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Pharmaceutical industry

Abbott's Stock Drops Amid Efficacy Concerns and Regulatory Rejection

Strategic Insights

— 1 min read

Abbott's pharmaceutical company saw its stock plummet last year following the rejection of its experimental drug for prostate cancer by the FDA. The company also lost US patent protection on some of its best-selling products. Despite this, Abbott's blockbuster rheumatoid arthritis drug, Humira, saw a significant increase in sales, reaching $1.4 billion worldwide in 2006, a fivefold jump from 2003.

Key Takeaways:

  • Abbott's stock dropped after the FDA rejected its application to sell Xinlay, an experimental drug for prostate cancer, in October.
  • The company lost US patent protection on some of its best-selling products, adding to its financial woes.
  • Humira, Abbott's blockbuster rheumatoid arthritis drug, saw a significant increase in sales, reaching $1.4 billion worldwide in 2006, a fivefold jump from 2003.
  • For six years, Abbott's CEO, Miles White, has been acquiring product lines and medical device companies to diversify the company's portfolio, a strategy he believes will make the company less dependent on drug sales.
  • Abbott bought Guidant Corp.'s medical device business for $4.1 billion, gaining access to the lucrative market of drug-coated stents.
  • Credit analyst Michael Zbinovec at Fitch Ratings Ltd. believes that Abbott's acquisition of Guidant's stent business will help the company increase its market share and revenue.
  • 35% of Abbott's shareholders have voted to tie CEO Miles White's pay to a performance standard, indicating growing frustration with his compensation package.

Statistics:

  • Abbott's stock drop: unknown (not specified in the article)
  • FDA rejection of Xinlay: October (no specific date mentioned)
  • Humira sales: $1.4 billion worldwide in 2006, a fivefold increase from $280 million in 2003
  • Acquisition of Guidant's medical device business: $4.1 billion
  • Percentage of shareholders voting to tie CEO pay to performance standard: 35%

Sources:

  • Daniel Rome Levine, "What went wrong: Abbott's stock dropped last year after medical studies questioned the efficacy of two drugs the company had high hopes for...", unknown publication (date not specified)
  • Fitch Ratings Ltd. (no specific source mentioned, but credit analyst Michael Zbinovec is quoted)

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