Abbott Laboratories is working hard to increase its market share in the various medtech sectors in which it operates, but over the past few years it seems to have been able to do little more than cling on to what it already has.
In a clear stab at achieving that elusive expansion, Abbott has bought the stent developer IDev Technologies for $310m and ophthalmic laser firm OptiMedica for $250m plus a potential $150m in milestones. Peripheral vascular technology and cataract surgery are both fast-growing areas, but competition is increasing all the time, and Abbott could find itself running as fast as it can just to keep up.
The Catalys Precision Laser System Abbott has obtained through the OptiMedica acquisition was cleared by the FDA a year ago, and is also CE marked, for making incisions into the lens in cataract removal surgeries. Most cataract surgeries are performed by hand, but the greater precision offered by lasers means they are growing in popularity.
Currently, Abbott's cataract device sales represent 60% of its total medical optics sales – putting them at around $600m worldwide in 2012 – and are growing faster than the market, the company said, boosted by more than 30% growth in emerging territories.
On the vascular side, the purchase of IDev brings the Supera Veritas peripheral stent. With the coronary stent market full to bursting and dominated by drug-eluting stents, chief among which is Abbott’s own Xience family, peripheral stenting is becoming the new battleground.
With only one drug-eluting peripheral stent approved in the US – and that subsequently withdrawn – a bare metal device like Supera Veritas could help Abbott carve out a niche (Zilver tarnished as FDA says recalled stent could be lethal, May 29, 2013).
A version of Supera Veritas gained 510(k) clearance from the US FDA in May for use in the bile duct rather than the blood vessels. The vascular version is awaiting premarket approval (PMA) for the much larger opportunity of peripheral artery disease in the superficial femoral artery.
Analysts from Cowen have pointed out that greater emphasis on peripheral vascular opportunities is key to Abbott’s growth. The company has launched a version of Xience called Xience Prime BTK (below the knee) for critical limb ischaemia in the EU, and is also pursuing CE mark for a below the knee version of the Absorb, its dissolving drug-eluting stent.
Abbott’s vascular products had a worldwide market share of 32% in 2010, according to analysts at Trefis, but this declined to around 26% in 2012. The company must know that the IDev buy alone cannot reverse this trend, though it will presumably help to alleviate it a little.
Both deals are expected to close by the end of the year, and neither will affect Abbott's 2013 earnings forecast, the company said.
These deals are moves into hot areas, but they are unlikely to do a huge amount to turn Abbott’s problems around. In the first quarter of this year, the company’s vascular and diabetes sales dipped 7.7% and 0.5%, respectively, compared with the first quarter of 2012, and its medical optics business, which includes devices for refractive and corneal applications as well as for cataracts, was down 0.6%.
The company’s shareholders appear to have drawn their own conclusions about what these deals mean for Abbott. Its share price rose less than 1% on the news.