Abbott Laboratories

brand-profile-thumb

Company Headquarters

100 Abbott Park Road Abbott Park, Illinois 60064-3500 US

Driving Directions

Brand Description

Abbott is a global healthcare leader that helps people live more fully at all stages of life. Our portfolio of life-changing technologies spans the spectrum of healthcare, with leading businesses and products in diagnostics, medical devices, nutritional and branded generic medicines. Our 114,000 colleagues serve people in more than 160 countries.

Key Personnel

NAME
JOB TITLE
  • Robert B. Ford
    Chairman and Chief Executive Officer
  • Hubert L. Allen
    Executive Vice President, General Counsel and Secretary
  • Phil Boudreau
    Executive Vice President, Finance and Chief Financial Officer
  • Lisa D. Earnhardt
    Executive Vice President and Group President, Medical Devices
  • Joseph Manning
    Executive Vice President, Nutritional Products
  • Mary K. Moreland
    Executive Vice President, Human Resources
  • Louis H. Morrone
    Executive Vice President, Core Diagnostics
  • Daniel Salvadori
    Executive Vice President and Group President, Established Pharmaceuticals and Nutritional Products
  • Andrea F. Wainer
    Executive Vice President, Rapid and Molecular Diagnostics
  • Jared L. Watkin
    Executive Vice President, Diabetes Care
  • Christopher J. Calamari
    Senior Vice President, U.S. Nutrition
  • Sabina Ewing
    Senior Vice President, Business and Technology Services and Chief Information Officer
  • J. Scott House
    Senior Vice President, Quality Assurance, Regulatory and Engineering Services
  • Sammy G. Karam
    Senior Vice President, Emerging Markets Established Pharmaceuticals
  • Scott M. Leinenweber
    Senior Vice President, Licensing, Acquisitions and Ventures
  • Sandra Lesenfants
    Senior Vice President, Structural Heart
  • Fernando Mateus
    Senior Vice President, International Nutrition
  • Chris J. Scoggins
    Senior Vice President, Commercial Operations and Marketing, Diabetes Care
  • Julie Tyler
    Senior Vice President, Vascular
  • Alejandro Wellisch
    Senior Vice President, Established Pharmaceuticals, Latin America
  • Randel Woodgrift
    Senior Vice President, Cardiac Rhythm Management
  • Uri Yaron
    Senior Vice President, Electrophysiology

Yearly results

Sales: 23.1 Billion

Headcount: 21,500
Pharma Revenues: $23,133 (3%)
Total Revenues: $39,874 (3%)
Net Income: $5,9632 (6%)
R&D Budget: $2,778 (6%)

Top Selling Drugs

Drug Indication $ (+/- %)
Humira rheumatoid arthritis $9,265 17%
AndroGel testosterone $1,185 36%
TriCor/TriLipix cholesterol $1,098 -20%
Kaletra HIV/AIDS $1,013 -13%
Niaspan cholesterol $911 -7%
Synagis RSV $842 6%
Lupron hormone treatment $800 -1%
Creon digestion $659 5%
Sevoflurane anesthesia $602 -9%
Clarithromycin antibiotic $501 -9%

Account for 73% of total pharma sales, up from 70% in 2011

Welcome to the top! Now get out! Abbott’s Humira was the world’s top-selling drug in 2012, closing in on the $10 billion mark after a 17% uptick last year. As a reward, Abbott has split off its proprietary pharmaceuticals division into a new company, effective January 1, 2013.

We’ll focus this report on AbbVie’s efforts as it works through its first year as a standalone business. Now that Abbott has taken its $5.1 billion in generic sales (not quite good enough to get it in the Top 20 ranks) and left, AbbVie faces the problem of having the biggest drug in the world and not much beside it.

Humira’s sales are so outsized that it represents the biggest #1-to-#2 ratio in the industry, with sales 7.8 times larger than any other product in its portfolio. In 1Q13, with AbbVie’s proprietary-only portfolio, Humira posted more in sales than ALL of the company’s other products. With the broadest label in its category and new indications still getting approved, Humira is sure to keep growing in the double digits, while the rest of AbbVie’s drugs struggle along (AndroGel excepted, and that’s starting to slow down).

