Abbott Reports 17.4 Percent Sales Growth and 12.3 Percent Ongoing Earnings-Per-Share Growth in First Quarter Abbott (NYSE: ABT) today announced financial results for the first quarter ended March 31, 2011. Diluted earnings per share, excluding specified...

ABBOTT PARK, Ill., April 20, 2011 /PRNewswire/ -- Abbott (NYSE: ABT ) today announced financial results for the first quarter ended March 31, 2011 .

"Stronger-than-expected sales helped us deliver 12 percent ongoing earnings-per-share growth in the first quarter," said Miles White , chairman and chief executive officer. "Growth was balanced across our three key strategic business categories – Durable Growth, Proprietary Pharmaceuticals and Innovation-Driven Devices, reflecting healthy performance across our global operations, including continued rapid growth in emerging markets."

The following is a summary of first-quarter 2011 sales by major business category.

The following is a summary of first-quarter 2011 sales for select products.

Abbott confirms ongoing earnings-per-share outlook for 2011

Abbott is confirming ongoing earnings-per-share guidance for the full-year 2011 of $4.54 to $4.64 . The midpoint of this guidance range reflects growth of 10 percent over 2010.

Abbott forecasts specified items for the full-year 2011 of approximately $0.84 per share, primarily associated with acquisition integration/cost reduction initiatives and in-process R&D. Including these specified items, projected earnings per share under Generally Accepted Accounting Principles (GAAP) would be $3.70 to $3.80 for the full-year 2011.

Abbott declares quarterly dividend

On Feb. 18, 2011 , the board of directors of Abbott declared the company's quarterly common dividend of 48 cents per share, an increase of 9 percent over the prior year. The cash dividend is payable May 15, 2011 , to shareholders of record at the close of business on April 14, 2011 . This marks the 349th consecutive dividend paid by Abbott since 1924.

Abbott is a global, broad-based health care company devoted to the discovery, development, manufacture and marketing of pharmaceuticals and medical products, including nutritionals, devices and diagnostics. The company employs nearly 90,000 people and markets its products in more than 130 countries.

Abbott's news releases and other information are available on the company's Web site at www.abbott.com . Abbott will webcast its live first-quarter earnings conference call through its Investor Relations Web site at www.abbottinvestor.com at 8 a.m. Central time today. An archived edition of the call will be available after 11 a.m. Central time .

— Private Securities Litigation Reform Act of 1995 —

A Caution Concerning Forward-Looking Statements

Some statements in this news release may be forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Abbott cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect Abbott's operations are discussed in Item 1A, "Risk Factors," to our Annual Report on Securities and Exchange Commission Form 10-K for the year ended Dec. 31, 2010, and are incorporated by reference. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments.

Questions & Answers

Q1) What drove the strong sales growth?

A1) We have characterized Abbott's major businesses into three categories, based on their underlying attributes. These include:

Durable Growth Businesses sales grew 24.3 percent, driven by strong sales growth in Established Pharmaceuticals and steady sales growth in Core Laboratory Diagnostics, Diabetes Care and Point of Care Diagnostics businesses. Established Pharmaceuticals sales, which include sales of our branded generics pharmaceuticals outside of the United States , were approximately $1.3 billion , including the contribution from the Solvay and Piramal acquisitions. Worldwide Nutritional products sales growth was 7.8 percent, with 15.8 percent growth in international nutritionals. Nutritional sales in the United States during the quarter were negatively impacted by the infant nutrition recall that was announced in September 2010 , as previously forecasted.

Proprietary Pharmaceuticals sales increased 11.7 percent, driven by U.S. pharmaceutical sales growth of 12.7 percent. U.S. sales growth of HUMIRA was 16.2 percent and International sales growth for HUMIRA was 18.9 percent. U.S. TRILIPIX/TriCor franchise sales growth was 3.8 percent. U.S. Niaspan sales growth of 10.6 percent significantly exceeded the growth rate of the overall cholesterol market.

Growth in Innovation-Driven Device Businesses was driven by double-digit growth in Worldwide Vascular sales, including strong international performance, as well as emerging market growth of 45 percent. Abbott's Molecular Diagnostics businesses continued to grow double digits.

Q2) What were emerging markets sales?

A2) Emerging market sales within each division were as follows (dollars in millions):

Abbott total company emerging markets sales grew 38.4 percent in the quarter, reflecting strong growth across all divisions and including the impact of acquisitions. Excluding the impact of the acquisitions, emerging markets sales growth exceeded 20 percent, underscoring the importance of these markets to Abbott's growth profile. In our Established Pharmaceuticals business, which includes the contribution from the Solvay and Piramal acquisitions, we saw strong performance in Russia , India and China . In Nutritionals, we saw particularly strong growth in Asia and Latin America , where we are expanding our presence and gaining share with the introduction of new products.

In our Diagnostics business, we continue to perform well in China , where we are placing new ARCHITECT systems and continuing to penetrate the market. And, in our Vascular business, we saw strong growth across all key emerging markets, driven by double-digit procedure volumes in these markets, as well as Abbott market share gains.

Q3) What drove the increase in the gross margin ratio?

A3) The gross margin ratio before and after specified items is shown below (dollars in millions):

The adjusted gross margin ratio of 58.5 percent increased 110 basis points from the prior year when the adjusted gross margin ratio was 57.4 percent, due to improved product mix. The favorable comparison to the prior year was partially offset by additional rebates under U.S. health care reform, the carryover effect of 2010 pharmaceutical pricing actions by European governments, and an unfavorable impact from foreign exchange rates on the ratio.

Q4) What drove SG&A and R&D investment?

A4) Both SG&A and R&D investment increased strong double-digits, reflecting Abbott's continued investment in programs to drive future growth, as well as increases associated with the addition of Solvay Pharmaceuticals, Piramal Healthcare Solutions and pharmaceutical fee associated with U.S. health care reform. R&D expense reflects continued investment in Abbott's broad-based pipeline, including programs in vascular devices, immunology, neuroscience, oncology and HCV.

Q5) What was the tax rate?

A5) The ongoing tax rate this quarter was 15.7 percent, in line with Abbott's previous forecast, and reconciled below (dollars in millions):

Q6) How did specified items affect reported results?

A6) Specified items impacted first-quarter results as follows:

Restructuring/integration (acquisitions/cost reductions) is associated with restructuring and integration costs for the Solvay Pharmaceuticals acquisition and a previously announced restructuring in our pharmaceuticals business. This item also includes previously announced cost reduction initiatives to improve efficiencies in the vascular and core laboratory diagnostic businesses. Change to calendar year reporting (one-month lag) recorded in the other (income)/expense line item of the P&L as noted below, reflects the impact of Abbott's change to a calendar year end for international operations previously on a November 30 year end. Acquired in-process research and development is related to the agreement with Reata to develop and commercialize bardoxolone methyl outside the United States , excluding certain Asian markets. Litigation reserves relates to settlements reached in principle for which reserves were established during the quarter.

The impact of specified items by Consolidated Statement of Earnings line item is as follows (dollars in millions):

Q7) What are the key areas of focus in Abbott's broad-based pipeline?

A7) We continue to advance our broad-based pipeline. In proprietary pharmaceuticals, we expect to have nearly 20 new molecular entities and indications in Phase 2 or 3 development by the end of 2011. We also expect numerous new trial starts and new data presentations throughout the year. Following are select highlights from breakthrough research across pharmaceuticals, medical products and nutritionals pipelines: