Abbott Reports 4th Quarter and Full Year Results
This morning Abbott (NYSE:ABT) reported 2007 fourth quarter and full year results. The news for the diabetes care business remains dismal. Domestically in the fourth quarter sales for unit decreased 0.3% and for the full year sales barley grew at all gaining an anemic 1.3%. The unit performed better overseas growing a respectable 9.6% on a full year basis and taking into account the impact of currency exchange.
The company stated that their Navigator continuous glucose monitoring system, which is still awaiting approval at the Food and Drug Administration (FDA), would be launched sometime in the current quarter. This statement is significant as it has been quite some time since the company publicly mentioned any date when the product would be launched. Abbott must feel fairly confident that they have meet of the demands made by the FDA. According to sources inside the company they have an approval letter from the FDA and are merely waiting for some final few items before the approval becomes official.
Based on the history of the Navigator Diabetic Investor remains skeptical. Today was not the first time the company stated the product would be launched in a specific time frame. Each time before the company failed to launch the product during the time frame mentioned. Should the Navigator miss today’s target it would be one more black eye for the diabetes care unit which already has enough problems with their conventional glucose monitoring products.
The fact is the diabetes care unit is in serious trouble. In the conventional glucose monitoring area they fallen to fourth place behind LifeScan, Roche and Bayer. Their sales force has lost all confidence in the management team and the failure to get Navigator to market only adds to the problems. Even if the Navigator is launched this year the product faces a major uphill battle as it will be third player to enter the market. While Diabetic Investor sees value in continuous monitoring the fact remains that this market is not large enough or growing fast enough to support all the players here. Dexcom (NASDAQ:DXCM) and Medtronic (NYSE:MDT) have already grabbed the low hanging fruit and it is difficult to see the Navigator gaining much traction given the many limitations of the product, most notably the 10 hour warm up period where the patient sees no data.
Without an insulin pump Diabetic Investor is curious just how Abbott plans to market Navigator. While the company does have an agreement with Insulet (NASDAQ:PODD) to combine the Navigator with the OmniPod, there are only 4000 or so patients using the OmniPod and it’s unlikely a large majority of these patients would upgrade to a combined product. It’s also worth noting that Insulet recently struck a deal with Dexcom to combine Dexcom’s system with the OmniPod. This begs the question, if the Navigator is coming this quarter why would the company see the need to join with Dexcom? As stated before given the history of Navigator one cannot blame Insulet for working with Dexcom who already has a second generation product on the market.
Try as they might to sugar coat the poor performance of their diabetes care unit the facts speak otherwise. The way Abbott talks about the diabetes care unit reminds Diabetic Investor of the how the many presidential candidates play fast and loose with the facts. The simple fact is, if it walks like a duck and squawks like a duck it’s a duck. If Abbott doesn’t do something soon with their diabetes care unit it’s in danger of becoming a dead duck.