07.29.15
$10.1 Billion
KEY EXECUTIVES:
Miles D. White, Chairman of the Board & CEO
Thomas C. Freyman, Exec. VP, Finance & Chief Financial Officer
Brian J. Blaser, Exec. VP, Diagnostics Products
John M. Capek, Ph.D., Exec. VP, Medical Devices
Jaime Contreras, Sr. VP, Core Laboratory Diagnostics, Commercial Operations
Charles D. Foltz, Sr. VP, Abbott Vascular
Robert B. Ford, Sr. VP, Diabetes Care
Corlis D. Murray, Sr. VP, Quality Assurance, Regulatory & Engineering Services
Murthy V. Simhambhatla, Sr. VP, Abbott Medical Optics
Sharon J. Bracken, VP, Point of Care Diagnostics
Dennis A. Gilbert, VP, Research & Development, Diagnostics
Catherine Mazzacco, VP, Abbott Medical Optics, Commercial
Deepak S. Nath, VP, Vascular, Commercial
Andrea F. Wainer, VP, Molecular Diagnostics
Randel W. Woodgrift, VP, Vascular, Manufacturing and R&D
NO. OF EMPLOYEES: 69,000 (total)
GLOBAL HEADQUARTERS: Abbott Park, Ill.
2012, a year of separation. 2013, a year of establishing the template. 2014, realization.
Abbott Laboratories CEO Miles D. White paints the picture of an epic journey, one that flowered in FY14 with very positive results. Three years ago in 2012, Abbott split into two separate, publicly traded companies. The spinoff firm AbbVie Inc. took all of the big-name drugs, including Tricor, Niaspan and Humira. The following year thus became the re-establishment year as Abbott found a new way forward. Happily, FY14 was a success by any measure, giving Abbott much to celebrate.
Abbott’s medical devices fall into four categories: Diagnostic Products, Vascular Products, Diabetes Care and Medical Optics. Because the latter two segments make up less than 10 percent of the company’s revenues or assets, they count as non-reportable (further information about products released under these umbrellas can be found on page 72). Diagnostic Products brought in $4.7 billion in revenues, a 3.9 percent increase over the previous year; and Vascular Products brought in $3 billion in revenues, a slight (less than 1 percent) decrease over FY13. Overall, Abbott’s $10.11 in medical product revenue was an increase over the previous year, which brought in $10.01 billion.
About half of Abbott’s sales now are in faster-growing geographies outside the United States. In 2014, the company added a new vaccine facility in the Netherlands, nutrition plants in China, India and the United States, and is adding a new optics facility in Malaysia to meet growing demand in those regions. Global sales were well up in China at 22 percent growth, in India at 9.4 percent growth and Brazil at 8 percent growth. Japan saw a dip of 7 percent, a decrease for the second year in a row, demonstrating that Abbott’s better growth areas are in developing markets. Sales in Spain, France Italy, the United Kingdom and Germany enjoyed an increase in 2014 as well, while Switzerland showed a decrease due to an anomalous spike in sales in 2013.
Abbott completed patient enrollment in clinical trials for the Absorb bioresorbable vascular scaffold to support regulatory approvals in the United States, Japan and China, which will hopefully aid in bolstering the Japan market in the near future, should a regulatory approval emerge.
In September 2014, Abbott’s board of directors approved a new share repurchase program and declared a quarterly common dividend. The board authorized the repurchase of up to $3 billion of the corporation’s common shares. This new authorization is in addition to the $511 million unused portion of the previous program that was announced in June 2013.
Leading By Example
With a balanced portfolio of medical device, diagnostics, pharmaceutical and nutrition products, Abbott is already a force to be reckoned with in each of the markets in which it competes. The balance, along with diversified offerings, means the company is not overly dependent on any one product or even division to carry the load. In the 2014 annual report, White preaches the message of field-leadership boldly, noting that Abbott’s goal is “to lead—both scientifically and commercially—in the markets in which [it] competes.”
“Well-balanced diversity is the foundation of Abbott’s strategy and success,” White noted. “Our four major businesses are of roughly equal size, and that balance extends across geographies and our mix of payers. We constantly shape our portfolio to ensure that we’re in the right markets and that our success isn’t over-reliant on any single therapy, technology, or country.”
