The Expense Of Diabetes: Is It Worth It? Eli Lilly & Co. (LLY), Novo Nordisk A/S (NVO), Abbott Laboratories (ABT)

Page 1 of 2

With studies showing 33% of Americans with diabetes or pre-diabetes, it is obvious that the industry should be booming. Like most fields there is stiff competition in the industry. I recently wrote a piece explaining why it appears these companies should be good investments. Since then earnings have been released, so let’s see how they stack up now.

Lilly calls active as shares soar; Put spreads constructed on Verizon, AT&TEli Lilly & Co. (NYSE:LLY) and Novo Nordisk A/S (ADR) (NYSE:NVO) are the two largest insulin companies in the world.  They are slightly more specific than other companies because their market is narrower. Generally speaking, type one diabetics need insulin and most type two diabetics don’t (although more and more type two’s are using insulin). Although only one in three hundred American’s are type one diabetics, that is nearly twice as much as it was thirty years ago. The rates of type one diabetics are increasing globally at three percent every year.

Lilly and Novo Nordisk posted different results in their Q4 results. Although Lilly posted better than expected earnings, revenues did decline by 1%. The patent expiry of Zyprexa led to the decrease, but other products such as Cymbalta, Forteo and Alimta nearly made the loss a wash. Novo Nordisk showed a solid 18% increase in sales growth, and net profits also increased by 25%.

Lilly forecasts earnings to increase 15% in 2013. Novo Nordisk expects to see around 10% growth in sales and operating profits.

Abbott Laboratories (NYSE:ABT)
is a test strip manufacturer that recently spun off a new company coined AbbVie Inc (NYSE:ABBV) which virtually split Abbott Laboratories (NYSE:ABT) in half. Abbott remained the diabetic manufacturer.  Despite this spin off, Abbott posted solid numbers this past quarter as well as some expected declines. Although the company posted a 46% decrease in net income for the quarter, net sales increased by 4%. For the year, net income increased by over 26%, or $1.23 billion dollars. Net sales increased by over $1 billion as well.

Abbott’s CEO Miles White had this to say, “In 2012, we achieved a significant milestone in Abbott’s 125-year history with the creation of AbbVie while delivering another year of strong results. Abbott’s mix of diversified healthcare businesses and pipeline is favorably aligned with key healthcare and emerging market trends and well positioned to deliver top-tier growth in 2013.”

With over 40% of Johnson & Johnson (NYSE:JNJ)’s revenue acquired from medical devices/diagnostics, diabetes is again playing a major role in a company’s success. In Q4, medical devices/diagnostics sales rose to $7.38 billion dollars in the fourth quarter, an increase of 13.7%. Johnson & Johnson (NYSE:JNJ) expects to increase revenues this year by 7%, bringing the expected total to around $72 billion. This past quarter, the company’s sales increased 8% with the Synthes deal contributing 5.6% of that growth. It becomes obvious when looking at these numbers how significant of a role medical devices/diagnostics really are to Johnson and Johnson.

The last company we will look at today is the clear insulin pump market leader. Diabetes directly accounts for 10% of Medtronic, Inc. (NYSE:MDT)’s revenues. Indirectly (mainly complications from the disease) Diabetes accounts for 40% of the company’s revenues. However, I don’t want to talk about earnings or diabetes with this company.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!