CNBC transcript: Abbott Laboratories (NYSE:ABT) President & CEO Robert Ford speaks with Jim Cramer live during CNBC‘s Healthy Returns Summit today
WHEN: Today, Tuesday, May 11th
WHERE: CNBC’s “Healthy Returns Summit: New Era of Innovation”
Interview With Abbott CEO Robert Ford
TYLER MATHISEN: Testing is going to be critical to the success of reopening. I'll tell you just a quick story. I took my son and his best friend to a Yankee game, along with my wife last Friday night, and the whole key of it was testing. You had to show proof that you were tested or vaccinated. And so, testing is going to be a part of our lives. I had the best experience of my life at a Yankee stadium. I'm only going to go to Yankee stadium in a pandemic from now on. So, of course, testing is going to be critical to the reopening of our economy, and Abbott Labs has been at the forefront of testing from early on. My friend at “Mad Money,” host Jim Cramer, joins us now with Abbott CEO Robert Ford on how the past year may translate into innovation for the future. Good to see you, Jim.
JIM CRAMER: Thank you so much, Ty. You're absolutely right. I mean, I haven't had that experience of going to the stadium yet, but I sure hope I do, because I miss it and I want to know that everybody's tested or is vaccinated. And the man who's probably done more to help be sure that we are tested, including a stay-at-home test, is Robert Ford, president and CEO of Abbott Labs. Robert, welcome to our conference. How have you been?
ROBERT FORD: Jim, nice to see you again. I have been great. I was just going to add there that I'm more of a Boston guy, so Fenway Park would be my kind of thing, but I support the whole testing in stadiums. I think it's a great idea.
JIM CRAMER: That's an insight I didn't know. I hope when football season comes, you have good sense in favor of the Eagles. I happen to have in front of me BinaxNOW, two tests. I've used it. Why have I used it? Because I went out of the country and I wanted you to know that I was okay. I want to know, Robert, as we get more and more vaccinated, will we be using BinaxNOW less, or is it going to be a fact of our life no matter what, we're going to find it at Walgreens and CVS and stockpile it?
ROBERT FORD: Well, listen, from the beginning, as you know, we went all in. And we went all in, Jim, because we knew that, you know, we had a responsibility to develop the, you know, using our diagnostic leadership, to develop the test, not only for pandemic phase, but also for vaccine phase. You know, if we're going to rely solely on vaccine, which I think we've done an amazing job from the development to the rollout, but if we rely solely on it, you know, it's not as complete as you would like. You know, whether it is the penetration rate of vaccines, we know that some states have higher rates than others; the longevity, we still have to learn a little bit more about how the booster strategy is going to play into this; and then mutants. So, we always believed that COVID was going to be part of it, sorry, that testing was going to be part of it. But not the testing that we remember from a year ago, right? You know, in your car for four hours, $150, wait four or five days, right? What you're holding up in your hand is where we see that complementary to the vaccine strategy, which is rapid testing at an affordable price, which is accessible to everybody, and that all comes together where, together with the vaccine rollout, we will be in a better spot to get back to normal. I think there are a lot of progressive companies that want to get back, their employees back to the office; schools with kids; hotels with guests. I mean, you name it, a hotel leisure. To think about buying these tests and providing them free of charge to your employees is definitely a way to kind of augment your strategy of bringing everybody back and opening up. Vaccines plus testing.
JIM CRAMER: Okay. Well, let's talk about something even bigger. It's a coalition that you created. This is the Abbott announces its Pandemic Defense Coalition, a global network of expert collaborators designed to help prevent future pandemics, currently searching for COVID-19 variants. Now, Robert, I can guess, but when the Federal Reserve surveyed money managers, the thing that they are most worried about is the variants. Are we overdoing it or are we absolutely right to be worried that that could derail the economy?
ROBERT FORD: Well, I think what we've always taken a view here is that because of our experience in infectious disease testing we have a group, we call them the virus hunters, Jim. They're constantly looking. They're constantly looking for new viruses. And in this case, we set up a team to be able to monitor all of the mutations that could exist, and I think we're ahead of it. We put the resources in place, and we partner. Because it can't just be a U.S. thing. We have to partner with all the countries, all the universities, and all the different collection sites. And I think that's the way to go. If we just sit back and say, okay, it's done, it's played its course, then yeah, then we should be worried. But I think if we're working proactively to monitor, to chase these mutant, these mutations, I think that's the way to do it. And we've been in this business, you know, for over four decades doing this. So, this is the way to do it. It is a broad coalition and our scientists are on top of this.
