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Growth of Abbott’s Nutrition Segment Driven by Sales

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Abbott’s 4Q15 Nutrition sales

Abbott Laboratories (ABT) reported ~$5.2 billion of revenues worldwide in 4Q15. Of that, ~$1.8 billion was generated through the company’s Nutrition segment, which accounts for about 35% of Abbott’s total revenues. These sales figures represent about a 5.5% YoY (year-over-year) increase in 4Q15 on an operational basis. But the negative foreign exchange impact of ~5.7% led to the reported decline in revenues of ~0.2%. Adult nutrition sales witnessed stronger YoY growth at 1.3% on a reported basis. This compares to the reported decline of 1.3% in pediatric nutrition sales.

NUTRITION TREND

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Key growth drivers

Abbott is the worldwide leader in pediatric nutritional products and the major player in the adult nutritional segment in the United States. The company has grown through market expansion initiatives, primarily in emerging markets and Latin America.

In 2015, Abbott established an R&D (research and development) center in China and manufacturing plants in India, China, and the United States. These initiatives were among the factors that accelerated growth in its Nutrition segment. They led the company to achieve double-digit growth and expansion of market share in China, Latin America, and other international markets.

Sales growth was led by a continued uptake of Eleva in China, which constitutes a premium segment of the Chinese market. Growth was also led by the demand for Ensure in the United States. The company’s focus on locally relevant products in pediatric nutrition also helped boost the segment’s growth.

One of the other major players in nutrition is Mead Johnson Nutrition (MJN). It manufactures products under brands such as Enfamil, Enfagrow, and Nutramigen.

Johnson & Johnson (JNJ) and Boston Scientific (BSX) are some of Abbott’s major competitors in the US medical devices industry. They have reported YoY sales growth of -2.4% and 3.6%, respectively, in 4Q15.

Investors seeking exposure to Abbott Laboratories can invest in the iShares MSCI USA Minimum Volatility ETF (USMV). Abbott Laboratories accounts for approximately 0.85% of USMV’s total holdings.

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