Abbott CEO "Bullish" On St. Jude, Guarded On Alere Deal
By Jof Enriquez,
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Abbott CEO Miles White says the deal to acquire St. Jude Medical is on track to close by the end the year, as expected. The planned purchase of point-of-care diagnostics firm Alere, however, needs to comply with certain regulatory requirements, which Abbott is actively pursuing.
In April, Abbott announced that it is paying $25 billion for St. Jude to significantly bolster its cardiovascular business. Earlier this month, St. Jude and the U.S. Food and Drug Administration (FDA) warned that the batteries in some of St. Jude's implantable cardioverter defibrillators (ICDs) drain faster than expected, putting patients at risk, reports the Chicago Tribune. Third parties also claim that St. Jude's cardiac implants are vulnerable to cyberattacks, which the company denies.
Miles said St. Jude is considered an important piece, nonetheless, and he is "pretty bullish" about it.
"I think St. Jude has handled all this pretty well, pretty thoroughly," Miles told analysts in a conference call. "I would say based on everything I see, the deal is going to close. And determined by the timing of regulatory approvals, it's probably going to close by year-end. And I haven't seen anything to date that would suggest otherwise."
To bring the deal closer to completion, St. Jude and Abbott announced earlier this month that they are selling a portion of their vascular closure and electrophysiology businesses to Terumo for approximately $1.12 billion.
Abbott in February said it plans to buy Alere for $5.8 billion to become a major player in the diagnostics space. Two months later, however, Abbott offered to rescind the deal after reports surfaced that Alere was under investigation for its sales practices, and was found to be remiss in filing financial statements. In August, Alere sued Abbott for "dragging its feet" on key antitrust submissions to sabotage the deal, according to Reuters.
During the call, Miles was more guarded on the prospects of the deal's outcome, which "remains to be seen." He says that Abbott currently is "pursuing all the necessary regulatory approvals for the deal" and is "doing everything we are supposed to do on the contract. And beyond that, I am not going to forecast it or try to."
Miles says ongoing speculation about the Alere deal is just "noise," and not worth responding to. He did indicate that Alere is well worth pursuing.
"Is the strategic fit there? Yes, it is. We like the products. We like the businesses. We have said that and I continue to say that. Is the long-term post-merger opportunity and fit there? Yes, it is and I have never wavered on that," he told analysts.
Both the St. Jude and Alere deals are important for Abbott in realizing its goal to sharpen its focus on cardiovascular and diagnostic products. To that end, Abbott sold its medical optics business to Johnson & Johnson (J&J) for $4.3 billion in September.
Abbott reported medical device sales grew 6.4 percent in the third quarter. Sales in vascular products were led by double-digit growth of the MitraClip mitral regurgitation treatment device, and endovascular sales were driven by strong sales of the company's Supera stent. Diabetes care sales increased 11.5 percent in the third quarter, led by continued consumer uptake of FreeStyle Libre continuous glucose monitoring (CGM) device, internationally. Diagnostics sales worldwide rose 5.0 percent. Abbott's Established Pharmaceuticals sales were up 5.3 percent. Total worldwide sales for the third quarter increased 2.9 percent to $5.3 billion.
"Strong performance in Established Pharmaceuticals and Medical Devices led our sales growth this quarter," Miles wrote in a statement. "We're on track to deliver the financial commitments we set at the beginning of the year. We also had several key product launches and continued to take strategic actions to shape our business for long-term growth."