In fact, when we run AbbVie as a standalone company next year, it’s almost certain to be listed as a Top Biopharma, rather than a Top Pharma company, since its biologic revenues will account for more than half of its drug sales. Knocking Amgen down to #3 is quite a start for a new company! (But if you don’t like that criterion for what makes a biopharma versus a pharma, we should note that paring away Abbott’s generic business would have dropped pre-AbbVie to #10 in our ranks, with 2012 revenues of $18.0 billion.)

Given the importance of Humira to AbbVie’s fortunes, the company is taking out all the stops to prevent competitors from developing a biosimilar of the drug in time for its patent expiration in 2016. The company is also working to downplay the biosimilars threat by developing new, patented formulations and delivery methods for Humira, but it’s also been taking its case to court.

In March 2013, AbbVie sued the EMA to block the release of patient-level data from clinical studies, a followup to its April 2012 petition to the FDA to block any biosimilar of Humira, since development would constitute a violation of trade secrets. The EMA suit appeared to be in response to a request from UCB Pharma in September 2012 for Humira’s clinical study reports; AbbVie argued

“Those reports therefore provide a very specific road map for a company wishing to develop a TNF antagonist for the therapeutic use in question, by enabling it to develop a similar ‘biologics/biosimilar’ strategy in order to produce a follow-on medicinal product or to add new therapeutic indications to an existing medicinal product. The reports also provide information about some of the hurdles the applicants had to overcome, which could reduce the development process for a medicinal product by two to three years.”

UCB withdrew its request, but AbbVie is still wrestling with the EMA over this issue. We can’t exactly blame AbbVie for trying every avenue to delay or stop biosimilar development, but it will seem a little dodgy if the company begins its own biosimilar initiative down the line.

AbbVie’s dependence on Humira will grow even more severe as some of its key products wither. TriCor was hit with generic competition in the U.S. in November 2012, and the company’s other cholesterol treatments, Trilipix and Niaspan, will get face generics within the next year. Those three drugs represented around 13% of proprietary drug sales in 2012. The company plans to lay off hundreds of salespeople in its cardiovascular area in anticipation of those revenues drying up.

So how’s AbbVie going to build up its drug portfolio to complement Humira? Not with the chief scientific officer who helped launch the new company. In May 2013, the company mentioned in an SEC filing that CSO John Leonard will retire in a few months when his successor is named. Dr. Leonard had been with Abbott since 1992.

The company suffered a significant R&D failure in October 2012 when safety issues forced it to end Phase III trials of bardoxolone (co-developed with Reata Pharmaceuticals) to treat chronic kidney disease and diabetes. Abbott had ex-U.S. rights to the drug, and some sales estimates had been in the billion-dollar range. Enrollment for trials of ABT-199, a treatment for chronic lymphocytic leukemia, were paused while the company worked out dosing and monitoring approaches for certain patients at risk of a harmful side effect.

The new company’s R&D focus is on six areas: HCV, neuroscience, immunology, oncology, renal disease and women’s healthm and AbbVie touts 20 mid- and late-stage programs in its pipeline. The company has hopes of getting in on the massive hepatitis C virus (HCV) market with an unnamed, interferon-free, oral Phase III treatment that received Breakthrough designation from the FDA in May 2013. The company is also continuing to advance an oral selective JAK1 inhibitor, co-developed with Galapagos, to move into the rheumatoid arthritis and Crohn’s disease spaces. Elsewhere in the immunology arena, AbbVie announced a collaboration with Alvine in May 2013 focused on an oral treatment for celiac disease. The pact involved a $70 million upfront payment and an option to acquire either the compound or equity in Alvine, which is handling Phase II work.

So there are some prospects, but there’s nothing in the immediate timeline that’s going to narrow the spread between Humira and everything else it sells. Richard Gonzalez, the chairman and chief executive officer of the new AbbVie, has his work cut out for him, even as he counts the dollars pouring in from what could be the best-selling drug of all time.


Lowe Down
Oh, do I hate typing AbbVie, but we seem to be stuck with it. And Abbvie itself is stuck with a few things, too: the loss of some big cardiovascular moneymakers (Tricor and Niaspan), leaving more than half its revenues to come from one drug. The good news is that drug is Humira, and since no one still knows what a biosimilar would look like or what will happen if one gets approved, its 2016 patent expiration might not matter so much.

