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Abbott Laboratories: Pipeline - Products - Performance - Potential
Espicom Business Intelligence Ltd, Aug 2009, Pages: 134
Abbott has been selling pharmaceuticals for over one hundred years and has firmly established itself as one of the leading players in this market, regularly featuring among the top fifteen companies in terms of pharmaceutical revenue. Although Abbott recorded double-digit growth in both its total revenue and in its pharmaceutical segment in 2007 and 2008, the company is recovering from a particularily trying period in 2006 when overall sales growth was less than 1 per cent. The most significant development in terms of sales in 2006 was the termination of Abbott’s distribution agreement with Boehringer Ingelheim. Effective 1st January 2006, Abbott ceased to distribute not only Mobic, formerly the second largest selling product in the company’s portfolio, but also Flomax and on 31st March 2006, Abbott also ceased to market Micardis. With the loss of these products, especially Mobic, Abbott recorded its first decline in pharmaceutical sales in recent years.
The company faces further challenges in the short- to medium-term. Within our forecast period (2008-2013), only two of the company’s major products have patent protection in place, with most of the product portfolio facing declining sales. The continued success of Humira, which in 2008 saw sales exceed US$4 billion, will be key to company performance. Within the cardiovascular field, Abbott can expect strong growth from the recently-launched Niaspan and TriLipix. Also in this field, the pipeline contains Simcor which is forecast strong sales upon launch. Within virology, Kaletra is rapidly becoming the preferred treatment worldwide for HIV, benefitting from its extensive range of formulations that give it the edge over many of its competitors
Until 2008, a core feature of Abbott’s global success was its joint venture in Japan with Takeda, TAP Pharmaceuticals. This partnership provided Abbott with the infrastructure and expertise to successfully develop and distribute a number of its products in Japan, most notably its leuprolide and lansoprazole franchises, which generated US$3.1 billion for TAP in 2007. This has lead to Japan becoming Abbott’s most profitable market outside of the US. Following conclusion of the TAP joint venture, Abbott retains rights to the leuprolide franchise. Takeda takes lansoprazole, all remaining TAP commercial and support operations and the right's to TAP's pipeline. Abbott will receive payments from Takeda on current and future TAP derived products. Over the years, both companies have benefited from the establishment of TAP, gaining important access and expertise in the key Japanese and US markets. On disbanding the alliance, both companies are now in a stong position to continue independent market development.
Outside the TAP alliance, Abbott has a history of prosperous alliances and agreements with other market leaders and emerging pharmaceutical companies. Abbott will need to utilise these alliances in order to expand its limited pipeline. Within the short- to medium-term, Abbott appears to have the growth drivers to offset any losses expected, however, in the longer-term, the product portfolio needs a rapid overhaul in order for Abbott to maintain its position amongst the world’s leading pharmaceutical companies.
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