#9: Abbott
Headcount 91,4400
Year Established 1888
Pharma Revenues $19,894 21%
Total Revenues $35,167 14%
Net Income $4,626 -19%
R&D Budget $3,742 36%
Top-Selling Drugs in 2010
Drug |
Indication |
$ |
(+/- %) |
Humira |
rheumatoid arthritis |
$6,548 |
19% |
TriCor/TriLipix |
cholesterol |
$1,582 |
18% |
Kaletra |
HIV/AIDS |
$1,255 |
-8% |
Niaspan |
cholesterol |
$927 |
8% |
Lupron |
hormone treatment |
$748 |
-7% |
Synthroid |
hyperthyroidism |
$555 |
11% |
Account for 58% of total pharma sales, down from 63% in 2009.
PROFILE
In 2011, Abbott changed its reporting structure slightly. Instead of four units consisting of Pharmaceutical, Nutritional, Diagnostics and Vascular, the company now reports Proprietary Pharmaceuticals, Innovation-Driven Devices, and “Durable Growth.” The latter includes an “Established Pharmaceuticals” subcategory that covers branded generics sold outside the U.S., while the Proprietary unit covers patented drugs.
The new structure makes sense, given Abbott’s acquisitions in the previous year. The pickups of Solvay and Piramal Healthcare Solutions (reported in last year’s edition) created a major branded generics business for Abbott (it could bring in around $5.0 billion in 2011), and reconciling their sales (and margins) with those of innovative products can muddy the waters. (I’m a little dubious of “Durable Growth” as a business division title, as it sounds too similar to a Bush-era military operation.) Established Pharmaceuticals posted $1.3 billion in revenues in 1Q11, up from $716 million in 1Q10. Proprietary Pharmaceuticals were up 12% to $3.8 billion in the quarter.
The Solvay acquisition helped push Abbott past Bristol-Myers Squibb for the #9 spot in this year’s ranks, along with another major year for Humira, which posted the second-biggest sales jump in this year’s list, behind Crestor. That growth wasn’t enough to keep Abbott from implementing a 1,500-person layoff in its pharma unit in January 2011. The layoffs are in addition to the 3,000 layoffs Abbott announced in the wake of its Solvay acquisition. This round is projected to cost Abbott $295 million, and more than half the job cuts will occur in manufacturing operations in the Illinois area. The announcement came a week after Abbott withdrew the BLA for briakinumab, a psoriasis treatment that would have competed with J&J’s Stelara. Some analysts estimated briakinumab to be a $1.0 billion seller by the end of the decade. Abbott may refile the drug with the FDA and EMA.
At least Abbott’s not facing some major patent expirations. The company suffered huge revenue losses when Depakote went generic in 2009 (2008 sales: $1.3 billion. 2010 sales: $161 million), but doesn’t have too much generic exposure in its immediate future. One dose of TriCor could see generic competition by July 2012, and Niaspan may lose patent protection in September 2013, but those are survivable.
The bigger worry for Abbott actually came from outside the company. In May 2011, the National Institutes of Health reported interim results of a clinical trial of Niaspan (which raises HDL) and simvastatin (which lowers LDL), the combination Abbott markets as Simcor: the combo was linked to strokes in more than twice as many patients as in the control group (simvastatin alone). The trial was ended 18 months early due to the lack of benefit for patients.
Abbott downplayed the report, highlighting the fact that the patient population — people with stable, non-acute, pre-existing CV disease and well-controlled LDL levels — isn’t necessarily reflective of the broader population. Also, the numbers of patients who suffered strokes — 28 in the trial group, 12 in the control group — may be statistically insignificant. Niaspan was closing in on billion-dollar status, but some analysts believe the news could lead to a 20% drop in revenues for the treatment.
This wasn’t Abbott’s only NIH problem. In March 2010, the National Heart Lung and Blood Institute reported results from a trial on CV outcomes for patients with type 2 diabetes. That trial yielded the result that Abbott’s Tricor + simvastatin (which the company sells as Trilipix) was no better than simvastatin alone in preventing heart attacks or strokes in that patient group. In May 2011, an FDA advisory panel voted to recommend that Abbott update Trilipix’ label to include discussion of the NHLBI study. The panel also voted to recommend that Abbott conduct a new study to test whether Trilipix actually reduces risk of CV events in that high-risk patient group.