Standout product releases in 2014 included the new Diabetes Care glucose-monitoring technology, Freestyle Libre, in Europe. According to Abbott, this product solves one of the biggest problems diabetic patients face: having to stick their fingers repeatedly to draw blood for testing. Libre allows the user to read the data wirelessly by simply passing an electronic reader over a disposable sensor worn on the body. The system consists of a small, round sensor—approximately the size of a two Euro coin—worn on the back of the upper arm, which measures glucose every minute in interstitial fluid through a small (5 mm long, 0.4 mm wide) filament that is inserted just under the skin and held in place with a small adhesive pad. A reader is scanned over the sensor to get a glucose result painlessly in less than one second. Scanning can take place while the sensor is under clothing, making testing more discreet and convenient. Each scan displays a real-time glucose result, a historical trend and the direction the glucose is heading. The reader holds up to 90 days of data, providing a historical snapshot of glucose levels over time.
Another notable release was the Iridica molecular-testing platform approved in Europe to more quickly diagnose serious infections, such as sepsis. Iridica uses a combination of sophisticated testing technologies known as polymerase chain reaction/electrospray ionization mass spectrometry to rapidly identify infection-causing pathogens directly from a patient’s sample, without the need for culture. According to the results of an Abbott study, “Rapid Diagnosis of Infections in the Critically Ill” (RADICAL), the company’s new technology was able to detect pathogens when the current standard of care did not. This platform was released under the umbrella of Abbott’s Diagnostics business, which Abbott is directing special attention to, beefing up its full range of existing diagnostic platforms, both systems and tests. Abbott highlighted these two technologies as breakthrough innovations on par with the company’s goal to lead in the markets in which it participates. For more product releases in 2014, see the included sidebar.
Acquisitions
Fiscal 2014 saw several important additions to the Abbott Labs fold, an important growth strategy in the wake of the big split of 2012. The company acquired two pharmaceutical companies, both of which are in developing markets: CFR Pharmaceuticals based in Santiago, Chile, but with a broad presence in 15 Latin American countries; and Veropharm, a Russian pharmaceuticals manufacturer based in Moscow.
Just under the wire for FY14, Abbott made a medical device company acquisition in December. The company bought San Diego, Calif.-based Topera Inc. for $250 million in cash upfront, plus potential future payments of up to $300 million to be made upon completion of certain regulatory and sales milestones.
Soon after its founding in 2010, Topera managed to earn 510(k) FDA clearance for its 3-D mapping and analysis system Rhythmview in 2012. This rotor identification system helps physicians identify and target patient-specific rotors (spiral electrical waves that sustain atrial fibrillation and other cardiac arrhythmias) that have been shown to be the sustaining mechanism for atrial fibrillation. The ability to locate these rotors enables the physician to individualize patient treatment through a procedure referred to as Focal Impulse and Rotor Mapping guided ablation, or FIRM-guided ablation. Topera’s rotor identification system has been shown, when used with existing catheter ablation therapy, to result in positive long-term success rates, even in difficult-to-treat cases. Catheter-based electrophysiology is an approximately $3 billion global market that has been growing annually at double-digit rates.
“The Topera acquisition gives Abbott a foundational entry in the large, high-growth electrophysiology market with breakthrough technologies that can transform how physicians treat people with complex heart rhythm disorders,” said John M. Capek, Ph.D., executive vice president of Medical Devices, Abbott. “The ability to more accurately target the areas of the heart perpetuating atrial fibrillation is a significant advancement in the field of electrophysiology and can transform patient care.”
Unfortunately, Abbot also has had to make cost-saving cuts to maintain its financial health. Just after the Veropharm deal was announced, the company cut an undisclosed number of employees from its Diagnostics division at its headquarter facilities in Abbott Park outside Chicago. An Abbott spokesperson told the Chicago Tribune that the layoffs were an attempt to reduce expenses. In the first quarter of 2014, Abbott incurred $194 million in charges associated primarily to “cost reduction initiatives,” according to financial statements. January of the same year also saw an unspecified number of layoffs. This was the third year in a row Abbott has made cuts to its workforce.
KEY EXECUTIVES:
Miles D. White, Chairman of the Board & CEO
Thomas C. Freyman, Exec. VP, Finance & Chief Financial Officer
Brian J. Blaser, Exec. VP, Diagnostics Products
John M. Capek, Ph.D., Exec. VP, Medical Devices
Jaime Contreras, Sr. VP, Core Laboratory Diagnostics, Commercial Operations
Charles D. Foltz, Sr. VP, Abbott Vascular
Robert B. Ford, Sr. VP, Diabetes Care
Corlis D. Murray, Sr. VP, Quality Assurance, Regulatory & Engineering Services
Murthy V. Simhambhatla, Sr. VP, Abbott Medical Optics
Sharon J. Bracken, VP, Point of Care Diagnostics
Dennis A. Gilbert, VP, Research & Development, Diagnostics
Catherine Mazzacco, VP, Abbott Medical Optics, Commercial
Deepak S. Nath, VP, Vascular, Commercial
Andrea F. Wainer, VP, Molecular Diagnostics
Randel W. Woodgrift, VP, Vascular, Manufacturing and R&D
NO. OF EMPLOYEES: 69,000 (total)
GLOBAL HEADQUARTERS: Abbott Park, Ill.
