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Abbott cashes in as aging baby boomers turn to liquid nutrition

By Elaine Watson , 18-Apr-2012
Last updated on 18-Apr-2012 at 16:21 GMT2012-04-18T16:21:35Z

Sales of Ensure and Glucerna are growing at double digit rates

Sales of Ensure and Glucerna are growing at double digit rates

Sales of adult nutrition products Ensure and Glucerna are on course to generate combined sales of almost $2bn this year for Chicago-based healthcare giant Abbott, bosses have revealed.

The firm, which is pumping $270m into a new manufacturing plant in Tipp City, Ohio , to make these products, posted a 10.4% rise in sales to $1.57bn in its global nutritionals division in the first quarter of 2012.

Continued expansion in adult nutrition

Speaking on a call with analysts this morning, John Landgraf, executive vice president, Global Nutrition, said Ensure and Glucerna had generated double-digit growth in 2011 and continued to perform strongly in the first quarter of 2012.

“As the baby boomer demographic ages, we expect continued expansion of our adult nutrition business.”

Abbott's nutrition division – based in Columbus, Ohio - is expected to boost sales from $6bn in 2011 to more than $9bn by 2015, and plans to launch “a number of new products and formulations this year”, said Landgraf.

More than 30 clinical studies underway in nutrition division

The division, which is focusing new product development efforts on cognition, immunity, lean body mass, inflammation, metabolism, and tolerance, has “more than 30 clinical studies underway to demonstrate proven outcomes with our nutrition innovation”, he said.

It is also on a mission to increase margins from “the low teens in 2011 to more than 20% in 2015”, he added.

“We’re expecting significant margin expansion  from 2013 driven by reducing packaging, ingredients and material costs; building plants closer to customers; distribution improvement – going direct to customers in key markets; and changing the mix [to focus on more profitable products].”

Q1, 2012, nutrition division results breakdown

In the quarter ended March 31, 2012, global nutritionals sales increased 10.4% to $1.57bn, excluding an unfavorable 0.3% effect of foreign exchange.

US nutritionals sales were up 11%, with US pediatric nutritionals sales up 15.4% on continued share gains for infant formula brand Similac, and double-digit growth of toddler brand PediaSure.

US adult nutritionals sales were up 7.3%, driven by double-digit growth of Ensure and Glucerna.

International nutritionals increased 9.9%, excluding an unfavorable 0.6% effect of foreign exchange, driven by continued strong growth of pediatric nutritionals in emerging markets.

Corporate re-engineering

Abbott, which is raising its earnings-per-share guidance for 2012, is on track to complete its separation into two publicly-traded companies by the year-end, said chief executive Miles White.

Abbott is off to a strong start in 2012, delivering double-digit ongoing earnings-per-share growth. As a result, we're raising our outlook for the full year.”

Abbott is breaking up its business into an $18bn research-based drugs division (which makes anti-inflammatory drug Humira and cholesterol-lowering drug Niapan) and a $22bn diversified medical products division (which makes generic drugs, medical implants, diagnostic tests drugs and nutritional products).

New Ohio manufacturing facility

The new Tipp City, Ohio, facility, which will employ approximately 240 people, is expected to become operational in late 2013.

The site will focus on the production of Glucerna and Ensure, but will also have the capability to make additional products.

Click here for details.

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