Abbott reports 2nd Quarter Results with a Navigator update

Abbott reports 2nd Quarter Results with a Navigator update

This morning Abbott (NYSE:ABT) announced their second quarter 2006 results and reiterated their belief that their continuous glucose monitor Navigator will receive FDA approval in the second half of this year. The company also mentioned they are closing in on taking over second place, in terms of market share, in the US blood glucose monitoring market. According to the company they now hold 20% of the domestic BGM market.

The company also alluded to developing new glucose monitoring devices “which allow for more discreet” testing. According to industry sources, Abbott has a relationship with Pelikan Technologies who’s Pelikan Sun automatic lancing device is now available in Australia. The Pelikan Sun sells for approximately $300 US and according to the Pelikan the cost is covered by third party payors in the country. Besides offering automated lancing the company claims the device offers less painful testing. It would not be stretch to envision combining Pelikan’s lancing technology with Abbott’s glucose monitoring technology to form an all-in-one glucose monitoring device. Roche already has the Accu-Chek Compact Plus on the market and has projects underway to improve upon this product.

No update was provided on the status of their Aviator insulin pump or their litigation with Dexcom (NASDAQ:DXCM) who reports results tomorrow at 4:30 pm EST.

As for their results, sales gains in the BGM area while better than LifeScan’s, LifeScan is a unit of Johnson and Johnson (NYSE:JNJ) who reported results yesterday, where hardly impressive. The company commented that with the FreeStyle Freedom now approved by the FDA and coming to market future results should be improve. With Roche reporting results tomorrow it will be interesting to see if Abbott’s market share gains are continuing to hurt Roche. It should be noted that Abbott mentioned that some new managed care contracts will coming online in the second half of this year which should also help sales.

Diabetic Investor continues to see the BGM market as a battle between the Big Four, Roche, LifeScan, Abbott and Bayer (NYSE:BAY). Bayer will be the last to report second quarter results on August 29th, 2006. The real battle however is not over which company can introduce new systems, the real battle lies in which company is willing to sacrifice margins to gain market share. Abbott has been very aggressive with their pricing structure which has helped them win valuable managed care contracts. Nothing really new here as each player in the market has played this game before. Some may recall a few years ago after JNJ bought Inverness Medical their aggressive approach to re-establish their market position. For the time being Roche has decided not to play the game which has cost them market share. Diabetic Investor suspects it won’t be long before Roche re-enters the game and becomes aggressive with their pricing.

Once again all the members of the Big Four are avoiding the real issues with the BGM market but that too is nothing new.

David Kliff
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