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Market Update

Abbott Labs Still in Slow-Growth Mode

Although the company has some promising products under development, sales and earnings growth are still well below average.

Abbott Laboratories (ABT) has been trying to shake off its lethargy, but its new initiatives probably won't reinvigorate sales until later this year.

In its earnings release this morning, the company said revenues for the first quarter were up about 1% over the previous year. Although the company's hospital-products and Ross Nutritionals lines continued to show decent sales gains, sales were down for the pharmaceutical and diagnostic segments. Earnings were in line with expectations at $0.44 per share.

Abbott's quarterly results suffered partly because of increased generic competition for Hytrin, a medication used to treat high blood pressure and prostate enlargement. Sales on Biaxin, a leading antibiotic, were down about 17% for the quarter because this year's flu season was short and relatively mild. The company also took some significant hits as currency movements cut into international sales.   

There are a couple of bright spots on the horizon, though. Abbott has ramped up research and development spending, and it looks like some of its efforts are close to paying off. An FDA advisory committee voted yesterday to recommend approval for Uprima, the company's treatment for erectile dysfunction. In the conference call this morning, management noted that an estimated 30 million men in the United States suffer from the condition and only half of them are currently being treated with other products such as Pfizer's (PFE) Viagra.

Management also has high hopes for its new HIV protease inhibitor, which is currently in phase III clinical trials. The company expects to file for FDA approval for this product, ABT-378, around the middle of this year.  

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