Abbott’s Nutrition Segment: Chinese Headwinds Continue



Performance of Abbott’s Nutrition segment

Abbott Laboratories (ABT) reported about $1.6 billion of revenues from its Nutrition segment, representing a YoY (year-over-year) fall of ~1.0%. The segment contributed around 25.0% to the company’s total sales. The sales contribution from this leading segment has fallen over the last few quarters. Abbott is currently the market leader in the nutrition space.

Abbott’s Nutrition segment has been witnessing weak sales for the past few quarters, mainly due to the weakness in pediatric nutrition in China. Although sales are recuperating, Chinese headwinds continue to impact the segment’s revenues. In 2Q17, Abbott expects to register low-single digit YoY revenue growth in this segment.

Despite these headwinds, the company expects significant long-term benefits from emerging markets, including China. For more on this, be sure to read Emerging Markets Drive Abbott’s Nutrition Business Growth.

Investors can consider investing in the iShares Russell 1000 Value (IWD) to participate in the growth potential of Abbott Laboratories. ABT comprises ~0.67% of IWD‘s total holdings.

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New product launches

Abbott Laboratories has always had an attractive and comprehensive product portfolio in its leading Nutrition segment. It has been actively pursuing research and development to introduce new, advanced products in the market. On average, the company has launched 70 products annually over the last several years. In April 2017, it launched two science-based nutrition drinks in its Ensure range of products. The EnsureSurgery Immunonutrition Shake and Ensure Pre-Surgery Clear Nutrition Drink are introduced to patients undergoing surgery to aid them in better recovery. Since most of the surgeries entail no food or drink consumption a few hours prior to surgery, the drinks launched by Abbott are expected to help patients recover more quickly. Abbott’s pre-surgery drink aids in the reduction of insulin resistance, whereas the post-surgery drink helps with immunity and the recovery process.

Other major players in the nutrition market space include Johnson & Johnson (JNJ), Mead Johnson Nutrition (MJN), and Nestlé (NSRGY).

In the next part of this series, we’ll look at the reimbursement approval of Abbott’s Freestyle Libre in France.


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