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For Abbott, Diversity Remains Paramount

Merck's earliest response to the FDA would be in 2010. Until that happens, Merck also won't seek FDA approval for a combination of Cordaptive and Zocor, which is now generic.

Bad news for Merck means less competition for Abbott. In February, Abbott won FDA approval for another Kos drug called Simcor, which combines Niaspan and generic Zocor. A recent Wachovia Securities report predicts the three Kos drugs could produce sales of $2.1 billion in 2012, up from an estimated $986 million this year.

Analysts are also encouraged by Abbott's follow-up to TriCor, called TriLipix, being developed with Belgium's Solvay. The FDA is due to rule on TriLipix in early October. And Abbott is collaborating with AstraZeneca (AZN) on a pill containing that company's bad-cholesterol drug Crestor and TriLipix. On Aug. 14, Abbott signed a deal to co-promote Crestor in the U.S.

Like Humira and the cholesterol drugs, Abbott got into the drug-coated stent business via an acquisition, but the 2006 deal creates concerns even for Abbott bulls.

"Uncertainty surrounding the market dynamics could pressure shares," says Rick Wise, of Leerink Swann, in a July 17 report affirming an outperform rating. However, the U.S. launch of Abbott's Xience V stent "appears to be going better than expected." The FDA approved the stent in early July.

Wise, who doesn't own shares, says Abbott predicts a 25% to 30% market share. His firm has had a recent non-investment banking relationship.

Stents are mesh-like tubes inserted into arteries that have been cleared of plaque. Stents allow blood to flow easily. Some stents are coated with a drug to prevent the artery from reclogging.

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