Get to Know Abbott Labs
Abbott Labs was founded in 1888. Today the company is a leader in several key categories
Source: Abbott Labs JP Morgan Conference Presentation, slide 4
Among the hedge funds and other investors tracked by Insider Monkey, Abbott Laboratories is fairly popular with 42 funds holding around $1.69 billion worth of stock, which represents roughly 2.70% of the company’s outstanding stock as of the end of March. During the first quarter, the company gained some popularity as the number of funds with long positions went up by three. Among the largest shareholders of Abbott are Ric Dillon’s Diamond Hill Capital and Richard S. Pzena’s Pzena Investment Management, which own 10.20 million shares and 4.64 million shares as of the end of March, respectively.
Abbott is the global leader in adult nutrition. The company’s adult nutrition leadership is a result of its Ensure brand.
The company grew adult nutrition sales year-over-year by 5.2% in the United States and 3.6% internationally (constant-currency) in its most recent quarter.
The company’s adult nutrition category will continue to be boosted by favorable demographic trends going forward.
Abbott Labs is much more than adult nutrition and baby formula. The company operates in 4 segments.
Each segment is shown below along with the percentage of total revenue generated for Abbott Laboratories in fiscal 2015:
– Nutrition generated 34% of total revenue
– Diagnostics generated 23% of total revenue
– Established Pharmaceuticals generated 18% of total revenue
– Medical Devices generated 25% of total revenue
The Nutrition segment’s primary brands are Ensure, Pedialyte, and Similac.
The established pharmaceutical segment is noteworthy for its geographical distribution. It sells generic pharmaceuticals only outside the Untied States. A full 75% of the segment’s revenue comes from key emerging markets.
But it’s not just the established pharmaceutical segment that has a large emerging market presence…
Abbott Labs Is An Emerging Market Business
Abbott Labs sales by country type (developed, emerging) are shown below:
– 50% of Abbott Lab’s sales come from emerging markets
– 31% come from the United States (developed)
– 19% come from developed international markets
The company generates half of its revenue in emerging markets.
It also generates half of its revenue in direct to consumer sales. This means Abbott Labs health care products are popular with consumers, not just health care providers.
Demographic changes will be most impactful in emerging markets.
They have the fastest population growth. More babies means more formula sales for Abbott.
Emerging markets will also make the biggest gains in life expectancy increases. Emerging market population’s dwarf developed populations. This means more sales for Abbott’s:
– Medical devices segment
– Adult nutrition division
– Diagnostics segment
– Generic pharmaceuticals segment
The company has positioned itself extremely well. It is primed to take advantage of emerging market growth.
With Abbott Labs you get expert management and developed world regulation and transparency combined with emerging market exposure and growth.