NEW YORK – The COVID-19 pandemic has had serious impacts on all diagnostic firms, and Abbott Laboratories is no exception.
The Abbott Park, Illinois-based company has rolled out a variety of COVID-19 tests, including molecular PCR tests, rapid instrument-free antigen tests, and serology tests to detect SARS-CoV-2 antibodies. The high demand for those tests, both in the US and across the globe, has led the company's revenues to skyrocket in the recently finished quarter, with diagnostics revenues up 38 percent year over year and molecular diagnostics revenues in particular tripling compared to the third quarter of 2019.
On a conference call to discuss the firm's financial results, President and CEO Robert Ford said Abbott has sold more than 100 million tests across its diagnostic platforms and has built two new US manufacturing facilities to continue increasing manufacturing capacity.
Although no one could have predicted the impact of the COVID-19 pandemic, Ford said on the call that the pandemic has allowed the company to "execut[e] on its vision" and long-term strategy it had when buying rapid diagnostics business Alere in October 2017. That vision encompassed decentralizing, democratizing, and digitizing testing for the point of care, Ford continued.
Because of the significant pandemic-related increase in its global installed instrument base, Ford said the execution of the Alere strategy has occurred faster than expected. COVID-19 testing will likely ramp down to more of a seasonal influenza demand in the future, "but the installed base we've built during this period, the consumer behavior that's been created, the new channels we've opened up with rapid testing … will remain," for tests beyond coronavirus, Ford said.
He added that COVID-19 gave Abbott the opportunity to accelerate its strategy to "build a whole new testing platform outside of the walls of a lab and a hospital." However, despite the strategy expansion, Abbott's point-of-care testing segment revenues declined 10 percent year-over-year. In better news for that segment, Ford said ID Now placement rates had doubled since the beginning of 2020 in the US, largely in physicians' offices, universities, and retail settings.
Beyond this expansion of POC testing, Ford also noted that Abbott expects continued growth throughout the rest of this year and into 2021 based on two factors: namely, the continued recovery of the core laboratory base business and the ability to continue ramping up COVID-19 testing. The core lab business outside of COVID-19 testing has been one of the most affected by the pandemic, with flat year-over-year revenues.
However, Ford said that September marked the highest month of absolute sales for that segment and noted the business has shown nice recovery with growth in the US, Europe, and China.
Abbott expects continued growth in the core lab segment, as the rollout of its Alinity instrument continues and the menu on that platform improves and expands, Ford said. Before the pandemic hit, Alinity's rollout had "a real strong momentum" and had resulted in share gains in the immunoassay and clinical chemistry businesses. According to Ford, approximately 90 percent of existing contracts had been renewed and the firm had a 45 to 50 percent win rate for new contracts before the pandemic.
But in Q2 of this year, hospitals were less focused on migrating new systems due to the pandemic, so some of that growth slowed. Ford said that the firm has seen pickup in September of positive growth and emphasized that the company's position during the pandemic allowed them "to be viewed as a more holistic partner to large systems." The launch of the Alinity m system also helped the diagnostic business in its switch to COVID-19 testing, although it has a variety of cleared tests unrelated to SARS-CoV-2.
Abbott was quick to take advantage of its installed bases of Alinity and Architect systems, by developing an IgG antibody test early in the pandemic that received Emergency Use Authorization from the US Food and Drug Administration in April. The firm also received EUA for an IgM antibody test earlier this month.
However, the demand for antibody tests has not been as significant as expected so far, although Ford said he thinks the opportunity will grow as a vaccine becomes available. A vaccine could also lead to a small decrease in PCR testing and an increase in antibody testing, he said. "I see the opportunity for lab-based and rapid lateral flow testing," Ford said. Some governments have mandated antibody checks on every blood draw and he said he expects that will get more intense as vaccines get rolled out. "Abbott will be in a unique position there to be able to capitalize on that," he added.
Despite the variety in testing options available, ultimately the big questions surrounding the company involve COVID-19. Ford said he doesn't think there will be a decline in COVID-19 testing, regardless of if a vaccine is distributed anytime soon. COVID-19 testing has provided Abbott with the opportunity to "deliver differentiated earnings power and growth" and will continue to be a "big driver for us into 2021," Ford added.
Abbott is in an enviable position compared to some other diagnostic firms, with revenues increasing and likely double-digit revenue growth to round out 2020. "We're in a unique position, we're not coming out of a hole," Ford said.
The company is planning to continue expanding COVID-19 testing platforms and adding capacity throughout 2020 and into next year, Ford said. "We're well positioned to go from what is a very good, strong year for us to an even better one in 2021, and again I think we're pretty uniquely insulated against any COVID-19 reemergence scenario," Ford said.