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Abbott's (ABT) FreeStyle Libre Gets UK Reimbursement Nod

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Abbott ABT recently announced the receipt of national reimbursement for the FreeStyleLibre glucose monitoring system from National Health Service (NHS) Business Services Authority in the U.K. Notably, this was a major breakthrough in its diabetics business.

The development has widened this Illinois-based medical device major’s customer base in diabetes management. Beginning Nov 1, Abbott’s flagship glucose monitoring system will be available for reimbursement through the NHS across England and Wales, NHS Scotland, and the Health and Social Care in Northern Ireland.

Per Abbott, the grant of reimbursement will also make FreeStyleLibre system widely available to around 3.5 million people in the U.K.who are diagnosed with diabetes. Also, management expects that there may be roughly 549,000 people in the U.K.who have diabetes but are yet to be diagnosed.

This reimbursement approval in U.K. marks another milestone where Abbott’s FreeStyle Libre system stands partially or fully covered in 17 countries, including France, Germany and Japan. Notably, FreeStyle Libre system is presently under review by the FDA and awaits approval in the United States.

Meanwhile, Abbott has been moving steadily toward development in its diabetics segment. Recently, the company announced the receipt of national reimbursement for FreeStyle Libre in Japan.

Moreover, the company recently announced receipt of Health Canada License for FreeStyle Libre Flash Glucose Monitoring System. This will further stimulate growth in the Diabetes Care sales segment, which was up 18.7% in second-quarter 2017 on continued consumer acceptance of FreeStyle Libre internationally.

We expect Freestyle Libre to further contribute to Abbott’s top line as along with the U.K., Japanese and Canadian developments, the French Health Ministry recently approved national reimbursement for the device.

This apart, in July, the company partnered with Bigfoot Biomedical to solidify its footprint in the rapidly growing diabetes therapeutics market.

Per a report by Mordor Intelligence, the global market for diabetes care devices is projected to reach a value of $30.25 billion by 2021, at a CAGR of 5.93%.

Considering the market potential and Abbott’s slew of latest developments in the diabetes care segment, the recent national reimbursement grant in U.K. will accelerate the top line.

However, the diabetes market is dominated by many well established players, Johnson & Johnson (JNJ - Free Report) being the most prominent one.  In this space, Johnson & Johnson also has a tie-up with U.S.-based Animas Corporation to successfully develop and innovate insulin delivery systems.

Share Price Performance

Abbott has been gaining investor confidence on consistently positive results. Over the last three months, Abbott’s share price has outperformed the broader industry. The stock has gained 8.1%, in comparison with the broader industry’s 1.5% gain. The company has also outperformed the 2.7% gain of the S&P 500 market over the same time frame.

Zacks Rank & Key Picks

Abbott carries a Zacks Rank #3 (Hold). A few better-ranked medical stocks in the medical sector are Edwards Lifesciences Corporation EW and Lantheus Holdings, Inc. LNTH.  Edwards Lifesciences sports a Zacks Rank #1 (Strong Buy), while Lantheus Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has rallied roughly 19% over the last six months.

Lantheus Holdings has a long-term expected earnings growth rate of 12.5%. The stock has gained 39.4% over the last six months.

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