Abbott lays off 550 as breakup nears

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Analyst: Don't underestimate AbbVie
Analyst: Don't underestimate AbbVie
Although Abbott Labs' Q3 conference call focused on how easy it was going to be to break itself into two distinct companies, the 550 employees the company said it has laid off may not agree. External communications spokesperson Ann Smith told MM&M the eliminated employees were primarily in manufacturing and commercial operations and the cuts have been implemented across multiple businesses.

Abbott announced in October 2011 that it was going to split its operations into two freestanding businesses – one that will focus on medical devices and diagnostics (Abbott), and a research-centric business that was later named AbbVie. The two companies will be traded as independent companies as of January 2. Smith said the layoffs are not connected to the corporate split.

Executives used Wednesday's earnings call to outline expectations for the two companies and said they will be holding road shows to give investors a sense of the distinct corporate personalities. Among their expectations: the 2013 iteration of Abbott will have around $23 billion in sales next year, and will invest 6% to 7% of sales into research and development. Executives said they expect AbbVie will channel about 14% of sales into research and development and that they expect it to pull in $1 billion in emerging market sales over five years. AbbVie's foundational drug, Humira, is expected to provide ballast for the emergent business.

EVP and future AbbVie chief Richard Gonzalez told analysts during the Q&A he was confident Humira – which has 8 indications and 4 additional indications in the pipeline – will hold its ground if Pfizer's experimental RA drug tofacitinib is approved as a third- or even second-line drug. Gonzalez also said he isn't worried about 2017 or 2018 when biosimilars are expected to pop up. “It is a very different ballgame from small molecule. We do not believe it will be an interchangeable or substitutable kind of product,” he said.

The company reported $9.7 billion in sales for the quarter ended September 30, a 4% increase over the same period last year. Top-selling drugs included Humira, with $2.4 billion in sales for the quarter, a 27% increase over sales for the same period last year, and testosterone drug Androgel, with $287 million in sales, a 34% increase over the same period last year. Although the company said HIV medication Kaletra and prostate cancer drug Lupron remain worldwide contenders, with $267 million and $189 million in sales respectively, these sales were off, sliding 11.5% for Kaletra and by 9.2% for Lupron, compared to the same period last year.
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