Will Abbott Laboratories (ABT) Labs Help You Retire Rich? – Teva Pharmaceutical Industries Ltd (ADR) (TEVA), Mead Johnson Nutrition CO (MJN)

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Since we looked at Abbott Labs last year, the company lost a point, as the spinoff of AbbVie Inc (NYSE:ABBV) resulted in a lower dividend. But the stock has performed well, rising about 20% over the past year after adjusting for the spun-off AbbVie.

After a long wait, Abbott Laboratories (NYSE:ABT) finally broke itself into two pieces. AbbVie got the company’s proprietary drug business, including blockbuster Humira, which has sales that amount to almost half of AbbVie’s projected revenue. Abbott got to keep the rest of the business, which includes generic drugs, nutritional products, diagnostics, and vascular products.

In its first quarterly report as an independent company in January, Abbott Laboratories (NYSE:ABT) reveled in being in what CFO Thomas Freyman called a “no-Humira world.” Although its nutritional segment did well and its diagnostics business had a nice jump in revenue, Abbott’s generic drug segment and vascular health unit didn’t fare as well. In particular, nutritionals will be a key driver of performance for the new Abbott, and it’s faring well in emerging markets such as China. By contrast, Mead Johnson Nutrition CO (NYSE:MJN) reported difficulties in China earlier last year.

Meanwhile, for generics, Abbott needs to focus on emerging markets as well. Increasingly, industry giants Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) and Dr. Reddy’s Laboratories Limited (ADR) (NYSE:RDY) have moved toward emerging markets, with Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) in particular having found respite from falling U.S. sales by looking to faster-growing countries. The key is for Abbott to use generics as a way to break into new markets, and then once its name is better known, it can start selling higher-margin products.

For retirees and conservative investors, the new Abbott may seem like an unknown quantity. But despite some concerns about a lower yield, the company looks like a solid health-care pick for retirement portfolios.

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The article Will Abbott Labs Help You Retire Rich? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger and The Motley Fool have no position in any of the stocks mentioned.

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