2012, a year of separation. 2013, a year of establishing the template. 2014, realization.
Abbott Laboratories CEO Miles D. White paints the picture of an epic journey, one that flowered in FY14 with very positive results. Three years ago in 2012, Abbott split into two separate, publicly traded companies. The spinoff firm AbbVie Inc. took all of the big-name drugs, including Tricor, Niaspan and Humira. The following year thus became the re-establishment year as Abbott found a new way forward. Happily, FY14 was a success by any measure, giving Abbott much to celebrate.
Abbott’s medical devices fall into four categories: Diagnostic Products, Vascular Products, Diabetes Care and Medical Optics. Because the latter two segments make up less than 10 percent of the company’s revenues or assets, they count as non-reportable (further information about products released under these umbrellas can be found on page 72). Diagnostic Products brought in $4.7 billion in revenues, a 3.9 percent increase over the previous year; and Vascular Products brought in $3 billion in revenues, a slight (less than 1 percent) decrease over FY13. Overall, Abbott’s $10.11 in medical product revenue was an increase over the previous year, which brought in $10.01 billion.
About half of Abbott’s sales now are in faster-growing geographies outside the United States. In 2014, the company added a new vaccine facility in the Netherlands, nutrition plants in China, India and the United States, and is adding a new optics facility in Malaysia to meet growing demand in those regions. Global sales were well up in China at 22 percent growth, in India at 9.4 percent growth and Brazil at 8 percent growth. Japan saw a dip of 7 percent, a decrease for the second year in a row, demonstrating that Abbott’s better growth areas are in developing markets. Sales in Spain, France Italy, the United Kingdom and Germany enjoyed an increase in 2014 as well, while Switzerland showed a decrease due to an anomalous spike in sales in 2013.
Abbott completed patient enrollment in clinical trials for the Absorb bioresorbable vascular scaffold to support regulatory approvals in the United States, Japan and China, which will hopefully aid in bolstering the Japan market in the near future, should a regulatory approval emerge.
In September 2014, Abbott’s board of directors approved a new share repurchase program and declared a quarterly common dividend. The board authorized the repurchase of up to $3 billion of the corporation’s common shares. This new authorization is in addition to the $511 million unused portion of the previous program that was announced in June 2013.
Leading By Example
With a balanced portfolio of medical device, diagnostics, pharmaceutical and nutrition products, Abbott is already a force to be reckoned with in each of the markets in which it competes. The balance, along with diversified offerings, means the company is not overly dependent on any one product or even division to carry the load. In the 2014 annual report, White preaches the message of field-leadership boldly, noting that Abbott’s goal is “to lead—both scientifically and commercially—in the markets in which [it] competes.”
“Well-balanced diversity is the foundation of Abbott’s strategy and success,” White noted. “Our four major businesses are of roughly equal size, and that balance extends across geographies and our mix of payers. We constantly shape our portfolio to ensure that we’re in the right markets and that our success isn’t over-reliant on any single therapy, technology, or country.”
Standout product releases in 2014 included the new Diabetes Care glucose-monitoring technology, Freestyle Libre, in Europe. According to Abbott, this product solves one of the biggest problems diabetic patients face: having to stick their fingers repeatedly to draw blood for testing. Libre allows the user to read the data wirelessly by simply passing an electronic reader over a disposable sensor worn on the body. The system consists of a small, round sensor—approximately the size of a two Euro coin—worn on the back of the upper arm, which measures glucose every minute in interstitial fluid through a small (5 mm long, 0.4 mm wide) filament that is inserted just under the skin and held in place with a small adhesive pad. A reader is scanned over the sensor to get a glucose result painlessly in less than one second. Scanning can take place while the sensor is under clothing, making testing more discreet and convenient. Each scan displays a real-time glucose result, a historical trend and the direction the glucose is heading. The reader holds up to 90 days of data, providing a historical snapshot of glucose levels over time.
Another notable release was the Iridica molecular-testing platform approved in Europe to more quickly diagnose serious infections, such as sepsis. Iridica uses a combination of sophisticated testing technologies known as polymerase chain reaction/electrospray ionization mass spectrometry to rapidly identify infection-causing pathogens directly from a patient’s sample, without the need for culture. According to the results of an Abbott study, “Rapid Diagnosis of Infections in the Critically Ill” (RADICAL), the company’s new technology was able to detect pathogens when the current standard of care did not. This platform was released under the umbrella of Abbott’s Diagnostics business, which Abbott is directing special attention to, beefing up its full range of existing diagnostic platforms, both systems and tests. Abbott highlighted these two technologies as breakthrough innovations on par with the company’s goal to lead in the markets in which it participates. For more product releases in 2014, see the included sidebar.
