Can Abbott Laboratories (ABT) Grow This Global Business?

Abbott will also need to worry about margins abroad, however. The generics business has never been known for the type of massive margins and sky-high profits of blockbuster drugs found in big pharma. Furthermore, a strong dollar could hurt the division’s margins; in 2012, currency issues dropped operational sales growth of 2% to a reported sales decline of more than 4%. Abbott’s strategy of operating locally in foreign countries should help keep costs down with cheaper labor and increased accessibility to each market. Still, the company will need to drive growth by continuing to expand geographically, as well as bringing new generics forward.

Steady as she goes
Abbott’s generics business won’t compete with the growth of its nutritionals segment nor offer the incredible revenue of proprietary pharmaceuticals, but it will provide a steady stream of sales going forward. By opening up emerging markets, Abbott’s generics unit should help the company’s other businesses spread globally — boosting future growth across Abbott’s portfolio. Sales of generics won’t wow investors, but look for steady, stable margin growth and continued penetration of emerging markets with new generic offerings as keys to this division’s success.

The article Can Abbott Grow This Global Business? originally appeared on Fool.com and is written by Dan Carroll.

Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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