There’s a lot of oncology and CNS in the late-stage pipeline, as well as hepatitis C. But that last one looks like a brutally competitive market, and CNS has a notoriously high failure rate, even out through Phase III. So it’s too early to say what’s going to happen here: a few regulatory successes, and AbbVie will actually be in good shape for a while. A nasty run in the clinic . . . well, they still have Humira, and if anything happens to that, things will get very bad indeed. As I’ve mentioned before this year, there seem to be a lot of investors buying AbbVie stock for its dividend, but drug stocks are not exactly certificates of deposit. They’re . . . um, certificates of excitement. That’s it.

—Derek Lowe

Sales: 22.4 Billion

Headcount: 91,000
Pharma Revenues: $22,435 (13%)
Total Revenues: $38,851 (10%)
Net Income: $4,728 (2%)
R&D Budget: $2,618 (-30%)

Top-Selling Drugs

Drug Indication $ (+/- %)
Humira rheumatoid arthritis $7,932 21%
TriCor/TriLipix cholesterol $1,692 6%
Kaletra HIV/AIDS $1,170 -7%
Niaspan cholesterol $976 5%
AndroGel testosterone $874 35%
Lupron hormone treatment $810 8%
Synagis RSV $792 9%
Synthroid hyperthyroidism $638 15%
Clarithromycin antibiotic $542 4%

Account for 69% of total pharma sales, up from 68% in 2010

PROFILE
As we’ve noted elsewhere in the report, several companies are looking at a de-diversification strategy, spinning off non-pharma assets to focus on their core innovative drug business. Abbott took this concept in a new direction in October 2011, electing to keep its nutritionals, devices, diagnostics and generics businesses, while spinning the R&D-based pharma business out as a standalone entity under a new name. (This is the second spin-off Abbott has made since we started covering them; Hospira was spun out in 2004 as a standalone hospital products company.)

“Abbott” will remain with the non-innovative pharma company, while the innovator business will become AbbVie by the end of 2012. That’ll give us one more year of Abbott in the Top 20 report. After that AbbVie won’t contain Established Pharmaceuticals revenues ($5.4 billion in 2011). If it had been pared out for 2011, AbbVie’s revenues would have been around $17 billion, dropping it between Takeda and Teva, currently #11 and #12. (A portion of AbbVie’s revenue will come from its contract manufacturing business, as well as supply agreements with Abbott for some of its generics; we’ll pare those away if the company breaks them down in its filings.)
Humira remains the top-growing drug in our rankings, posting $1.4 billion in sales gains (+21%) to reach $7.9 billion in 2011 and then adding $1.9 billion in sales in 1Q12 (+17%). In fact, more than half of Abbott’s 2011 growth in drug revenues came from Humira. That also helped Abbott post the biggest overall growth rate of any company in our ranks (not aided by exchange rates).

Humira’s sales will continue to rise and AbbVie’s small molecule drugs continue to decline, so the new company will likely find that more than half of its revenues derive from biologics by 2013; that’ll make it eligible for our Top 10 Biopharma rankings, rather than the Top 20 Pharma.
That looks like a strong possibility, since 1Q12 showed a decline for a number of Abbott’s small molecule products: TriCor/Trilipix (-12%), Kaletra (-11%), Niaspan (-5%) and Clarithromycin (-5%, but Abbott sells that as a generic in some markets, and will continue to market it). TriCor will face generic competition later in 2012, followed by Niaspan (late 2013) and then Trilipix (late 2013 or early 2014).

The only significant new product for Abbott is AndroGel, the topical testosterone gel picked up in the 2010 acquisition of Solvay. With so much dependence on Humira’s revenues, Abbott clearly must have been worried about what’s going to happen when the biosimilars pathway in the U.S. gets approved. Humira’s patent protection expires in 2016 and, in May 2012, Abbott filed a citizen’s petition with the FDA to block any biosimilar of Humira because it would amount to violating trade secrets.

Humira won’t only face competition from biosimilars and branded TNF alpha inhibitors. There’s also the looming threat of JAK inhibitors, small molecule oral treatments for rheumatoid arthritis (RA) and other autoimmune and inflammatory disorders. Pfizer’s tofacitinib is the first salvo in that attack. To hedge its bets, Abbott began collaborating on a JAK1 inhibitor with Galapagos in February 2012. The compound was in Phase IIa for RA when Abbott bought in: $150 million upfront for the collaboration, $200 million to license it if it finishes Phase II up to Abbott’s criteria, and a potential $1.0 billion in milestones up through commercialization, plus tiered double-digit royalties on net sales. Galapagos would retain co-promotion rights in the critical markets of Belgium, the Netherlands and Luxembourg. Phase II is expected to wrap in 2014, so this is a long-range program.

