How Much Can Abbott’s Revenue Grow In The Coming Years?

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Abbott Labs (NYSE:ABT) is a diversified healthcare conglomerate with a global presence. The firm operates in four main segments: Medical Devices, Diagnostics, Nutritional, and Established Pharmaceuticals. Medical Devices has become the company’s largest segment accounting for over one-third of the company’s total sales. The company’s revenue growth jumped from 2.2% in 2016 to 31.3% in 2017, primarily led by the St. Jude acquisition. Excluding the acquisition impact, segment revenues have been unchanged vs the prior year. Abbott saw further growth of 11.6% in 2018, primarily due to the Alere acquisition. As such, we expect the revenue growth rate to be in mid-single-digits going forward, slightly higher than the historical average of low single-digits prior to these acquisitions, reflecting merger synergies. You can look at our interactive dashboard analysis ~ ABT Revenues: How Does Abbott Make Money? ~ for more details. You can also look at our data for healthcare companies here.

Abbott Generates Its Revenue From Sales of Medical Devices, Diagnostics, Nutritional Products, And Established Pharmaceuticals Products. Its Largest Segment In Terms of Revenues Is Medical Devices, Which Accounted For 37% of Total Revenues In 2018.

  • The Medical Devices segment includes minimally invasive medical devices for heart diseases, strokes, carotid artery diseases, and other serious vascular conditions.
  • The Diagnostics segment includes systems and tests used for screening for drugs of abuse, cancer, therapeutic drug monitoring, fertility, physiological diseases, and infectious diseases such as hepatitis and HIV.
  • The Nutritional segment includes pediatric, adult, healthy living and sports nutrition products, such as infant formulas, snack bars, and meal replacement shakes.
  • The Established Pharmaceutical Products segment includes a broad line of generic drugs that are manufactured worldwide and sold outside the U.S.

Abbott’s Business Model

  • What Need Does It Serve?
    • Abbott primarily serves the medical devices, pharmaceuticals, and nutritional products market. These medical devices are used primarily by various healthcare institutions in several countries. Its established pharmaceuticals business focuses primarily on emerging markets.
  • Who Pays To Abbott?
    • Blood banks, hospitals, commercial laboratories, and clinics
    • Physicians
    • Government agencies
    • Health care facilities, specialty pharmacies, wholesalers, distributors, and independent retailers
    • Retail consumers
  • Who Are Abbott’s Key Competitors?
    • Abbott competes with other medical devices companies, such as Medtronic, Johnson & Johnson, Boston Scientific, and Intuitive Surgical among others. In Diagnostics it competes with Roche among other companies. In established pharmaceuticals business, it competes with Pfizer, and GlaxoSmithKline, among others.

Abbott Saw A Sharp Surge In Revenues In 2017 Due To the St. Jude Medical Acquisition. 2018 Further Saw Double-Digit Growth, Reflecting the Alere Acquisition. However, The Growth Rate Will Likely Be In Mid-Single- Digits In The Coming Years, Representing Slightly Higher Rate Than Historical Average Led By Merger Synergies.

  • Abbott’s revenues grew from $20.2 billion in 2014 to $27.4 billion in 2017, reflecting the impact of the St. Jude acquisition.
  • Revenues grew further to $30.6 billion in 2018, reflecting the Alere acquisition.
  • The company’s top line could grow to north of $35 billion by 2021, reflecting mid-single-digit average annual growth.

Abbott Will Likely See Steady Growth Across Its Segments In The Coming Years

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