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Abbott Laboratories Message Board

  • zdnews zdnews May 15, 1998 6:36 PM Flag

    Analysis on Abbott

    For a long term investor, the recent poor
    performance by Abbott relative to its peers should be
    considered as a temporary set back. For a short term
    players, it is prudent to take a closer look at Abbott.
    Its two major drugs, Hytrin and Erythromycin will be
    out of patent protection in less than three years,
    Erythromycin now has a strong competitor from Pfizer--I
    personally have taken both antibiotics, the side effects of
    Erythromycin makes its lesser attractive of the two when both
    are effective against bacterial infections. Pfizer's
    drug is also cheaper--reimbursment issue here. The
    drug pipeline at Abbott is very week, the so-called
    Frog poison is a joke, people know the area well will
    tell you that it is not only far away from entering
    the US market, it is also facing formidable
    challenges in the upcoming clinical trials. At pre-clinical
    stage it has already shown many side effects. What else
    does Abbott have? Perhaps a new HIV drug, which will
    compete in a small market against that of Merck, Agouron,
    Glaxo, and many more. It will most likely remain in the
    single digit growth rate until the end of the century.
    Will continue later.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Abbott (before split) has a return for me of 37%
      and an 8.30% div yield. I have held since
      1987.

      I am concerned, as you state, about the
      pipeline...do you think another RX company would buy or merge
      with ABT? ABT does a bunch in "supplies".

      • 1 Reply to samintx
      • Depends on your holdings, I would at least cash
        out 30% of the Abbott stock around the split and move
        it into other companies, like Merck or Watson
        Pharmaceuticals. Depends on the post split activites, you can cash
        out the rest. Frankly I don't know how Abbott stock
        will do around the split date. In short term, the
        company really has nothing exciting to offer to the
        market since it really occupies none of the important
        therapeutic areas--ie, CNS, Cardivascualr, Immunoregulation,
        and Cancer. To be fair, it is a stable company and it
        will be around for a long time. The bottom line
        however is to use your money in the most effective way. A
        merger with another company will cause significant
        changes in Abbott structures, right now I doubt the board
        or the top management want to do that. Therefore, I
        don't see merger on the horizon. Abbott has to get its
        house in order before it can engage in merger talks.
        Acquisition is a possibility. Good luck.

    • Zdnews, I am well aware of the lengthy process
      involved in bringing a new drug to market, and there is
      always a risk that a it will prove too toxic in safety
      trials, or that it will prove ineffective in efficacy
      trials, etc. etc. And it always takes a long time to
      bring a new drug to market, especially one that
      involves a novel mechanism of action. So Abbott is not
      going to see any profits from its potential new
      painkiller for quite a while.

      But can you detail why
      you think that the compound derived from the poison
      arrow frog toxin is a "joke"? Your two statements are
      (a) it faces "formidable challenges" in the upcoming
      clinical trials and (b) "at a pre-clinical stage it has
      already shown many side effects."

      What is
      statement (a) supposed to mean? What are the "formidable
      challenges" that this drug faces that others don't?


      With regard to statement (b), what knowledge of the
      results in pre-clinical trials do you have? Are you a
      physician participating in the trials? Whence does your
      knowledge derive?

      You clearly know something about
      this business, and I sincerely appreciate your
      informed discussion of the status of Abbott's drugs. But
      to term this potentially exciting new drug a "joke"
      seems an overreaction to others' perhaps-excessive
      enthusiasm about a drug that is far short of the market.


      I well know the drawbacks of conventional
      painkillers. Investing aside, it would be a shame if this new
      drug did not pan out.

      Regards

      Chuck
      Edwards
      (Bear 9)

    • Well said. I have to agree with the assessment.
      However, I think Abbott Diagnostic division could see some
      improvements in the next two years. Will this make up the loss
      on the pharmceutical area? I really don't know. I
      guess it is fair to say that Abbott is not Pfizer,
      Merck, Warner Lambert, Glaxo, Eli Lilly or even Schering
      Plough, it is in a growing pain. It has suffered from the
      conservative style of management for years. Historically it
      has not performed as well as the average of
      pharmaceutical companies. Today's surge is probably due to
      option expiration as well as the broad move in
      pharmaceutical stocks, less so due to the intrinsic strength of
      Abbott. I have defended Abbott to a certain degree in
      previous posts, to be fair to the readers of this thread,
      I would have to say: if you own Abbott for many
      years, stay with it, it is going to stay flat for a
      while but it will take off again after a few quarters,
      there is no need to give Uncle Sam tax benefit; if you
      have invested in Abbott for less than two years, move
      out the stock for a while or minimize your
      holding--there are many better pharmaceutical stocks, like
      Merck, Schering Plough, Norvatis, etc. In any case, we
      will see a lot of volatility here. My sources say that
      there will be additional downgrades soon. So the facts
      are there, do you have the stomach to stay with an
      ill giant? It is for you to answer......FYI, I have
      cut down my holding in Abbott this afternoon when it
      reached 75.

 
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