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Abbott weak medical device sales, China impact drag shares down nearly 7 percent
New Delhi: Abbott Laboratories on Wednesday reported lower-than-expected growth in international medical device sales, hit by a strong dollar and supply challenges in China, dragging down shares of the company nearly 7%.
The U.S.-based company's weak medical device sales in markets outside its home country offset the initial enthusiasm over its quarterly beat and an upbeat forecast.
Abbott reported $3.62 billion in overall medical device sales, down 0.5% from last year, as the company faced supply challenges due to lockdowns in China.
J.P. Morgan analyst Robbie Marcus says the issues plaguing the medical device segment "could bleed a bit into" the first quarter next year as well.
Multinational companies such as Abbott and Johnson & Johnson have been hit by the dollar's strength against a basket of currencies, including the sterling and the yen, after the U.S. Federal Reserve ramped up interest rates to tame inflation.
Illinois-based Abbott reported third-quarter worldwide sales of $10.4 billion, down 4.7% from a year ago.
Excluding the foreign exchange impact, overall sales were up 1.3%, while the medical device segment saw 6.4% growth.
COVID-19 test kit sales were $1.7 billion, compared to $2.3 billion in the second quarter, as testing declined amid a slower pace of infections.
Abbott said it expects around $7.8 billion in COVID-19 test sales this year, with $500 million in the fourth quarter, compared to the $6.1 billion it had forecast earlier.
Medical device makers such as Abbott have relied on COVID-19 tests to bring in sales during the peak of the pandemic. However, demand has been slowing as more people get vaccinated and overall cases stabilize.
Abbott's stock had declined 25% this year through Tuesday, as the company also struggled with a shutdown of its baby formula facility at Sturgis, Michigan
Ruchika Sharma joined Medical Dialogue as an Correspondent for the Business Section in 2019. She covers all the updates in the Pharmaceutical field, Policy, Insurance, Business Healthcare, Medical News, Health News, Pharma News, Healthcare and Investment. She has completed her B.Com from Delhi University and then pursued postgraduation in M.Com. She can be contacted at editorial@medicaldialogues.in Contact no. 011-43720751