JIM CRAMER: Is it coordinated well with the government? I find that the government is really the NIH, it's the FDA, it's the CDC. And I'm never sure who to listen to.
ROBERT FORD: Well, listen, any response like this, you have to coordinate against with all, with all agencies here in the U.S., but even with other government. So, we're working with, you know, we work with the FDA, we work with the NIH, we work with other, other academic institutions outside the United States in other markets. And that's how you've got to do it.
JIM CRAMER: All right. So, let me get to something that is a sensitive topic, in my house. My wife got the J&J. I got the Moderna. She only had to get shot once. I had two. But it looks like, from the percentages, that I'm going to be in better shape than her. Should she be testing much more because she got the J&J which is, on a percentage basis, known to be less effective?
ROBERT FORD: I would say, I wouldn't make a distinction between testing, depending on the vaccine that you had. I think what the, what the industry has done on the vaccine data is incredible. And I think that, as I said, you know, you could still carry the virus, you could still, you know, you could still transmit it to other people that haven't taken the vaccine. So, I think just, you know, easy frequent testing like the product that you pulled up, I think that's the way to go about it, independently of which vaccine you've taken.
JIM CRAMER: And when you're in a crowd, maybe you go overseas, take them with you, right?
ROBERT FORD: I mean, that's the other thing. I think the CDC is now allowed for you to be able to take these antigen tests overseas and then test them and then show that result of proof to be able to kind of come back into the U.S. So that's another great step forward. And, again, you could probably stop by the pharmacy near your, near your, near the airport or, you know, soon might be able to see these in airports. BinaxNOW is in around 20,000 pharmacies in the U.S. We'll probably get to 30,000 by the end of this week, Jim. So, there's going to be plenty of availability of tests.
JIM CRAMER: You guys are pros when it comes to testing, and those of us who had kids who played sports or us, we didn't even know about it, but concussions. You have got something that tests for concussions which we think many people involved in sports are the bane of high school sports, in junior sports, where are we with this?
ROBERT FORD: So, it's interesting, all during COVID, we're doing everything with COVID testing, but then we also have all of our pipeline. And what our scientists were able to do to keep the pipeline going was fantastic. And one of those key products is a rapid test to be able to detect mild concussions or traumatic brain injuries. Our team was able to identify the two proteins that get produced when you have a traumatic brain injury, and we've been able to develop a test for it. This is the actual instrument that it will go into. The current test we have, Jim, is actually, it uses plasma. So, we take the sample of blood, we've then got to prepare that sample, and then put it into the test. We're working on a trial now to be able to do whole blood and with kids. So, then you would be able to prick a finger, put it on the cartridge on the test on that instrument I just showed you and then be able to get the results. And I think that's exactly what's kind of motivated us. If you think about all the elementary schools, high schools, all the colleges, you've talking about a hundred thousand-plus institutions all doing sports. And, you know, the current methodology today is if you think you have a concussion, you get taken out of the game, you then go to a hospital to maybe do a CT scan. With this test, once we, once we develop the right clinical data to be able to support the whole blood indication and to be able to deal with kids, you will be able to kind of do a test in 15 minutes and get the result right there. And if it's negative, then a kid can go back in, back into the game.
JIM CRAMER: Well, and it's a lot better than my days, where they asked me who was president or they asked me to count three fingers, and they said, okay, get back in there, kid. All right. So, you guys are also doing something that I, your reaction to it. And you guys explained this to me, actually, a long time ago. The epidemic of diabetes, and you have something that makes it so that. It's never pleasant to have diabetes, and it's obviously life-threatening, but you have an economic device that I think people don't know enough about, and it may be best in class, Robert, so why don't you describe it to us.
