Abbott closes Q1 with sales boost
The company's newly-independent status also meant trimming SG&A costs 3% compared to last year. CEO Miles White said the cuts are not about slashing sales and marketing jobs but putting an “emphasis on our G&A” by finding efficiencies within the business and being able to cut back on certain services that are no longer needed, now that AbbVie is off and on its own.
The company said it expects emerging markets to continue to be a major source of sales and that this is a major focus point. “We're definitely expanding in growth markets around the world both in headcount and promotion spending,” White said. “We're doing that at a prudent rate and we're also tightly managing the sales and marketing expenses in markets where we're not going to get the return,” he added.
“We don't feel like we're starving SG&A at all, actually,” he told investors during the earnings call, and said the company has the freedom to grow as much as it can in R&D, which is down almost 5% compared to the same period when Abbott and AbbVie were still one company.
Strong performers included nutrition, which saw sales rise 9% overall, 2.1% in the US. Diagnostics sales rose 7%, to $1 billion, compared to the same period last year, while medical devices dropped 3%. US device sales declined 13%, to $276 million, compared to the same period last year, and diabetes care fell 19%, to $133 million. Execs said these two markets are have been pushed around by pricing issues. In the back-and-forth with analysts following the call, they also said Medicare pricing issues aren't of particular concern for the company because it doesn't have a large share of the Medicare market. However, they noted that the company's diabetes R&D efforts are moving towards “users who are looking for more than just a test strip.”
Execs also said the AbbVie-free Abbott is open to acquisitions but is taking its time because it doesn't need an acquisition to boost its performance. While not addressing specifics, they said they are looking at possible device businesses.