Abbott Laboratories 2014 Annual Report Download - page 71

FINANCIAL REVIEW
69
ABBOTT 2014 ANNUAL REPORT
The specific requirements (e.g. scope of clinical trials) for obtaining
regulatory approval vary across dierent countries and geographic
regions. The process may range from one year for a bioequivalence
study project to 6 or more years for complex formulations, new
indications, or geographic expansion in specific countries, such
as China.
In the Diagnostics segment, the phases of the research and
development process include:
• Discovery which focuses on identification of a product that
will address a specific therapeutic area, platform, or unmet
clinical need.
• Concept/Feasibility during which the materials and manufac-
turing processes are evaluated, testing may include product
characterization and analysis is performed to confirm clinical
utility.
• Development during which extensive testing is performed
to demonstrate that the product meets specified design require-
ments and that the design specifications conform to user needs
and intended uses.
The regulatory requirements for diagnostic products vary across
dierent countries and geographic regions. In the U.S., the FDA
classifies diagnostic products into classes (I, II, or III) and the
classification determines the regulatory process for approval.
While the Diagnostics segment has products in all three classes,
the vast majority of its products are categorized as Class I or
ClassII. Submission of a separate regulatory filing is not required
for ClassI products. Class II devices typically require pre-market
notification to the FDA through a regulatory filing known as a
510(k) submission. Most Class III products are subject to the FDA’s
Pre-Marketing Approval (PMA) requirements. Other ClassIII
products, such as those used to screen blood, require the submis-
sion and approval of a Biological License Application (BLA).
In the EU, diagnostic products are also categorized into dierent
categories and the regulatory process, which is governed by the
European InVitro Diagnostic Medical Device Directive, depends
upon the category. Certain product categories require review and
approval by an independent company, known as a Notified Body,
before the manufacturer can ax a CE mark to the product to
show compliance with the Directive. Other products only require
a self-certification process.
In the Vascular segment, the research and development process
begins with research on a specific technology that is evaluated
for feasibility and commercial viability. If the research program
passes that hurdle, it moves forward into development. The
development process includes evaluation and selection of a
product design, completion of clinical trials to test the product’s
safety and ecacy, and validation of the manufacturing process
to demonstrate its repeatability and ability to consistently meet
pre-determined specifications.
Similar to the diagnostic products discussed above, in the U.S.,
vascular products are classified as Class I, II, or III. Most of
Abbott’s vascular products are classified as Class II devices that
follow the 510(k) regulatory process or Class III devices that
are subject to the PMA process.
The operating results of Abbott’s developed markets branded
generics pharmaceuticals and animal health businesses and as
well as the businesses transferred to Abbvie noted above, which
are being reported as discontinued operations are as follows:
(inmillions)
Year Ended December31
2014 2013 2012
Net Sales
Developed markets generics
pharmaceuticals and animal
health businesses $2,076 $2,191 $÷2,444
AbbVie — — 18,380
Total $2,076 $2,191 $20,824
Earnings Before Tax
Developed markets generics
pharmaceuticals and animal
health businesses $÷«505 $÷«480 $÷«÷525
AbbVie — — 5,958
Total $÷«505 $÷«480 $÷6,483
Net Earnings
Developed markets generics
pharmaceuticals and animal
health businesses $÷«397 $÷«395 $÷«÷342
AbbVie 166 193 5,384
Total $÷«563 $÷«588 $÷5,726
The year-over-year decline in net sales related to the developed
markets branded generics pharmaceuticals business was driven
primarily by the impact of declining prices and the unfavorable
impact of changes in foreign currency exchange rates.
RESEARCH AND DEVELOPMENT PROGRAMS
Abbott currently has numerous pharmaceutical, medical devices,
diagnostic and nutritional products in development.
RESEARCH AND DEVELOPMENT PROCESS
In the Established Pharmaceuticals segment, the development
process focuses on the geographic expansion and continuous
improvement of the segment’s existing products to provide bene-
fits to patients and customers. As Established Pharmaceuticals
does not actively pursue primary research, development usually
begins with work on existing products or after the acquisition
of an advanced stage licensing opportunity.
Depending upon the product, the phases of development may
include:
• Drug product development.
• Phase I bioequivalence studies to compare a future Established
Pharmaceutical’s brand with an already marketed compound
with the same active pharmaceutical ingredient (API).
• Phase II studies to test the ecacy of benefits in a small group
of patients.
• Phase III studies to broaden the testing to a wider population
that reflects the actual medical use.
• Phase IV and other post-marketing studies to obtain new clini-
cal use data on existing products within approved indications.