Abbott CEO reveals the biggest disruptions in healthcare

The Street

An inside look into Abbott's momentum across diagnostics and devices, tariff impacts, and how AI will transform healthcare within five years.

Transcript

00:00Joining me now, Robert Ford, CEO of Abbott.

00:03Robert, thanks so much for being here.

00:05Thanks for having me.

00:06So I saw you up on the podium ringing the opening bell.

00:09You're here with the We Give Blood Drive.

00:12It's a collaboration you have with the Big Ten Conference.

00:15Congratulations for being up there.

00:17Tell me a bit about the collaboration, why you're doing it,

00:21and why you're focused on college students for donating blood.

00:24Sure. Well, this is the second year we've been doing this.

00:26The reason we're doing this is that there's a blood shortage in this country.

00:29And, you know, we approached the Big Ten last year.

00:33We said, hey, we actually want to create a competition

00:36and create the largest blood drive the country's ever seen.

00:38And we thought the best way to do that was to create a competitive environment with the Big Ten.

00:44So that's the problem we're trying to solve.

00:46There is a shortage, and we haven't seen blood donations go back post-COVID.

00:51So they've dropped off and they haven't gone back.

00:53So that's our goal here.

00:55And we'll announce the winning school to competition,

00:58and we'll announce the winning school December 5th at the Big Ten championship game.

01:02And the winning school gets a million dollars to invest in community and students' health care services.

01:08So it just kicked off.

01:09I did see that UCLA is currently in the lead.

01:12So we'll have to see if some of the others can catch up.

01:16Still early going.

01:17But what's the hope?

01:18How many people are you hoping to get out there to roll up their sleeves and donate blood?

01:22Well, last year we did 20,000 donations that are directly tied to this initiative.

01:26Every donation saves three lives.

01:29I cannot think of a better ROI of somebody's time.

01:3230, 40 minutes, you could save three lives.

01:35So I know my team doesn't want me to talk about the actual target,

01:38but we definitely want to way exceed that number this year

01:41because we've learned what works, what doesn't work.

01:43So we've got high expectations this year.

01:45Okay, so we will certainly track that.

01:47In terms of business overall at Abbott,

01:50you became very well known during COVID for the COVID tests, of course.

01:54But you have so many different business sides.

02:00There's the diagnostics, there's the, you know, heart devices, there's nutrition.

02:05Tell me where you're seeing the most momentum right now.

02:09Really across the board, to be quite honest with you.

02:12If you think about we're the most diversified health care company,

02:14so we have a nutritional business, so good health starts with nutrition.

02:18If you have an issue, you've got to get diagnosed.

02:2070% of every medical intervention starts with a diagnostic test,

02:24so we have a very broad diagnostic portfolio.

02:26And then you've got to treat it, you've got to address it.

02:28And we've got a pharmaceutical business, and we have a medical device business.

02:31You mentioned the cardiovascular side.

02:33So we looked at those four segments.

02:36You know, they have, some grow really fast, some are very good growers,

02:39but we're really seeing it across the board.

02:41And I think, in general, what we saw post-COVID is a lot of people want to become a little bit more aware of their health

02:47and want to invest in their health, want to take some of their disposable income

02:50and allocate towards, you know, their own health.

02:53So we're really seeing our nutrition business, people getting more involved in diagnostics

02:57and doing diagnostic testing.

02:59We have a very strong diabetes business, a biowareable business,

03:02so those are people buying sensors to understand what's going on with their metabolism.

03:06So we've seen a lot of growth.

03:08First half of the year, we grew about 7.5% on a, you know, $45 billion revenue run, right?

03:15So I think that's evidence of our portfolios working.

03:19When you say there's momentum in every business, COVID testing, too?

03:22I can't remember the last time I took a COVID test.

03:25You know, that is one part of the portfolio, but I would say that was probably not,

03:29we never really viewed that as a real long-term.

03:32We did what we believe we had to do for the World Society to help.

03:37You know, that's kind of now at an endemic stage.

03:39I think we're seeing a little bit of an uptake in COVID cases now post-summer,

03:42and then we'll see a little bit of an uptake in cases during the winter,

03:46at least in the Northern Hemisphere.

03:48And we'll have products to be able to support that,

03:49but that's not really the core of our business right now.

03:52What's the biggest breakthrough that Abbott's working on right now

03:55that could impact people's daily lives?

03:58Well, I mean, it's difficult because it's a parent's heart.

04:03You've got room for everybody, all of your portfolios.

