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Abbott CEO Shares Most Important Lessons Learned During the COVID-19 Pandemic

Image courtesy of Abbott Laboratories Untitled design-212.png
The company’s Q3 results were phenomenal – but these takeaways will benefit us all.

JP Morgan's Robbie Marcus teed it up nicely during the question-and-answer portion of Abbott's third-quarter earnings call when he asked CEO Robert Ford a critical question related to the COVID-19 pandemic. Ford's response includes valuable lessons from the pandemic that could ultimately be beneficial to the medtech industry at large.

"I feel like you have a unique perspective looking at both sides of the coin, from COVID test volumes and also device procedure volumes," Marcus said. "So, Robert, I'd love to get your sense of where you think we are here in the fourth quarter and heading into 2022, and any early thoughts you could give us on sort of how to think about the progression of COVID testing sales, and the recovery and durability of medtech volumes."

The question comes as Abbott reported very impressive earnings results, which include global COVID-19 testing-related sales of $1.9 billion, driven primarily by rapid tests ($1.6 billion). Even without counting COVID testing, the company’s diagnostics business grew 13% year-over-year, and medical device sales grew 13% year-over-year (and more importantly, 16% compared to pre-pandemic levels in 2019).

"Since the start of the pandemic, we've been learning a lot," Ford said, in response to the analyst's question. "...The key thing that we learned over the last, let's say, couple of months here, is that the vaccine is just an incredible tool for the virus. It's had a huge impact on public health around the world. But alone, it's not enough. We know that it dramatically reduces hospitalizations, dramatically reduces mortality, but I think we're all seeing here that even if you're vaccinated, you could still get, and you could still transmit the virus."

So the biggest lesson learned going into the fourth quarter, and into 2022, he said, is that testing is going to remain an important part of the COVID-19 fight — even with the addition of therapeutics. Abbott has now shipped more than 1 billion COVID-19 tests since the beginning of the pandemic, and is currently at a supply capacity of more than 100 million tests per month.

"And I think we've also learned a lot about understanding the difference between symptomatic testing and screening testing," Ford continued. "And we started to pay much closer attention to understanding the channels and the platforms that are more aligned to symptomatic testing versus screening testing. And we can definitely see a correlation on the symptomatic testing with cases — cases going up, cases going down. [Where] we don't see that correlation is on screenings." 

So even as cases have started to dip in the United States, screening demand has actually increased quite a bit, the company's CEO noted. He also said Abbott has started to understand a key distinction between government purchasing of tests and private test purchases. Not surprising, most of the company's COVID-19 sales in the beginning of the pandemic came from government purchases, both in the United States and internationally.

"And that continues to be pretty strong. But what we've seen now grow pretty significantly — and I think it's aligned to the screening piece — is the private side of the market," Ford said.

Those private market sales include over-the-counter (OTC) tests, cash pay, as well as corporate testing purchases. Ford said a lot of companies have signed contracts with Abbott in recent months to ensure that they have rapid testing available for their employees. He acknowledged that the company has seen some shelf-and-stocking issues at the retail level with its OTC COVID-19 tests, but he expects those to "work their way out" over the next couple of weeks.

Graphic by Amanda Pedersen / MD+DICOVID-19 quote from Abbott CEO Robert Ford

COVID-19 will still be a wildcard in 2022 for medtech companies

"Listen, I don't know how much is going to be there next year," Ford said. "But it's clearly here that that screening segment of the market is going to be an important part, even with therapeutics and vaccines."

He noted that Abbott's base business has done very well, and continues to be on a recovery trajectory that started in the second quarter. While there was some "softness" during the third quarter as the Delta variant spread across the United States and COVID cases increased, particularly in August and the first half of September, Ford said the company began to see business pick back up again toward the end of the quarter.

"So when you think about 2022, I expect our base business — our underlying base business — to continue that ... very strong momentum across the board, especially with all of our new product launches."

COVID-19 remains a wildcard for all medtech companies, however, making it difficult for companies like Abbott to forecast 2022 earnings.

"There's probably a COVID number that we're comfortable [with] going into 2022. And then we'll have to update on a rolling quarterly basis here how COVID's going to play out throughout next year," Ford said. "So that's kind of how I see it."

TAGS: IVD
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