With the Q3 2022 reporting season underway, US-based medtech giant Abbott (NYSE: ABT) released its financials, showing sales of USD 10.4 billion, up 1.3% excluding foreign exchange impact. The performance was ahead of expectations, leading the company to raise its full-year guidance for earnings per share (EPS).
Business Unit Performance
By business unit, medical devices sales were up 6.4% year-on-year (YOY), and established pharmaceuticals grew 12.2%. However, diagnostics were down 0.6% due to falling COVID testing, and nutritionals were down 10.3% YOY, linked to a baby formula manufacturing stoppage in the US.
China Market and VBP Impact
Although Abbott reported “double-digit” sales growth in the China market during Q3, the firm has prior experience with both regional and national-level medical device-focused volume-based procurement (VBP) tendering. CEO Robert Ford, speaking during the earnings conference call, provided insights on the impact of those tenders. He noted that Abbott’s stent products were included in the national VBP round held last year, while the firm also gained earlier experience of the impact of VBP on its pharmaceutical products. He highlighted that the pricing impact ranges from -30% to -80%, depending on various factors. National tenders can require a greater degree of price cut compared to regional tenders, while the number of participants in each category is also a significant factor in the level of competition.
Future Outlook
Ford expects that Electrophysiology (EP) will “probably be the next category” targeted in the next year. He noted that due to the “technical support and the infrastructure” provided by Abbott to support customers in the EP business, those products may see price cuts in the “lower end of that range.” Despite these challenges, Abbott’s overall performance in Q3 demonstrates resilience and sets a positive tone for the remainder of the year.-Fineline Info & Tech
