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Abbott Laboratories (ABT), Pfizer Inc. (PFE): How Will the Patent Cliff Affect These Pharmaceuticals?

The pharmaceutical sector is mainly about the pipeline of new products and patents. The term patent cliff is being used to describe drugs that are near their patent expiration date which is extremely important because after the expiry new generic producers invade the market generating sales and price cuts for those specific drugs. Also, the pipeline of new product development has not been as successful as decades before and this has put pressure on some pharmaceutical companies. However, these issues are not equally affecting all of the drug manufacturers.

Abbott Laboratories (NYSE:ABT)

Let’s take a look at Abbott Laboratories (NYSE:ABT), Pfizer Inc. (NYSE:PFE) and Merck & Co., Inc. (NYSE:MRK) to see their situation in this tough market environment.

Abbott Laboratories (NYSE:ABT): A solid stock at bargain

Abbott Laboratories (NYSE:ABT) operates in diverse segments internationally, including its nutrition, diagnostics, pharmaceuticals and medical device businesses. The company posted net sales for the first quarter of 2013 of $5.4 billion which meant an increase of 1.8% compared to the same quarter the prior year. However, Abbott Laboratories (NYSE:ABT) showed a decrease in net earnings of more than 56% to $544 million for the same period of comparison. The company is exposed to emerging markets as they account for more than 40% of total sales. These markets gave good results this quarter as sales amounted to $2.2 billion increasing 15.2% on an operational basis compared to the same quarter of 2012.

The interesting point about this company is that it continued to deliver good results although its pharmaceutical business sales declined 1.9% in the first quarter of 2013 compared to the same quarter the prior year. A reason for this can be its diversified revenue mix comprised by: 31.6% nutrition, 24.7% medical devices, 23% pharmaceuticals and 20.2% diagnostics.

This company has excellent growth prospects as it has launched new products and initiated new trials in this first quarter. Abbott Laboratories (NYSE:ABT)’s stock price has surged almost 15% in the past year. And given the reaffirmed EPS guidance of $2.02 for 2013, expect some more.

Pfizer Inc. (NYSE:PFE): Future growth prospects look good

Pfizer Inc. (NYSE:PFE) manufactures a diverse product portfolio that includes human and animal biologic and small molecule medicines and vaccines, as well as nutritional products. Pfizer Inc. (NYSE:PFE) posted $13.5 billion in revenue for the first quarter of 2013, a 9% decrease compared to the same quarter of 2012. But due to a decline in selling, informational and administrative expenses (10%) as well as cost of sales (2%) and research and development expenses (3%), the company reported a net income of $2.75 billion or 53% more than in the first quarter of 2012.

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