Abbott Laboratories ($ABT)
CEO: Miles White
Based: New Brunswick, NJ
2014 sales: $10.1 billion
2013 sales: $10.0 billion
Roughly half of Abbott Laboratories' revenue, about $10 billion, comes from medical device and diagnostics products. And while diagnostics sales grew in 2014 by more than 3% to $4.7 billion, medical devices shrank by almost 4%.
The company has a trio of initiatives that it's investing in to turn around its medical device group: cataract lenses, electrophysiology and the Freestyle Libre, its latest blood glucose device that doesn't require finger sticks that launched in the EU last year.
During the fourth quarter, its diabetes device business was its worst performing segment--falling 9.6% to $313 million. Chairman and CEO Miles White said he expects to see operational sales growth in the low single digits in the diabetes business based on the launch of the Freestyle Libre in the EU. Over the next two to 5 years he sees the diabetes device business as becoming a positive contributor to growth.
By contrast, medical optics are a top-performing Abbott device business--it was up by 6.5% for the year to $1.2 billion. It's working to support its top products within that, for cataracts, by breaking ground last year on an optics manufacturing facility in Malaysia that will help it better meet demand. Cataract products were about 70% of the medical optics segment in the fourth quarter with growth in the high single digits.
"In medical optics and our cataract business a steady stream of new products over the last two years has resulted in several points of share gains," said White on a January call. "In 2015, we expect continued strong growth of our cataract business, driven by more than 20 new product launches across multiple geographies, as well as continued expansion of our laser cataract system Catalys."
Finally, Abbott made several bold moves last year in electrophysiology including the acquisition of startup Topera, but the category has yet to become a significant contributor to revenues.
White summed up 2014, "In Medical Devices we positioned our portfolio for stronger growth over the long term. We entered the $3 billion fast-growing electrophysiology market through the acquisition of Topera. In vascular, we achieved improved reimbursement and coverage for MitraClip in the U.S., which should further expand adoption. And we presented the first of multiple randomized clinical trials underway for ABSORB."
"In medical optics, we broke ground on a new facility in Malaysia to expand manufacturing capacity for our cataract lenses, driven by strong global demand for cataract surgeries," he concluded in his summary of the company's 2014 steps toward long-term medical device growth. "And in diabetes care we established a new market with our Flash glucose monitoring device, FreeStyle Libre, launched directly to consumers in Europe last fall. It eliminates the need for routine finger sticks and provides glucose data in a simple format that allows people with diabetes to achieve better health outcomes."
-- Stacy Lawrence (email | Twitter)
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