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

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As a major breakthrough in its diabetics business, AbbottABT recently announced the receipt of national reimbursement for the FreeStyle Libre glucose monitoring system in Japan.

The development has widened this Illinois-based medical device major's customer base in diabetes management. Per management, with around 9.5 million population diagnosed with diabetes, Japan is considered a nation with the highest rate of people suffering with the condition.

The company states that the grant of reimbursement will also make FreeStyle Libre system widely available to more than one million Japanese people diagnosed with both Type 1 and Type 2 diabetes and on insulin therapy varying from ages six and above.

Also, the reimbursement approval in Japan marks another milestone where Abbott's FreeStyle Libre system stands partially or fully covered in 16 countries, including France and Germany. Notably, FreeStyle Libre system is presently under review by the FDA and awaits approval in the United States.

Abbott has been moving steadily toward development in its diabetics segment. In July, the company partnered with Bigfoot Biomedical to solidify its footprint in the rapidly growing diabetes therapeutics market.

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 Canadian development, the French Health Ministry recently approved national reimbursement for the device.

Per a report by Mordor Intelligence, theglobal marketfor 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 current developments in the diabetes care segment, the recent national reimbursement grant in Japan will accelerate the top line.

We believe an ageing population, unhealthy lifestyle and rising awareness and expenditure in healthcare will continue to drive growth in the diabetes market. However, this market is dominated by many well established players, Johnson & Johnson (JNJ) 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.

Moreover, Abbott has been gaining investor confidence on consistently positive results. Over the last three months, the company's share price has outperformed the broader industry . The stock has gained 7.9%, in contrast to the broader industry's decline of 1.2%. The company has also outperformed the 0.8% fall 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 are Edwards Lifesciences Corporation EW , Lantheus Holdings, Inc. LNTH and IDEXX Laboratories, Inc. IDXX . Edwards Lifesciences sports a Zacks Rank #1 (Strong Buy), while Lantheus Holdings and IDEXX Laboratories carry 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 19.8% over the last six months.

Lantheus Holdings has a long-term expected earnings growth rate of 12.5%. The stock has gained 21.6% over the last six months.

IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. The stock has gained around 2.9% over the last six months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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