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Entering his third decade as chief executive of Abbott Laboratories and with his successor waiting in the wings, Miles White feels no immediate pressure to make another big deal for the diversified healthcare company.
Abbott, White says, is doing just fine growing the businesses it has.
“We certainly don't see gaps right now that we have to fill with M&A,” Abbott’s chairman told analysts on a conference call Wednesday morning to discuss the company’s 2018 earnings and outlook for this year.
The 63-year-old White has transformed Abbott since he became CEO in 1999, spinning off its pharmaceutical division six years ago into the fast-growing drug maker Abbvie and building a new empire with established drugs, implantable medical devices, nutritional products and diagnostic tests. Abbott sales rose nearly 12% to $30.6 billion last year, the company said Wednesday.
Though White hasn’t announced any retirement plans, he’s likely to hand off the company in better shape than he inherited 21 years ago. Last year, White named long-time Abbott executive Robert B. Ford, who is 45 years old, as the company’s president and chief operating officer. It’s the first official No. 2 executive and chief operating officer Abbott has had in more than a decade and Ford is expected to succeed White at some point.
The elevation of Ford came after a series of sizable acquisitions. In 2017, Abbott closed on its $5.3 billion acquisition of medical test maker, Alere and last year paid down a whopping more than $8 billion debt accumulated from its $25 billion purchase of device maker St. Jude Medical, which closed in January 2017. The Alere and St. Jude deals contributed to the largest debt load Abbott has had in its 131-year history, approaching nearly $28 billion at the end of 2017.
“With our recent strategic shaping completed, our focus in 2018 was on running the company we've built, and the result was an excellent year by every measure,” White said. “All four of our major businesses performed well, contributing to overall organic sales growth of more than 7%, which is above the initial guidance range we set at the beginning of last year.”
So White indicated to Wall Street analysts he doesn’t think it’s a good time for Abbott to be looking at mergers and acquisitions even though the company generated more than $6 billion in cash flow last year and returned $2 billion to shareholders.
Though Abbott is no longer in the brand name pharmaceutical business, the company is churning out individual products that are achieving blockbuster status, a moniker Wall Street uses when a treatment surpasses $1 billion in sales.
For example, Abbott’s diabetes care business grew by 35% in 2018 thanks to its FreeStyle Libre glucose monitoring system . The product, which surpassed $1 billion in global sales last year, is considered unique in that it measures glucose continuously for two weeks.
“During the fourth quarter, we added 300,000 new users,” White said of Freestyle Libre. "As of the end of 2018, there are now approximately 1.3 million active users worldwide, of which approximately 2/3 are type 1 diabetics and 1/3 are type 2.”
FreeStyle Libre is an example of Abbott’s focus in 2019.
“You make much higher return on your organic growth,” White said. “The growth we're getting from all of our businesses and even St. Jude is coming out of pipeline, and it's coming out of our own organic development. So we're able to return a pretty good sales and profit growth rate across the business.”
