Ok It’s Official Abbott Has Lost It

Ok It’s Official Abbott Has Lost It

This morning when Abbott (NYSE:ABT) reported 2014 fourth quarter and full year results we were expecting more of the same for their troubled diabetes unit. Based on the numbers we got exactly what we excepted with US sales declining 15.9% in the fourth quarter international sales also falling 5.9%, for the full year US sales declined 22% (and no that’s not a misprint) international sales down 0.3%. When the call started this morning we also got what we expected when Abbott CEO Miles White touted the Libre as the savior for the diabetes unit. Again no surprises that was until later in the call when the company stated that diabetes would start growing and sales would increase in 2015.

What was even crazier is Abbott management seems to actually believe that twice recalled not yet approved here in the US Libre is the answer. We were actually hoping someone would ask during the Q&A for more clarity one what they mean by growth and how they planned to get there. It’s possible that what the company meant was that compared to past two years diabetes will do better, which isn’t all the unrealistic.  It’s always easier to clear a lower hurdle.

However Diabetic Investor didn’t come away feeling that clearing a lower hurdle was what they meant that they actually believe they can grow share and they actually believe Libre is a big part of that even though the product has yet to be submitted to the FDA and many believe it won’t be approved.

Now we must admit it took us a little while to regain our bearings as we were stunned they would make such a foolish statement. Yes we know that Bayer and Roche are both bleeding share but my goodness unless both of these companies went under gaining share will be tough sledding. Abbott may not be in as bad shape as Roche and Bayer but as the results clearly indicate they are aboard the same sinking ship.

Keep in mind this is a company that has run not one but two glucose monitoring companies into the ground. First it was Medisense next came Therasense, which leads Diabetic Investor to believe that Abbott has a thing for companies with sense in their names. They also have a thing for running these sensible companies into the ground, for turning gold into sand. For completely mismanaging a great product like the way cool now way dead Navigator. Yes back in the day Abbott had a chance to become the leader in continuous glucose monitoring but like so many things Abbott they screwed it up.

Perhaps this new optimism that somehow magically BGM will turn itself around is why we continue to hear rumors that Abbott wants to enter the overcrowded highly competitive insulin pump market. Now we’re not quite sure how this will help sell more FreeStyle test strips but heck we’re not quite sure about much when it comes to Abbott diabetes.

It’s also possible that Bayer is so desperate to sell their diabetes unit that Abbott will buy this unit, shut it down and convert patients to an Abbott product. It’s also possible the New York Knicks will win the NBA championship that Jay Cutler will never throw another interception and Marshawn Lynch will actually answer questions from the media.

Frankly we think Abbott has lost it, that they have wandered well off the reservation.  Keep in mind this is the same company who is about to lay off even more people. That this is the same company whose last new conventional meter the Insulinx was a complete failure. That the product they see as driving growth has been recalled twice, is having reimbursement issues and is very expensive to manufacturer.

Perhaps reality will set in eventually, that management will wake up from this dream and realize that’s all that it was a dream. There is no way Abbott diabetes starts growing again, is it possible the results when compared to the new lower numbers will look better, for sure. But keep in mind that in 2014 sales globally feel almost 9%. That in 2013 global sales fell by almost 2%. That in 2012 global sales fell by 2.8%. Now folks we’re not sure what Abbott managements sees with those numbers but we know what we see and it’s not pretty.