In a regulatory filing about the spin-off, Abbott provided some reasons for the decision, including, “The investment identities of Abbott and AbbVie have evolved independently over time. The separation will allow investors to separately value Abbott and AbbVie based on their unique investment identities, including the merits, performance and future prospects of their respective businesses. The separation will also provide investors with two distinct and targeted investment opportunities.” In other words, worries about Humira and a scant short-term pipeline were bringing down the stock, and reducing the value of its other businesses.

AbbVie will have around 20 compounds in Phase II or III, and hopes to have a series of launches before 2016, including an interferon-free regimen for the treatment of HCV, a novel treatment for chronic kidney disease, and MAbs for multiple sclerosis (daclizumab) and multiple myeloma (elotuzumab). All of those, except for the HCV program, come from acquisitions or licensing deals.

Internal pharma R&D has historically been a lower priority for Abbott than its competitors. The company’s R&D budget of $2.6 billion comes out to less than 12% of pharma revenues, the lowest among our Top 20, next to the two generics-focused companies. It was 12.5% in 2010 and 10.4% in 2009. The average in each year was 17.2%, 17.8% and 17.3%. (Note: the R&D figures are from the AbbVie spin-out regulatory filing, and are divided by branded + generic revenues. In the new AbbVie, that percentage will rise, since $5 billion-plus in generics will be removed from the revenue pile.)

Will other companies in our Top 20 and Top 10 elect to follow Abbott’s lead and pare off pharma as the slower-performing section of the business? Few of them are in such a position to do so, and none have so much of their fortunes relying on a single product. The industry will have its collective eyes on how this transition plays out.


Abbvie & The CIA

There’s another advantage to Abbott in spinning off its branded pharma unit: the Corporate Integrity Agreement tied to the Depakote settlement will transfer over to AbbVie. In May 2012, Abbott made a $1.6 billion settlement with the feds and the states over mismarketing Depakote, an antipsychotic treatment. The company was accused of pushing the drug for off-label purposes, including schizophrenia and dementia in the elderly, and paying doctors and pharmacies to promote and prescribe it. Abbott pleaded guilty to a misdemeanor and got saddled with that aforementioned five-year CIA. AbbVie will take on that liability; the settlement funds were already reserved by Abbott in 4Q11 and 1Q12.


The Lowe Down
If there’s anything more telling about the state of the industry than Abbott’s decision to split off their pharma division, I’m not sure what it might be. Remember the days when diversified companies were being urged to ditch their slow-and-steady businesses in order to put it all into the big money opportunities of drug discovery? (Interestingly, that’s sort of how Pfizer is talking now, which makes them either very wrong or very right). No matter what the company might say, Abbott really looks like they’re unloading a business unit that they think is heading for trouble.
Naming it AbbVie, which I nominate as the single worst from-scratch invented corporate name I have ever encountered, just seems to be the parting insult. I have yet to hear the word used in casual spoken English, and I can’t wait to hear it tumble off someone’s tongue. Now, I never expected them to make everyone’s day by calling the company “Costello”, but they might as well have gone with something like NopamPharm or OobalCorp. The first one stands for “Not Our Problem Any More”, and the second is “Off Our Books At Last”. This time, the brave innovators in the lab coats are the accountants.
—Derek Lowe

Sales: 19.9 Billion

Headcount: 91,4400
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

Previous Profile: Eli Lilly & Co. // Next Profile: Bristol-Myers Squibb

Sales: 16.5 Billion

Headcount: 83,000 (Total company)
Pharma Revenues: $16,486 (-1%)
Total Revenues: $30,765 (+4%)
Net Income: $5,746 (+18%)
R&D Budget: $2,743 (+2%)

2009 Top Selling Drugs
Drug Indication Sales (+/-%)
Humira rheumatoid arthritis $5,488 +21%
Kaletra HIV/AIDS $1,366 -7%
TriCor/TriLipix cholesterol management $1,337 flat
Niaspan cholesterol management $855 +9%
Lupron prostate cancer $800 +23%
Synthroid hyperthyroidism $502 -4%

Account for 63% of total pharma sales, up from 56% in 2008.

