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Cramer applauds Abbott CEO Miles White for his value creation and leadership

  • "Mad Money" host Jim Cramer zoomed in on the track record of Abbott CEO Miles White, who has transformed the pharmaceutical company since he took over in 1999.
  • With all the buzz around CEOs who have failed their companies, Cramer wanted to focus on one who's made a killing for shareholders.
  • From the spin-off of AbbVie to the purchase of St. Jude's Medical, White's savvy deal-making has paid off in droves, Cramer said.

With all the talk on Wall Street about CEOs who have let their companies down, like former General Electric CEO Jeff Immelt, CNBC's Jim Cramer wanted to focus on the cream of the crop.

"While a lousy CEO can wreck even the best enterprise, the flip-side is also true," the "Mad Money" host said. "A great CEO can turn a company that may be mediocre into a powerhouse and stir up a tremendous amount of value in the process."

That's why Cramer wanted to highlight the work of Miles White, longtime chairman and CEO of health care giant Abbott. The $96 billion company deals mainly in diagnostics, medical devices, nutrition and generic drugs, with 70 percent of its sales coming from outside the United States.

Since White took over in 1999, he's made moves that have rewarded his shareholders handsomely, the most major being the spin-off of Abbott's pharmaceutical arm into AbbVie in 2013.

More specifically, White has shown his finesse in creating value, Cramer said. First there's Abbott's stock, which has gone from $22 a share to $55 a share under his leadership. Then there's the stock of AbbVie, which is now worth $94.47 as of Wednesday's close.

In 2004, White also spun off Hospira, Abbott's hospital supply segment, which Pfizer later bought for $17 billion. For shareholders who held on to their stake, it added p to another $9 per share for Abbott.

"Add it all up, all these different pieces, and you get $159 of value, meaning if you bought Abbott when White came in as CEO and you held it along with AbbVie, you'd have a 623 percent gain," Cramer said. "In other words, if you invested $1,000 in Abbott back then, your investment would now be worth $7,230. That doesn't seem like a lot of single-stock risk to me. No, it seems like pure stock price appreciation."

How did White do it? The CEO began by bolstering Abbott's drug business (which later became AbbVie). Within four years of White becoming CEO, Abbott released Humira, which would go on to treat forms of arthritis, plaque psoriasis and Crohn's Disease, among other ailments.

For over 10 years, Humira — which was created to level Abbott with the likes of Pfizer and Merck — was one of the best-selling drugs in the world. In 2016, it made $16.1 billion in sales, making it the best-selling drug in the world by a healthy margin.

"White's ability to take Humira and turn it into [the] blockbuster drug that it is today transformed Abbott Labs from a laggard into a leader. It's the kind of story business schools will write case studies about for years and years," Cramer said.

In an emailed response to CNBC's request for comment, Abbott spokesperson Scott Stoffel wrote:

"Our intent is to be the best company in the markets in which we compete. That means the company that offers the best solutions and, consequently, the best performance and returns. Mr. White's ability to strategically shape our company to meet this goal over two decades has made us one of the world's most successful companies and an extraordinary investment."

Many of White's deals either fine-tuned Abbott's focus — like its purchase of diabetes care provider TheraSense — or paid off in droves — like when the company acquired Piramal Healthcare's generic drug business, making Abbott the largest maker of generic drugs in India.

And even after the AbbVie spin-off, Abbott has continued to do deals, most recently buying medical device manufacturer St. Jude Medical for $25 billion in cash and stock.

"What makes this guy such a savvy deal-maker? It is simple, White has a real talent for anticipating consumers' future medical needs and then aggressively positioning his company to benefit from them," Cramer said. "The impact of Humira cannot be overstated — not only did he see the demand for this fabulous autoimmune drug that nobody else seemed to, but that drug then made billions of dollars which Abbott could use to fund all those acquisitions."

Similarly, White had the foresight to spin-off his company's pharmaceutical arm ahead of the explosion of the debate about drug prices, which now doesn't apply to Abbott.

Plus, White knows his own game — when Abbott's stock was going through a bout of under-performance in 2016, the CEO bought $46 million of his stock. Since then, it's turned him a $14 million profit.

"Here's the bottom line: good management is the key to success in any industry ... and it needs to be celebrated when we find it," Cramer concluded. "Miles White has done an amazing job for his shareholders at Abbott, so the next time you seem him do some insider buying, I suggest you pick this terrific stock up right along with him."

WATCH: Cramer reviews Abbott CEO Miles White's savvy deals

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