Abbott's sales grew 8% in the third quarter on an organic basis, and that upward trend is expected to continue. However, as a multinational company, Abbott faces some hefty currency headwinds going into 2019.Pixabay
Abbott Laboratories has had another stellar year in terms of new product launches and strong growth drivers across the company. In fact, the company's pipeline may be the strongest its ever been, thanks to products like the FreeStyle Libre glucose monitoring system, the MitraClip, the HeartMate3, and the Alinity family of diagnostic products – just to name a few.
"It's interesting, I've never in my career here seen such breadth across the company in new products, new product launches, market conditions, et cetera," CEO Miles White said during Abbott's third-quarter earnings call on Wednesday. "I think the sustainability of the growth and the diversity of it is a huge plus. It's not like we're reliant on a single product or a single country. We're not highly indexed in China, and we're not over-dependent on a single product. There's just great diversity of growth opportunity across the board."
White credited a lot of that pipeline strength to the products Abbott acquired from St. Jude Medical.
"St. Jude, in the course of our acquisition negotiations with them, continued to talk to us about the [diversity] of their pipeline and how good it was. And to be honest, they were right. And that's proven."
But like any multinational company, Abbott faces a currency headwind.
"The little elephant in the room is just, clearly, exchange," White said. "I think all of us, all investors, all companies doing business in international markets, are experiencing the upturn in exchange now, and frankly, a bit of uncertainty about how long it lasts."
At the beginning of each year, companies like Abbott have a notion of what the currency exchange is going to do, but whichever way that exchange is swinging, it never lasts the entire year, White said.
"I think for all of us, it's a little hard to forecast," he said. "So we see that in the third quarter, we’ve seen a tick-up in currency impact. We're clearly moving into a headwind here."
White said he expects to see a currency impact in the fourth quarter and into next year. The real question, he said, is how far into next year that headwind will last, and how heavy it will be?
That said, there are things Abbott can do to mitigate the volatility of the currency exchange.
"We've got a very sophisticated, and frankly, complex rolling hedging program on the currencies that we can hedge. So, we take out a lot of the unpredictability with that," White said. "Obviously, over the long-term, we're not currency traders and we're not trying to be. But we're trying to be able to make our earnings and our sales more predictable, more stable, more reliable, in terms of what our investors want to see, and frankly, impact on us, so we can plan and manage."
While the currency headwind is the elephant in the room for Abbott, White said he prefers to focus on the things that are within the company's control, like the sustainability of growth and the diversity of its portfolio.
Abbott's sales grew 8% in the third quarter on an organic basis, and that upward trend is expected to continue.
In July the company initiated a pivotal trial for Tendyne, a device designed to replace damaged mitral heart valves without the need for open heart surgery. The company also received FDA approval for its third generation version of the MitraClip, a market-leading device for the repair of mitral heart valves. And in September, Abbott announced results of the landmark COAPT trial, which demonstrated that the MitraClip improves survival and clinical outcomes for patients with functional mitral regurgitation, the most prevalent form of the condition. White said Abbott expects to submit the COAPT data to FDA in the coming weeks to support consideration of an extended indication for the device. MitraClip sales grew more than 20% during the quarter.
He also highlighted the FreeStyle Libre glucose monitoring system, which eliminates the need for routine fingersticks, and pointed out that during the quarter Abbott received FDA approval for a 14-day sensor with a shorter one-hour warmup, making Libre the longest lasting wearable glucose sensor available. The company also obtained CE mark for its FreeStyle Libre 2 system in Europe, which includes optional real-time alarms.
"In a relatively short period of time, FreeStyle Libre now has more than 1 million users across the globe, a testament to the mass market appeal of this product, which is fundamentally changing the way people with diabetes manage their disease," White said.
Abbott recorded more than $300 million in FreeStyle Libre sales during the third quarter, leading to sales growth of 40% for the company's diabetes care business.
"Our pipeline continues to be highly productive, including significant recent advancements in structural heart and diabetes care that are creating and shaping markets," White said.