 

PROFILE

If it weren’t for H1N1 panic, Abbott’s Humira would’ve had the largest sales boost of any drug in 2009. The RA treatment added $967 million in 2009, after posting a $1.5 billion gain in 2008. The only thing to beat it was H1N1: GSK’s Relenza flu treatment climbed from $100 million in 2008 to $1.1 billion in 2009, while Roche’s Tamiflu jumped from $564 million to $2.9 billion.

The Lowe Down

Abbott has long been spread around into a lot of different businesses, but with their acquisition of Facet, they seem to have decided that the one to really be in is biologics. Who’s to say that they’re wrong? Watching those products just keep selling year after year really does something to executives who have come up through the small-molecule world, where every blockbuster has a sizzling patent-expiration fuse already lit.

And it’s Humira that’s really been paying the bills over there for some time, and will for some time to come. The patent is set to expire in 2017, for what that’s worth. No, we’re all going to have to get used to the idea of Abbott as a company that makes its money off protein drugs.

But then there was that acquisition of Solvay. And Evalve, and Visiogen, and Advanced Medical Optics and . . . well, you get the idea. These guys are pretty quick with the checkbook, although they don’t seem to be keen on buying up anyone who’s remotely their size. (That’s not a complaint, by the way). Their soup-to-nuts approach seems to be working for them, which makes you wonder why more companies don’t try it themselves. Too late to switch? —Derek Lowe

The problem for Abbott is that Humira’s increase in sales was offset by the generics-driven loss of $939 million in Depakote revenues. (Note: this wasn’t the even among the top three biggest drops in sales for 2009, which helps accentuate how much trouble lies ahead for some companies.) Oh, and the pre-collapse marketing of Depakote is the subject of a federal investigation (off-label promotion), for which the prosecution is demanding that Abbott turn over all Depakote-related e-mails from and to chief executive Miles White and two other Abbott executives from 1996 to 2008. Abbott filed that the e-mail restoration would be burdensome and cost more than $10,000, prompting the judge in the case to point out that Abbott’s annual revenues are nearly $30 billion and to order Abbott to comply. So for this year, it looks like Depakote is the gift that keeps on taking.

Charged Up

Target: Solvay Pharmaceuticals

Price: $6.2 billion

Announced: September 2009

What they said: “The acquisition of Solvay Pharmaceuticals further diversifies our pharmaceutical portfolio, expands our presence in key high-growth emerging markets, enhances our investment in R&D and accelerates our long-term earnings-per-share growth outlook.” —Miles D. White, chairman and CEO, Abbott

Target: Facet Biotech

Price: $450 million net value

Announced: March 2010

What they said: “This acquisition will further strengthen Abbott’s biologics capabilities and pharmaceutical pipeline.” —John Leonard, M.D., senior VP, global pharma R&D, Abbott

Target: Piramal Healthcare Solutions

Price: $2.1 billion upfront, plus $400 million annually for four years

Announced: May 2010

What they said: “This strategic action will advance Abbott into the leading market position in India, one of the world’s most attractive and rapidly growing markets.” —Miles D. White

In addition, Abbott acquired Visiogen and Evalve for its medical device and eye care segments.

This wasn’t the only legal battle Abbott lost in the past 12 months. In June 2009, a jury found that Humira infringes a patent belonging to New York University and Centocor, and awarded the plaintiffs $1.67 billion in past damages. Abbott appealed and in October 2009 got the “willful” part of the violation overturned, but the award was upheld. In December 2009, a final judgment was issues and Abbott was ordered to pay $175 million in interest. Abbott hasn’t paid, plans to appeal and has yet to set aside the cash to pay the penalty. Centocor is seeking enhanced damages and interest for the continued marketing of Humira, which is in more than 80 markets, and posted a 36% increase in sales in 1Q10 to $1.4 billion.

Abbott also got disappointing pipeline news when Certriad, its combo of Trilipix and AstraZeneca’s Crestor, received a Complete Response Letter in March 2010. Abbott had anticipated approval during 1H10, and the letter puts a crimp in the company’s plan to build out its lipid management franchise. Neither Abbott nor AZ disclosed any of the FDA’s problems with their NDA, so analysts are reading tea leaves on this one. I’ll note that when a company gets a CRL, it usually tells the public immediately if the FDA has not requested a new clinical trial.

