Abbott Profit Tops Forecast; Drugs, Devices Shine

Abbott Laboratories Wednesday said second-quarter earnings jumped 34 percent, beating its expectations, fueled by sizzling sales of its medical devices, Humira arthritis treatment and other drugs.

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Based on the strong results, the suburban Chicago drugmaker slightly raised its 2008 profit forecast, saying Humira will generate global sales this year of more than $4.3 billion.

In an interview with CNBC, ABBOTT CEO Miles White spoke with CNBC about the surging sales of the company's drug Humira. (To hear the full interview, see the video below.)

"It's one of those great miracle drugs that come along every now and then," he said. "We're just fortunate that it's ours; it's doing really well, and it's driving a lot of growth, and it keeps exceeding our expectations, and we expect it to keep doing so."

Humira, an injectable drug used to treat rheumatoid arthritis and Crohn's disease, has quickly become one of the world's top-selling medicines and is one of Abbott's biggest linchpins for future earnings growth.

The company is also counting heavily on Xience, its new stent that has proven to be superior in clinical trials to Boston Scientific's widely used Taxus device also used to prop open arteries that have been cleared of plaque.

Abbott said it earned $1.32 billion, or 85 cents per share. That compared with $989 million, or 63 cents per share, in the year-ago quarter.

Excluding special items, the company earned 84 cents per share. Analysts on average expected 79 cents per share, according to Reuters Estimates.

Company officials told analysts on a conference call that half of the earnings "beat" was due to early payments from Takeda Pharmaceutical related to ending its TAP Pharmaceuticals joint venture with Abbott.

Abbott shares had risen as much as 2.5 percent in premarket trading, but lost the gains during the conference call.

Excluding special items, the company earned 84 cents per share. Analysts on average expected 79 cents per share, according to Reuters Estimates.

Quarterly sales jumped almost 15 percent to $7.31 billion, about $100 million higher than the Reuters Estimates forecast. They would have risen 8.9 percent if not for the weak dollar, which raises the value of overseas sales.

White credited the company's international exposure with offsetting some weakness in its U.S. business.

"Our international sales, across the board, were much stronger than even we even though we're seeing some softness in the U.S., it's not enough to affect the core strength of the business," White said.

Global Humira sales soared 48 percent to $1.09 billion, despite strong competition from Johnson & Johnson's Remicade and Wyeth's Enbrel.

Like its rivals, Humira works by blocking an inflammation-causing protein called tumor necrosis factor.

Sales of Kaletra, which combines two treatments for HIV, rose almost 13 percent to $355 million.

Niaspan, the most widely used medicine to raise levels of "good" HDL cholesterol, rose 14 percent to $194 million.

Global sales of medical products jumped almost 15 percent to $1.8 billion, amid growing demand for its diagnostics and overseas sales of Xience.

U.S. regulators approved Xience earlier this month. It will compete with Taxus, Medtronic's Endeavor and J&J's Cypher.

Drug coatings on the devices are meant to prevent reclogging with scar tissue.

Recent concerns that drug-coated stents can trigger potentially deadly blood clots in some patients, months after the devices are implanted, have dented their once $6 billion-a-year global market.

Abbott-funded studies have found there were fewer heart attacks and heart-related deaths with Xience than with Taxus, and that Xience was better at preventing scar tissue when compared to Taxus.

As another source of profit growth, Abbott aims for $1 billion in annual sales from its Japanese pharmaceuticals division within two years, in large part from Humira.

Abbott said it now expects earnings per share this year, excluding special items, of $3.24 to $3.28, up from its earlier view of $3.20 to $3.25 per share.

The new forecast translates into growth of as much as 15.4 percent from last year.

Abbott shares slipped 15 cents to $57.70 in early trading on the New York Stock Exchange. They have risen about 10 percent in the past 52 weeks, as Humira and Xience have bolstered investor confidence.

By contrast, the American Stock Exchange Pharmaceutical Index of large U.S. and European drugmakers has fallen 15 percent during the same period, as many rivals have failed to develop new big-selling drugs needed to replace ones losing patent protection.