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Following EUA for OTC SARS-CoV-2 Antigen Test, Abbott Looks at Rapid Testing as Key Growth Driver

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NEW YORK – As Abbott's base business continues to recover from its pandemic-induced lows a year ago, its COVID-19 testing segment, particularly its rapid tests, has been its main growth driver.

According to Abbott CEO Robert Ford during the company's conference call to discuss its first quarter financial results on Tuesday, global COVID-19 testing raked in $2.2 billion for the quarter with $1.8 billion coming from Abbott's rapid testing platforms, namely its BinaxNow, Panbio, and ID Now tests, he said.

Earlier this month, the company's SARS-CoV-2 BinaxNow COVID-19 Ag Self Test rapid test received Emergency Use Authorization from the US Food and Drug Administration for its use without a prescription. Ford said on the call that Abbott had begun shipping the test kits to retailers CVS, Walgreens, and Walmart on Monday. Once the firm received EUA, it immediately began manufacturing the kit, which has a different presentation from the previous BinaxNow test, Ford said. The kit consists of two tests and the necessary consumables, and as the company starts accelerating manufacturing of the test it expects to add other retailers to its list.

Although the BinaxNow test is currently available only in the US, Abbott's Panbio test is available globally and has seen significant demand. Worldwide, Ford said, demand has shifted away from laboratory-based PCR testing to rapid antigen-based testing, with Abbott CFO Robert Funck adding that half of the company's COVID-19 testing-related sales came from international markets.

That worldwide demand for rapid testing is what Abbott is counting on to drive its expected growth throughout the year and into 2022. Ford said the company sees a "significant opportunity" in the over-the-counter clearance of its BinaxNow test, particularly as COVID-19 testing turns toward surveillance and screening. The firm's rapid tests are easy and affordable, which are the key factors necessary in serial testing, Ford said. "It's difficult to do serial testing on PCR when you've got a cost of $100-plus and it takes between two to three days to get" a result, he added. 

The pandemic has allowed for an "accelerated move here from more hospital, lab-based testing to more rapid testing outside of that environment," where consumers can "get their results at a much faster rate and quite frankly with a little bit less hassle," he said. With its rapid tests, Abbott now has "a great opportunity here to be able to capitalize on that." He continued that he sees the BinaxNow test and other rapid tests as something "people are going to want to buy and have in their homes."

"Think of it as maybe your new element in your medicine cabinet," he added. The low cost of the test will allow "a lot of households in the US to be able to have testing on hand, ready to go," Ford said, and that cost will also encourage repeat purchases.

Ford emphasized that its experience in the retail channel due to its nutrition and diabetes businesses would put Abbott in "a great position," particularly in the US. "It's a channel we know very well," he said. Another key aspect to meeting the demand for rapid tests is scale, and he noted Abbott's ability to produce 150 million rapid tests per month across all its platforms this quarter.  

"Few diagnostic companies that have this product have the capacity and manufacturing scale and the channel experience and domain here to really compete, so we feel very good about our position," Ford said.

While there is still uncertainty over how significant the demand for COVID-19 testing will be once the pandemic has ended, Ford said he continues to believe that "a good portion of the COVID testing is sustainable." He added that there has been a "clear trend" toward rapid testing formats, and Abbott is the "dominant producer here of these rapid tests … so wherever that market goes, we know that we'll be the share leader here for sure."

Beyond COVID-19, Abbott is ramping up placements of its instruments, including the ID Now platform, in order to keep building its rapid testing channel, Ford said. In 2019, there were 19,000 ID Now instruments placed in the US, a figure that has swelled to 75,000, Ford said. Although they won't all be as productive as they were during the peaks of the pandemic, they will "be very productive with all of our other assays" and that installed base "will continue to grow and will continue to produce for us," Ford said.

Within diagnostics, Abbott's base business has recovered from its previous dips, growing nearly 6 percent in the first quarter. Excluding COVID-19 sales, both the core laboratory and molecular diagnostics businesses achieved double-digit sales growth, Ford said. The strong core lab growth serves as a "good indicator of routine testing coming back to hospitals," he added.

The growth in the lab and molecular diagnostic segments outside of COVID-19 testing "has to do with the instruments we're placing and getting the test pull-through on other tests," Ford said.

He noted that the firm launched its Alinity m instrument last year during the COVID pandemic and the growing molecular diagnostic business gives Abbott the opportunity to continue its rollout. 

He added that Abbot is reinvesting a significant portion of its COVID-19-related revenues back into the business through research and development and sales, general, and administrative initiatives. If the demand for COVID-19 testing changes, he said there was flexibility for the company to adjust SG&A investment if needed. He added that Abbott is always actively looking for potential merger and acquisition opportunities and wants "businesses that we can grow … and can fit well into the company." 

"I'm not going to tip my hand and give up any kind of competitive advantage there, but if there's something that is attractive, that has got growth that won't dilute our top line growth profile … or that we can do better with, we're always going to be interested," Ford said.