So what went right for Abbott besides Humira’s runaway growth? Well, in September 2009, Abbott won the Solvay sweepstakes, paying $6.2 billion to acquire a company with a marketing infrastructure in eastern Europe, Russia, India, Brazil and other markets. Adding Solvay’s $2.9 billion in pharma sales may push Abbott past Bristol-Myers Squibb in next year’s ranks.

In May 2010, Abbot bought Piramal’s Healthcare Solutions business to make itself the top pharma company in India. The deal has an interesting structure: Abbott paid $2.1 billion upfront, and will pay another $400 annually for four years. Some speculate the staggered payments are a hedge against what happened to Daiichi Sankyo, which acquired Ranbaxy in 2008, then discovered huge quality issues that sank the value of the acquisition.

Shortly before the Piramal acquisition, Abbott signed pact with Zydus Cadila to sell at least Zydus products in 15 emerging markets, with an option to add as many as 40 more products. Announcing the deal, Abbott also noted that it was launching an Established Products Division to coordinate sales of its branded generics portfolio.

Subdivisions

Abbott is built like a mini-Johnson & Johnson, with units in Pharmaceuticals, Nutritionals, Diagnostics and Vascular. Unlike J&J, Abbott’s in no danger of seeing its pharma unit eclipsed by one of the others; pharma accounted for 54% of total revenues last year, and the addition of Solvay will push that percentage higher. For 1Q10, pharma revenues rose 13% to $4.1 billion.

The other units give Abbott a head start on the strategy that its larger competitors are pursuing. If it broke out sales within its Vascular category, I might be able to write with confidence that Abbott is building a franchise with its Xience drug-eluting stents. Interestingly, Abbott’s Diagnostics division is collaborating with some of Pharma’s competitors to help them identify patients for clinical trials. Abbott is working with Pfizer and GSK (separately) to develop tests to select patients for non-small cell lung cancer drug trials, and is also working with GSK to find patients for a skin cancer immunotherapy.

In March 2010, Abbott added the pipeline of Facet Biotech, which is developing an MS treatment with Biogen Idec. BI had tried buying Facet several months earlier in a hostile bid, but gave up; Abbott’s purchase price was almost $10/share higher than BI’s. The companies began a Phase III study of their lead drug, daclizumab, for MS in May 2010.

But pipeline news isn’t too prominent for Abbott. Not many of the company’s announcements this past year has been along those lines. There’s far less talk about the pipeline than there is talk about acquisitions, strategic expansions, new markets, and other divisions. That’s not exactly a knock. Abbott’s working to rebuild its pipeline, but it’s hard at work building a 21st century healthcare company around it.

 

Return to Top Pharma Report homepage.

Sales: 16 Billion

Headcount: (Total) 69,000
Pharma Revenues: $16,013 (+9%)
Total Revenues: $29,528 (+14%)
Net Income: $4,881 (+35%)
R&D Budget: $2,255 (-10%)

* 2006 revenues did not include TAP Pharmaceutical Products income

2008 Top Selling Drugs
Drug Indication Sales (+/-%)
Humira rheumatoid arthritis $4,521 +48%
Kaletra HIV/AIDS $1,474 +11%
Depakote bipolar disorder $1,364 -13%
TriCor cholesterol $1,341 +10%
Ultane/Sevorane anesthetic $787 +4%
Niaspan cholesterol $786 +19%
Lupron prostate cancer $651 n/a
Biaxin antibiotic $651 -10%
Synthroid hyperthyroidism $524 -2%

Account for 76% of total pharma sales, up from 67% in 2007.

PROFILE

The Lowe Down

Abbott’s a sort of cousin to Johnson & Johnson compared to the other companies on this list. Its diagnostics and medical device wings give the business a different rhythm than that of pure pharma companies, and looking around the industry, Abbott’s probably fine with that.

The drug department, though, is not immune to all the wonderful high-G-force maneuvers that the competition gets to experience. People are taking aim at their franchises in HIV and CNS, but they at least don’t have any of those monster patent expirations hanging over them (for now). And they’re making a big push in cardiovascular disease, with a number of drug combinations and the acquisition of Kos. All this ties into their devices business as well, since they’re doing very good business in the vicious stent market.

