diagnose arrhythmia. Abbott’s electrophysiology product line primarily includes catheters, which are used to run this test. The company is seeing strong demand for heart mapping and ablation portfolio, while neuromodulation is seeing growth in its product line for the treatment of chronic pain and movement disorders. Apart from electrophysiology, structural heart continues to benefit from higher MitraClip sales. In fact, MitraClip was recently approved by the U.S. FDA for the treatment of heart failure in patients with clinically significant secondary mitral regurgitation. 

Abbott’s Diagnostics business includes systems and tests such as immunoassay, assays used for screening for drugs of abuse, cancer, therapeutic drug monitoring, fertility, physiological diseases, and infectious diseases. An assay is a quantitative or qualitative test of a drug to determine its components. The segment revenues have grown from $4.8 billion in 2016 to $7.5 billion in 2018, primarily reflecting the impact of the Alere acquisition. We expect the division’s revenue to grow in mid-single-digits in the coming years. This can primarily be attributed to the Alere acquisition, which will further strengthen Abbott’s share in the diagnostics business. With this acquisition Abbott has added the tests for heart attacks, influenza, and drug abuse to its suite of diagnostic products.

The company’s Nutritionals business, which primarily includes dietary supplements, functional foods, and clinical & medical foods, hasn’t seen much growth over the past few years, and the revenues have hovered around $7 billion. We don’t expect any significant growth in this segment, given the nutritional industry is highly fragmented, and large pharmaceutical companies and packaged food and beverage companies compete for the same consumer base. Further, there is also a challenge from local label brands.

Looking at Abbott’s generic pharmaceutical business, the segment includes branded generic drugs such as Creon, Biaxin, Klacid, Influvac, Brufen, Synthroid, and Dicetel among others. The segment revenues have grown from $3.9 billion in 2016 to $4.4 billion in 2018. We forecast mid-single-digits growth in revenues in the coming years, primarily led by its expansion in emerging markets. The company has been focused on the emerging markets, especially Brazil, Russia, China, and India, and it is seeing strong growth in these regions. However, the pharmaceutical industry is characterized by intense competition globally, as many companies compete for the same consumer base. This will likely cap the overall sales growth for the segment. 

 

 

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