Abbott results don't augur well for pharma spinoff

Abbott Laboratories ($ABT) is so far the only Big Pharma bucking the downward earnings trend. The company posted an increase in profits to $1.62 billion for the fourth quarter, on a 4.1% increase in overall sales and a 6.7% increase from branded pharma. But the sales boost fell short of analyst estimates, and Humira sales growth weren't enough to allay analyst fears that the spun-off pharma business won't hit the ground running.

Abbott has announced plans to split into two companies: One that will keep the name Abbott and include virtually everything in the diversified health products company but its pharma business. The branded-drugs unit will be spun off to make its own way in the world. In its knapsack will be Humira, which has been enjoying sales growth but faces some competitive headwinds, as well as the faltering cholesterol drugs Tricor and Niaspan. Plus, there's a pipeline of new drugs, which may or may not deliver, analysts point out.

"Abbott's pharma business is going to struggle over the next three to four years at a minimum and perhaps much longer," JPMorgan Chase's Michael Weinstein wrote in a recent note to clients (as quoted by Bloomberg). "Beyond 2015, performance will depend largely on what happens to Humira growth" and "the play-out of Abbott's pipeline." For the fourth quarter, Humira sales grew by 16%, MarketWatch points out, while third-quarter sales amounted to 25.7% year-over-year growth. Can the drug sustain its growth in the face of new rivals? That's the billion-dollar question.

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