UPDATE: Abbott 4Q Net Up 28% On Xience, Humira Sales Growth

Abbott Laboratories' (ABT) fourth-quarter profit jumped 28% on strong sales of its Humira anti-inflammatory drug and the new Xience stent device, despite the faltering economy and unfavorable currency-exchange rates.

Abbott's sales were slightly short of Wall Street expectations, but its overall quarterly performance and forecast for 2009 suggest that it may be sidestepping some of the challenges facing the health-care sector. Abbott's larger rival, Johnson & Johnson (JNJ), reported results Tuesday that suggested the health-care sector may be more vulnerable to this recession than it has been in past downturns.

Leerink Swann analyst Rick Wise called Abbott's report "just a basically solid quarter," with "positive momentum across major products." J&J, Wise noted in a separate report, missed his sales expectations across the board. He rates Abbott shares "outperform" and J&J shares "market perform."

Abbott shares jumped $1.62, or 3.3%, to $50.82.

Abbott also signaled that it will remain on the lookout for potential acquisitions, even after last week's deal to purchase vision-care company Advanced Medical Optics Inc. (EYE) for $1.36 billion. Chief Executive Miles White said he intends to continue adding to the company's non-pharmaceutical businesses, such as devices, and that the current economic downturn might present more buying opportunities. He doesn't expect any "gargantuan" deals, though.

"I think it's a good time to be a buyer as long as there's a willing seller," White said. "A lot of valuations are depressed for a lot of good reasons, and in some cases not for good reasons." White said Abbott may not have purchased Advanced Medical if its valuation hadn't been depressed in recent months by the recession.

The Abbott Park, Ill., maker of drugs and medical devices reported net income of $1.54 billion, or 98 cents a share, compared with $1.2 billion, or 77 cents, year earlier.

Earnings from continuing operations, excluding restructuring and charges related to a legal settlement, rose to $1.06 a share from 93 cents, matching the mean estimate of analysts surveyed by Thomson Reuters.

Net sales rose 10% to $7.95 billion, despite a negative impact of 2.5 percentage points from the stronger dollar, and fell short of the Thomson Reuters estimate of $7.99 billion.

Sales of Abbott's coronary stents - which are used to prop open damaged arteries - rose 125% to $257 million. Abbott's Xience V drug-coated stent, which hit the U.S. last summer, has quickly vaulted to a leading position in a rebounding market. Abbott said Xience captured the biggest share of the U.S. market for drug-eluting stents, contributing to a 16% increase in medical-products sales for the quarter.

Pharmaceutical sales - Abbott's biggest business - rose 10%. Sales of Humira, which treats various forms of arthritis, plus skin and gastrointestinal disorders, rose 42% to $1.35 billion.

Gains for both Xience and Humira came at the expense of older, competing products from J&J. J&J on Tuesday reported declines in sales of anti-inflammatory drug Remicade and drug-eluting stent Cypher.

Abbott is partly insulated from the generic-competition woes affecting the drug industry because patents on some of its top-selling drugs won't expire for several years, plus it has a diversified range of other products that including Ensure nutrition supplements and laboratory diagnostic systems. However, its Depakote anti-epilepsy drug lost U.S. patent protection last year and saw sales drop 42% to $268 million for the quarter.

Looking ahead, Abbott confirmed its projection made two weeks ago for 2009 earnings, excluding items, of $3.65 to $3.70 a share, versus $3.32 a share on the same basis for 2008.

For the first quarter, Abbott sees earnings of 69 cents to 71 cents a share.

-Peter Loftus; Dow Jones Newswires; 215-656-8289; [e-mail]

(Mike Barris contributed to this article.)

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