04:05But I would say across the cardiovascular device,

04:08I think we have a pacemaker, which is very interesting now,

04:11that's really getting a lot of traction,

04:13which is what we call a leadless pacemaker.

04:15So these are pacemakers that don't require to create a, you know,

04:19what I call an incision here in your chest and put a device in.

04:22It actually gets put in through your groin, and it's got great outcomes.

04:28And I think that that's an incredible technology.

04:31Two separate medical devices inside your heart,

04:34communicating with each other and delivering therapy.

04:36I think that's incredible, incredible science.

04:38So I'm excited about that.

04:39I think on the biowearable space, you know,

04:41we've launched a consumer biowearable called Lingo,

04:44and that's starting to get a lot of traction,

04:46which are a device that monitors your glucose continuously

04:49for people that don't have diabetes to understand, you know,

04:52impact of food and exercise and things like that.

04:55So we're launching a biosimilars portfolio in the emerging markets

04:59in our pharmaceutical business.

05:01So really across the board, we have a traumatic brain test

05:04for concussion in our diagnostic business.

05:07So think about how that, you know,

05:08the impact that that could have at every high school in this country

05:11to have a rapid blood test in 15 minutes

05:13to know whether your child has had a concussion or not.

05:16So I think across the board,

05:17we've got one of the most attractive pipelines, I would say.

05:21Very cool.

05:22So while you're working on all of that,

05:24you're also having to plan for and account for tariffs.

05:28Correct.

05:28They have been looming.

05:29I know you've said that they're not going to have

05:32as much of an impact as you once feared,

05:34but still could cost, what, hundreds of millions of dollars.

05:37Does that ultimately mean patients are going to have to spend more?

05:42Well, in the majority of our business,

05:45we're not selling that product to the patient directly.

05:48We're selling it to healthcare systems,

05:50but we're aware of the challenges that the healthcare systems are going through right now.

05:53So we're doing what we can to be able to kind of have a real lower impact on that.

06:00And one of the things that for decades Abbott has done

06:02is it's aligned its manufacturing footprint with its sales.

06:07So the majority of the United States revenue that we have in the United States

06:10is supported by U.S. manufacturing,

06:13and the majority of the international sales

06:15are supported by international manufacturing sites.

06:18So that way we can kind of mitigate the impact.

06:21Right now for us, it's just under $200 million.

06:24And we have a whole team that's working.

06:26Because one thing we know is that the tariffs won't go away.

06:29We know that once they're put in place,

06:31it's very difficult for a government to just go out and take them off.

06:35So we have to think long-term, how do we do this?

06:37And part of it is making manufacturing investments to be able to mitigate that.

06:40How much of that was a result of the tariffs,

06:44and how much of it was already your business plan?

06:46You know, I inherited that philosophy from my predecessors

06:49who really looked at a strategy of matching your revenue with your cost structures.

06:53And for us as an international company,

06:55what that does is it limits the impact or mitigates the impact of foreign exchange when you do that.

07:00So that was the driver of that.

07:01And obviously now it's having benefits for us when it comes to tariffs.

07:05And just finally, talk to me about the impact of AI in health care.

07:08How is Abbott already using it?

07:11How will you use it?

07:13Well, listen, I think it's going to be an incredible tool.

07:16I would say there's a lot of health care companies are working and are benefiting from it.

07:23So for us, we're working in our diagnostic space.

07:26So be able to diagnose things faster, earlier.

07:28We're working in our device portfolio.

07:32We have a lot of capital equipment that are in hospitals.

07:34How do you collect that data and those images to make the procedure faster and simpler?

07:37I think what's also going to be important as the health care industry does is that the regulation also follows that and aligns to,

07:46OK, we're going to have this incredible innovation.

07:48And what's the regulatory framework around those products that are more AI driven?

07:52So but I think it's going to be an incredible moment for health care over the next five years.

07:56Five years from now, how different will it be?

08:00I think it's going to be very different.

08:01So a specific, I don't think we're going to do today what we do in emergency rooms where we go in, get a bracelet, wait.

08:09Wait 17 hours.

08:10No, no.

08:10I think we're just going to walk in.

08:11You're going to step into a room.

08:13It's going to collect all your data.

08:14It's going to be very, very fast.

08:17I mean, that's just one element, I think.

08:18But I think across even health care systems are working really hard using AI.

08:22So I think it's going to be very different.

08:24All right.

08:24We'll leave it there.

08:25Thank you so much for joining us today.

08:27Thank you for having me.

08:28That was Robert Ford, the CEO of Abbott.

Category

Transcript

Be the first to comment

Recommended