Abbott forecasts strong growth for nutritionals business in 2012

By Elaine Watson

- Last updated on GMT

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Abbott forecasts strong growth for nutritionals business in 2012
Chicago-based healthcare giant Abbott has regained all of the market share it lost following its 2010 recall of Similac infant formula products and says its nutritionals business is set to grow in the high single digits in 2012.

The firm, which recently announced plans to separate into two publicly-traded companies, posted an 8.6% rise in sales to $6bn in its global nutritionals division in 2011 driven by strong sales in emerging markets and gains in the US infant formula market.

Speaking on a conference call with investors and analysts yesterday, chief executive Miles White said he aimed to increase margins in the nutritionals business from “the low teens in 2011 to our target of more than 20% in 2015”.

He added:“In the US we regained all the share we had lost due to the late 2010 infant formula recall and re-established our position as the infant formula market leader with Similac.

“At $2.5bn, our emerging market sales comprised more than 40% of our total nutritional business and increased 17% in the full year.”

The US market for infant nutrition is ‘slightly declining’

John Landgraf, executive vice president, global nutrition, said Abbott had also generated double-digit growth in top-selling adult nutritional brand Ensure and toddler nutrition brand PediaSure.

“For full year 2012 in the global nutritionals business, we are forecasting high single digit reported sales growth including mid-single digit growth in our US business and low double-digit reported growth for our international nutritionals business”

Asked about longer-term prospects for infant nutrition, he added: “We have regained all the share impacted by the recall and we’ve done a nice job relative to the competition.

“But the US market for infant nutrition is slightly declining, at least ​[it has been] in the last couple of years. But the growth profile overseas will improve… particularly in emerging markets.

Corporate re-engineering

While there was still “significant work to do”​ to prepare for the split, Abbott remained “on track to complete the separation by the end of 2012”,​ said White.

"2011 was a significant year for Abbott, with the announced plan to separate into two leading health care companies in research-based pharmaceuticals and diversified medical products, each offering shareholders distinct identities with unique investment opportunities.”

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) made sense, said White, announcing the plan last year.

“These two investments make sense separately and both are of a critical mass and size that they have great sustainability going forward as independent companies."

Nutritional division areas of focus in 2012

Abbott’s focus for new product development in nutritionals will be on six areas this year: Cognition, immunity, lean body mass, inflammation, metabolism, and tolerance.

In a conference call with analysts in October, White said the Nutritionals business – which includes sports nutrition brands EAS Myoplex and AdvantEGDE, weight management brands Zone Perfect and Glucerna and infant nutrition brand Similac – would launch a ‘cadence of new products’ in 2012.

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