Looking at them and at J&J, you have to think that the diverse-medical-products model has something going for it, at least in times like these. (When things are booming in the drug business, those other divisions look like so much ballast to be dealt with, naturally.) But since ‘times like these’ look to continue for a while, Abbott should, in theory, be in good shape to deal with them.—Derek Lowe

Humira was the single biggest growth engine in our ranks, adding a mind-blowing $1.5 billion in revenues in 2008. That equals the entirety of Abbott’s revenue growth for the year. Abbott predicts it’ll grow another 15-20% in 2009, including severe exchange rate fluctuations. That should help offset the sizeable losses that Depakote will post, now that generics have walloped that billion-dollar product.

The biggest news around Abbott is that it was allegedly the mystery company that was negotiating with Wyeth about a merger a few weeks before that deal with Pfizer came together. I have no idea whether that’s true, but I’m sure there would’ve been regulatory hangups over Humira and Enbrel (partly) belonging to the same company.

The company got cholesterol treatment Trilipix approved in December, and is partnering with AstraZeneca to get a combo of Trilipix and Crestor on the market. Abbott’s Trilipix/Tricor combo posted $253 million in 1Q09 sales.

Depakote notwithstanding, Abbott’s pharma business is in pretty good patent position, and once the companies ahead of it get swallowed up, it’ll be one of our top 10.

 


Return to Top Pharma Report homepage.

Sales: 14.6 Billion

Headcount: 68,000
Pharma Revenues: *$14,632 (+9%)
Total Revenue: *$25,914 (+9%)
Net Income: $3,606 (+35%)
R&D Budget: $2,505 (+12%)

* 2006 revenues did not include TAP Pharmaceutical Products income

Top Selling Drugs
Drug Indication Sales (+/-%)
Humira rheumatoid arthritis $3,064 +50%
Depakote bipolar disorder $1,575 +20%
Kaletra HIV/AIDS $1,325 +17%
TriCor cholesterol $1,218 +16%
Ultane/Sevorane anesthetic $759 -5%
Biaxin antibiotic $724 -11%
Niaspan cholesterol $658 n/a
Synthroid hyperthyroidism $533 flat

Account for 67% of total pharma sales, up from 62% in 2006.

PROFILE

With the exception of being accused of “product switching” by generic manufacturer Teva — which is dying to launch its TriCor equivalent — Abbott went under the radar in 2007 but came through loud and clear in the battle of the autoimmune disease blockbuster biologics. Its flagship Humira barreled through 2007, gaining its fifth indication and surpassing an impressive $3.0 billion in sales, just shy of its closest rival, Johnson & Johnson’s $3.3 billion in Remicade sales. Which drug will take the lead in 2008? Humira sales were $878 million (+54%) in 1Q08 and Remicade sales were $1 billion (+37%) — it’s too close to call at this point, and with ever-increasing drug safety concerns, it’s hard to say.

Early in the year, the FDA approved Humira for Crohn’s Disease, and in early 2008 added treatment of psoriasis and juvenile rheumatoid arthritis. Humira is also being studied in ulcerative colitis, which is currently in Phase III development. Additional indications and long-term efficacy studies are making Humira the company’s most successful drug ever.

The Lowe Down: Abbott Labs

Abbott continues to roll along with drugs, diagnostics, and devices, and they seem reasonably happy with that mix. It doesn’t seem to be a golden age over there, exactly, but when you compare them to the rest of the industry they’ve looked pretty stable. But this has been the Year of Risk Assessment in the industry and the FDA, and Abbott is getting hit pretty hard right now, with both Humira and Depakote (and the others in their classes) being examined. I think the company is broad-based enough to get past these problems, and their relative lack of big patent expirations has to help, but no safety review makes anyone any happier — not the patients, not the company.

One odd thing: you could actually assemble a pretty good-sized company out of all the ex-Abbott people around the industry. I’m not sure why that is, but there sure are a lot of them.

—Derek Lowe

Needless to say, Abbott’s pharmaceutical business is holding its own, with sales up 18% to $14.6 billion thanks to blockbusters, Humira, Depakote, Kaletra and TriCor, and a pipeline poised to deliver several new drugs in the next year or so. The company’s diagnostics business, which includes medical products, also delivered. Sales were up 11% to $3.2 billion with vascular sales contributing more than half of that number ($1.7 billion, up 54%) thanks to international sales of Xience V, Abbott’s next-gen drug-eluting stent, as well as abating safety concerns in the stent market. In July 2008, the stent was approved in the U.S. The company’s success and focus on this aspect of the business may help differentiate it from other drug-focused competitors (except J&J, of course).