This is worrying for the development of HDL+/LDL- combination drugs. Abbott’s not the only company in the field; Merck is in the midst of a 25,000-patient trial of a niacin-based HDL-raiser. And it’s just a few years now since Pfizer famously had to end development of torcetrapib, the HDL-booster that it planned to sell in a combo-drug with Lipitor.
Speaking of which, in December 2010, Abbott and AstraZeneca cancelled their partnership to develop a Trilipix-Crestor combo-drug, following a CRL from the FDA in March and “careful consideration of [. . .] the resulting regulatory delay and the commercial attractiveness of the product in the U.S. market,” according to an Abbott statement.
Despite that news and the briakinumab withdrawal, Abbott has some pipeline prospects. The acquisition of Facet in March 2010 boosted the company’s late-stage pipeline, and accordingly bumped up Abbott’s total R&D budget by $1.0 billion, to $3.7 billion. The lead drug from Facet, daclizumab for MS (co-developed with Biogen Idec), is scheduled to wrap up by January 2014. The other late-stage Facet drug, elotuzumab (co-developed with BMS), is recruiting for a Phase III trial scheduled to start shortly. That one is estimated to finish in late 2017, but final data for primary outcomes will be collected around March 2014.
In September 2010, Abbott bought rights to bardoxolone methyl, a chronic kidney disease drug, from Reata for $450 million, in addition to development milestones and sales royalties. Two months later, Abbott and Reata announced positive Phase IIb data for the drug, and began a 1,600-person Phase III trial in June 2011.
Which is to say, Abbott does have some interesting drugs in the pipeline, but they’re nowhere near filing them. Good thing they have the best contender for Top-Selling Drug in the World! Humira posted 19% revenue growth in 2010 and was up another 18% in 1Q11. With Lipitor soon to fall and Avastin plateauing, Humira is on a clear path to become #1 with a bullet. (That hasn’t made Abbott complacent; the company is working on several advances for the drug: thinner needles, monthly dose (it’s currently bi-weekly) and more indications, beginning with gastrointestinal disorder colitis.)
In other good Humira news, Abbott in February 2011 won a reversal of the $1.8 billion verdict in a patent infringement case it had lost against J&J and New York University in 2009. The parties sued Abbott over a fully-humanized antibody patent, but the court of appeals ruled that the patent was too broad. According to the ruling, “A ‘mere wish or plan’ for obtaining the claimed invention is not sufficient.” J&J may decide to appeal.
Abbott’s also looking ahead in the rheumatoid arthritis field. In June 2011, the company signed a development pact with Biotest for a next-gen RA/psoriasis anti-CD-4 antibody. Abbott paid $85 million upfront with potential milestones of $395 million for the Phase II drug, BT-061. If it reaches the market, the companies will co-promote in Germany, France, the UK, Italy and Spain, with Abbott holding the rest of the global rights.
Between Humira and its booming branded generics strategy, Abbott will be able to keep up in the game for the next few years. —GYR
THE LOWE DOWN
Abbott has been making the most out of its pharma assets for a long time now. Their HIV drug Kaletra wasn’t intrinsically that great, but it sure is a great metabolic addition to the cocktail. Fenofibrate is as old as the hills, but the company sure does sell a lot of it, in various combinations. A lot of other companies must wish that they could make such huge pots of soup out of leftovers the way that these folks do.
Things may be getting a bit hot back in the kitchen, though. Fenofibrate is under pressure, as more clinical studies call its real-world endpoints into doubt. Briakinumab, an antibody for psoriasis, was going to be a big deal, but it’s been shrinking in the face of competition from J&J, and now may have disappeared completely.
There’s always Humira, though, and having your biggest seller be a biologic is no bad thing. The lack of an instant generic waiting to swoop down should buy Abbott some time, and it looks like they’ll need it. The dark cloud is Pfizer’s JAK inhibitor, which, if everything goes well, could become a huge force in the arthritis market (but since when have things gone that smoothly for Pfizer?) —Derek Lowe
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