Acquisitions
Fiscal 2014 saw several important additions to the Abbott Labs fold, an important growth strategy in the wake of the big split of 2012. The company acquired two pharmaceutical companies, both of which are in developing markets: CFR Pharmaceuticals based in Santiago, Chile, but with a broad presence in 15 Latin American countries; and Veropharm, a Russian pharmaceuticals manufacturer based in Moscow.
Just under the wire for FY14, Abbott made a medical device company acquisition in December. The company bought San Diego, Calif.-based Topera Inc. for $250 million in cash upfront, plus potential future payments of up to $300 million to be made upon completion of certain regulatory and sales milestones.
Soon after its founding in 2010, Topera managed to earn 510(k) FDA clearance for its 3-D mapping and analysis system Rhythmview in 2012. This rotor identification system helps physicians identify and target patient-specific rotors (spiral electrical waves that sustain atrial fibrillation and other cardiac arrhythmias) that have been shown to be the sustaining mechanism for atrial fibrillation. The ability to locate these rotors enables the physician to individualize patient treatment through a procedure referred to as Focal Impulse and Rotor Mapping guided ablation, or FIRM-guided ablation. Topera’s rotor identification system has been shown, when used with existing catheter ablation therapy, to result in positive long-term success rates, even in difficult-to-treat cases. Catheter-based electrophysiology is an approximately $3 billion global market that has been growing annually at double-digit rates.
“The Topera acquisition gives Abbott a foundational entry in the large, high-growth electrophysiology market with breakthrough technologies that can transform how physicians treat people with complex heart rhythm disorders,” said John M. Capek, Ph.D., executive vice president of Medical Devices, Abbott. “The ability to more accurately target the areas of the heart perpetuating atrial fibrillation is a significant advancement in the field of electrophysiology and can transform patient care.”
Unfortunately, Abbot also has had to make cost-saving cuts to maintain its financial health. Just after the Veropharm deal was announced, the company cut an undisclosed number of employees from its Diagnostics division at its headquarter facilities in Abbott Park outside Chicago. An Abbott spokesperson told the Chicago Tribune that the layoffs were an attempt to reduce expenses. In the first quarter of 2014, Abbott incurred $194 million in charges associated primarily to “cost reduction initiatives,” according to financial statements. January of the same year also saw an unspecified number of layoffs. This was the third year in a row Abbott has made cuts to its workforce.
The Supera peripheral stent system received U.S. Food and Drug Administration (FDA) approval to treat people with blocked blood vessels in the upper leg caused by peripheral artery disease (PAD) in March. PAD occurs when fat and cholesterol buildup causes arteries outside of the heart to narrow, which reduces blood flow to parts of the body, most commonly the legs. The disease affects 12 to 20 percent of Americans age 65 or older and can cause leg pain, in addition to increasing the risk of heart attack or stroke. The Architect clinical chemistry hemoglobin A1c (HbA1c) test received 510(k) FDA clearance in April. The test aids physicians in diagnosing and monitoring diabetes and identifying people at risk for the disease. More than 25 million Americans are living with diabetes and several million remain undiagnosed. People with diabetes who can understand and manage their condition can prevent or delay health problems, which may lead to longer and healthier lives. The catheter-based Mitraclip therapy, a treatment option hoped to significantly improve symptoms, disease progression and quality of life for certain people with a heart condition called mitral regurgitation (MR), gained Health Canada approval in April. Canadian regulatory authorities approved the device for people with degenerative MR who are too high risk for mitral valve surgery based on evaluation by a team of heart doctors, including a heart surgeon. Degenerative MR is a type of MR caused by an anatomic defect of the mitral valve of the heart. Treatment with the MitraClip device is touted to be effective in reducing the symptoms associated with severe MR, such as shortness of breath and fatigue, which may help people lead a more active lifestyle. In August, The Centers for Medicare & Medicaid Services in the United States issued a National Coverage Determination that extended coverage for Medicare beneficiaries in the United States to Transcatheter Mitral Valve Repair with the Mitraclip system. The Tecnis Symfony extended range of vision intraocular lens (IOL) for the treatment of cataract patients who also may have a diminished ability to focus on near objects (presbyopia) earned the CE mark for commercialization in Europe in June. Standard IOLs can be used in cataract treatment to improve distance vision, but the Tecnis Symfony IOL is reportedly a first-of-its kind lens intended to provide patients a continuous range of vision including far, intermediate and near distances with reduced incidence of halo and glare comparable to a monofocal lens. This IOL is not approved for use in the United States. |