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Earnings

Abbott says COVID-19 test demand to grow in 2021

(Reuters) - Abbott Laboratories ABT.N said it expects demand for its COVID-19 tests to grow in 2021 even if a vaccine is developed and for the business to eventually stabilize into a lucrative new franchise.

FILE PHOTO: Boxes of Abbott's heart stents are pictured inside a store at a hospital in New Delhi, India, April 27, 2018. REUTERS/Adnan Abidi/File Photo

It made the comments during its quarterly investor update, where it raised its 2020 profit forecast on strong COVID-19 testing revenues and a recovery in its medical device business as patients opt for surgeries they had put off due to the pandemic.

COVID-19 testing, which earned Abbott $881 million in sales in the most recent quarter, will eventually become a stable franchise for Abbott like its influenza tests, Chief Executive Robert Ford said during Abbott’s earnings call.

The pandemic is creating new relationships with airports, retailers and doctors offices, which will continue to purchase its tests, he said.

Demand for molecular diagnostic tests may decline once people receive COVID-19 vaccines but antibody tests, which detect past infections, could get a boost, he said.

The company said sales in its medical devices unit rose about 3% from the prior quarter to $3.17 billion, as its cardiovascular and neuromodulation businesses improved. Sales in its diagnostics unit jumped nearly 39% to $2.64 billion.

For a graphic on Abbott’s diagnostics tests emerge as new growth drivers amid pandemic:

For an interactive graphic on Abbott's segment sales growth, click here: (tmsnrt.rs/35fJzY2)

Abbott has U.S. authorization for several tests including one in August for a $5 portable antigen test called BinaxNOW that can deliver results in 15 minutes. It released a rapid test in March called the ID Now that has been used by the White House. It also makes lab-based diagnostic tests and antibody tests.

Abbott has a $750 million contract with the U.S. government to sell it 150 million BinaxNOW tests. Most will be distributed to states for use in schools and other essential tasks.

The company said it expects 2020 adjusted profit per share to be at least $3.55 from continuing operations, up from its prior estimate of at least $3.25 per share.

Abbott’s shares were down 3.2% at $104.86.

SVB Leerink’s Danielle Antalffy said the stock’s modest underperformance could be because the company implied that some of the COVID-driven upside or benefit would be reinvested in the business.

Reporting by Manojna Maddipatla and Trisha Roy in Bengaluru; Editing by Arun Koyyur and Tom Brown

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