The big news this year was Abbott and Takeda ending the successful 30-year-old TAP joint venture, which produced revenues of $3.1 billion in 2007. In March, the two companies decided to go their separate ways and split the assets, which include two currently marketed products, Prevacid and Lupron, and two NDAs under FDA review, TAK-390MR for acid related diseases, and febuxostat, a treatment for gout. The strategic split establishes an on-market presence in oncology for Abbott with rights to the cancer drug Lupron, as well as cash payments for the next five years based on TAP’s other current and certain future products.

Although considerable restructuring initiatives in the industry were rampant this past year, Abbott’s restructuring phase appears to have reached or at least neared its end — we’ll have to wait and see if any streamlining lies ahead. Plans for 2005-2007 included realigning its worldwide pharmaceutical and vascular manufacturing operations and selected commercial and R&D operations to reduce costs. In 2007, Abbott implemented facilities restructuring plans related to the acquired operations of Kos Pharmaceuticals, Inc., eliminating 200 research jobs — mostly related to early stage compounds for which Abbott discontinued development — and several hundred sales jobs in an effort to eliminate redundancies created by the $3.7 billion acquisition.

The company appears to be maintaining control of manufacturing operations in an effort to advance some of its products using the latest, top-of-the-line facilities and equipment. Abbott made its largest capital investment to date last April, when it opened a $450 million state-of-the art biologics manufacturing facility in Puerto Rico to keep up with Humira demand and to support other future biologics. In June of this year, Abbott opened its new formulation development center at its headquarters in Abbott Park, IL, taking on the capabilities for the formulation of new investigational drugs for trials with the goal of this state-of-the-art center to expedite development programs, creating a link between the R&D lab and commercial manufacturing.

On the cholesterol front, Abbott received FDA approval this February for Simcor, the first fixed-dose cholesterol therapy combining, Niaspan (its niacin extended-release) and simvastatin. Simcor is approved for lowering total cholesterol levels, LDL “bad” cholesterol and triglycerides, and to raise HDL “good” cholesterol in patients when treatment with simvastatin or Niaspan monotherapies don’t work. Abbott dodged a bullet when in May the FDA rejected Merck’s cholesterol drug Cordaptive (niacin ER/laropiprant), which combines niacin with a new chemical entity, laropiprant, designed to minimize a skin-related side effect.

Also, Abbott and AstraZeneca are working together to co-develop and market a fixed-dose combination of TriLipix and Crestor to treat high cholesterol. Thanks to positive Phase III results announced in June, the companies plan to submit an NDA in 2009.

In the pain arena, the company is working on an extended release version of its pain drug Vicodin. Taken twice daily, Vicodin CR with 12-hour dosing would outlast the currently available short-acting combinations that need to be taken every four to six hours. The NDA for Vicodin CR was submitted to the FDA in 4Q07.

In other lipid-lowering news, offering a lower dose of the blockbuster drug TriCor — and changing it from a capsule to a tablet — didn’t make Teva Pharmaceuticals happy, as Teva has been chasing the opportunity to market a generic version of the drug for years. Teva is claiming that Abbott is blocking generics by obtaining term-extending patents on the 33-year-old cholesterol drug. This isn’t against the law (neither is frustrating generic competition, for that matter) therefore Teva’s looming generic remains on hold. The dissolvable version of TriCor retains patent protection until 2018.

Nonetheless, the FTC is investigating Teva’s lawsuit alleging that Abbott acted improperly by employing “product switching,” which involves retiring an existing drug and replacing it with a modified version that is marketed “new and improved” solely to preserve its monopoly on the drug. Abbott denies these allegations. So far, 18 states and the District of Columbia have filed suit against Abbott for the alleged scheme.

The patent expiration for Depakote for bipolar disorder expired this July and generics are ready to move. In 2007 sales were $1.6 billion, up 20%. No word on a “new and improved” version.  —KB

Previous Profile: Bristol-Myers Squibb // Next Profile: Schering-Plough

Top 20 Pharma Report homepage

Related Content