Drug and medical device maker Abbott Laboratories reported positive first-quarter results Wednesday that edged past Wall Street expectations on double-digit sales growth of drugs to treat inflammatory diseases and cholesterol levels.
The company's revenue increased 17.4 percent to over $9.04 billion, led by international sales of the company's mix of drugs, implants and nutritional formula. The company's adjusted net profit increased 12 percent to $1.4 billion.
In January, Abbott said it would eliminate 1,900 employees from its pharmaceutical business as it struggles to maintain double-digit profit growth amid cost pressures.
But first-quarter results highlighted the growth potential of the company's businesses in emerging markets like Russia, India and China. Total emerging market sales increased 38.4 percent to $2.3 billion, with generic pharmaceuticals accounting for more than $725 million.
Sales in developed markets were higher led by the company's best-selling product Humira, which increased 18 percent to $1.65 billion. Humira is used to treat inflammatory diseases like rheumatoid arthritis and has historically accounted for nearly one-fifth of the company's sales.
Leerink Swann analyst Rick Wise called Humira's performance "encouraging ... given the questions about sustainability of double-digit long-term growth."
Elsewhere, Wise noted that the company's gross margins on products sold were lower than expected.
"Recent acquisitions, geographic mix with strong emerging market sales growth, and ongoing price pressure likely brought margins below estimates and management's guidance," Wise wrote in an investment note.
Investors appeared disappointed with margin levels and sent shares down 29 cents to $50.80.
The North Chicago, Ill., company has made a number of acquisitions in the past two years to diversify sales ahead of Humira's patent expiration in 2017.
Last week Pfizer Inc. reported results for its experimental drug tofacitinib in reducing damage caused by rheumatoid arthritis. Some analysts have speculated that the convenience of a pill could lure patients away from Humira, which is injected.
But Abbott executives downplayed concerns, pointing out that the 5 milligram dose of Pfizer's pill failed to slow arthritis damage at six months. Humira has been shown to reduce structural damage after six months and continue for up to eight years.
"At the end of the day for the rheumatologist, that is paramount to their view of products," said Larry Peepo, vice president for investor relations, on a call with analysts. "That data is very strong in our label and something that we discuss with physicians all the time."
For the period ended March 31, the company earned $864 million, or 55 cents per share, down 14 percent from $1.27 billion, or 64 cents per share, in the first quarter of 2010. Excluding one-time costs, the company would have earned 91 cents per share.
That was higher than the 90 cents per share estimate of analysts polled by FactSet.
The company's one-time charges included the expense of integrating Solvay Pharmaceuticals and restructuring the business, layoffs and other cost-cutting reduction plans, and acquired research and development costs. Abbott acquired Solvay Pharmaceuticals in February 2010 for $6.2 billion.
The company said sales of its cholesterol drugs Trilipix and TriCor grew 28 percent from last year, to $372 million in total. Sales of pediatric nutritionals rose 8 percent to $755 million, and adult nutritional product revenue increased 10 percent to $664 million. Revenue from heart stents rose 15 percent to $524 million.
Abbott backed its 2011 profit outlook. Excluding 84 cents per share in one-time costs, the company expects to earn between $4.54 and $4.64 per share. Analysts are forecasting $4.60 per share, on average.