Abbott Execs Predict Big Growth for Pharma Spinoff
When Abbott Laboratories (NYS: ABT) said last week that it would spin off its pharma unit, the announcement had a certain ignominious air. The new drug business lacked a name, and while Abbott executives touted the prospects of its going-forward healthcare conglomerate, they seemed less enthusiastic about the pharma company's future.
Now, company officials are making up for all that. Perhaps realizing that a spinoff needs salesmanship, too, Abbott released "ultra-bullish" sales projections for its arthritis drug Humira and talked up the prospects of a potential treatment for kidney disease and its in-development combo therapy for hepatitis C, Reuters reports.
Richard Gonzalez, the putative CEO of the spunoff company, predicted $4 billion in additional annual revenue from new Humira uses and newly approved drugs. Humira alone should grow $1 billion a year for the next several years, Gonzalez said. "On an $18 billion pharma business, that's a significant growth rate," Gonzalez said (as quoted by Bloomberg).
Analysts and institutional investors were a bit skeptical. Sanford Bernstein's Derrick Sung questioned whether Abbott can keep pumping up Humira at that rate. "The key for driving value on the pharma side will be if they can sustain Humira growth beyond 2015," he said (as quoted by Reuters).
Haverford Financial's director of research, meanwhile, said the Humira projections seem "aggressive," and the new-drug predictions somewhat pie-in-the-sky. "To me, it's a show-me stock in terms of the pipeline," Haverford's Tim Hoyle said. "Show me you can take something you've developed and turn it into a billion-dollar drug."
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