ROBERT FORD: Well, we looked at Libre, which is the product we're talking about, as really a mass market opportunity, which is different from traditional devices, where it's a little bit more nichey, right? You're talking about a hundred million people that somehow are doing some sort of glucose monitoring, right? So, we thought about it in three ways, three key strategies to go about it differently: Build a consumer-friendly device. You know, a lot of the CGMs before Libre, they were kind of clunky, kind of medically, you know, kind of focused, and we took a Fisher-Price friendly kind of attitude on how we developed it to make it very intuitive. We then invested in outcomes to show that you can actually, while wearing it, improve your diabetes to lower your A1Cs, and we did a lot of investments in trial to show that. And then, on top of that, we priced it in a way that aligned to where we saw the opportunity, a mass market opportunity. So, whether you were paying cash for it, whether you were getting reimbursed from a health insurance company or a government-reimbursement scheme, we wanted to be able to price it for mass adoption. And that strategy is working. Right now, we're the leader, if you look at it from a revenue perspective, the amount of patients we have, three times more than our nearest competitor. In the first quarter, eight out of ten prescriptions in the U.S. that were generated were fulfilled by Libre. And we're the leader in clinical evidence. Libre is the most studied CGM in the world right now, so the evidence about its use and the benefits that it has towards people with diabetes is huge. So, what we've got to argue is that we're going to keep that innovation, we're going to keep on leading. So, we launched our second-generation product here in the U.S. last year, best accuracy across the board, whether it's for kids or adults. We launched in Germany a couple of weeks ago this product. So this is Libre 3. So it's much smaller. And Libre 2 was already the smallest device. Getting great, great reviews from the diabetes community in Europe. We've got Libre 4 in development. But we also talked about Libre always being a platform, that we could potentially use the platform to look at other anolytes and explore other measurements outside of diabetes, and we have a whole team assembled to be able to kind of work on that. The first product we launched last year in Europe was a sports biosensor, aimed at the fitness market. So that was launched last year. And, again, if I look at Libre in diabetes and Libre in a platform outside of diabetes, the potential we have is significant, and we're really in the early innings here.
JIM CRAMER: Well, I'm glad you talked about the early innings and all the different extensions, because I think that some people would feel, and let me put my stock hat on for a second, that Abbott, once the pandemic is over, that Abbott is over. Co: check this. And I have become convinced it's the opposite. The technology that you have discovered, even just during the pandemic, is applicable to so many different things. And you've also been working endlessly on digital and health, and that there's so much there that the new Abbott, so to speak, the Robert Ford Abbott, is one that worked, spending a lot of time on the healthy returns side because it is about technology.
ROBERT FORD: I mean, it is. I mean, I would say one of the key things that we've done during this pandemic phase, Jim, is we've taken the profits, the cash flows from our COVID testing business, we've provided a portion of that back to our shareholders, we increased our dividend 25 percent this year, but we've also taken a portion of that and reinvested into the business, into the pipeline, into the portfolio. And I think that's, that's the key for us, it's the lifeline of our company, it's our pipeline, and we've got over a hundred new products over the next two to three years across all of our businesses. And as you mentioned, one of the key aspects there is this conversion of digital and healthcare and coming together. And a lot of our products that we integrated in St. Jude when we did the St. Jude acquisition, we were figuring out ways how to connect those devices to the phones, to the tablets, the cloud. We've done that with Libre. We've done it with a lot of our cardiovascular devices and we've started to do that with our diagnostic businesses too. And I think that that is the future to be able to empower the consumer, empower them with information, with data that they can use, packaged in a way that's understandable for the consumer. And there's a way to package it for the healthcare professional and there's a different way to package it for the consumer. And I think that that's going to be the future, and that's a lot of where kind of Abbott is going, is that digitally connected healthcare space.
JIM CRAMER: Well, it kind of blew me away. I know you've introduced this in Europe. I got this from your press room. New coronary imaging platform powered by artificial intelligence. It sounds like we'll be able to find things, my cardiologist will be able to find things that they've never been able to find before.
ROBERT FORD: That's true. So one of the key things, one of the greatest evolutions I think we've seen in the field of cardiology, one of them is the use of imaging and 3D colored imaging to be able to look at vessels and different parts and different anatomies and parts of the heart. And so, we do have, one of the products that came from the St. Jude acquisition is a technology to be able to look at these vessels in a very high-definition way. We've now started to augment that software with our Ultreon AI-powered system so that not only can you see it, but the system will also tell you everything you need to know about that vessel, its size, its diameter, all the specifics about it that will allow you to place a stent in the right position. So, your cardiologist is right. This is a key innovation to doing cardiology with imaging.
JIM CRAMER: With the time we have left, I want to just go back to the pandemic for a second just to see where we are. There's a belief in the country that I think because we just had, we had fewer than 40,000 cases of COVID yesterday, that somehow we're in great shape, even though when we had that in 2020, the first time we were completely freaking out. Which is the right way to approach this?
ROBERT FORD: I think it's a, I'm never an extremist. I'm always trying to find the balance. I would say on one side I understand and I agree because we've got better understanding of the virus, we've got better tools, we've got vaccines, we've got more testing. So, in a way, that 40,000 today is different than the 40,000, say, back in, back in June, July. But at the same time, you know, it's, I think everybody needs to understand that it can mutate, it can change, and we've just got to stay vigilant. So, what we're doing with the vaccine rollout, what we're doing with testing, we've got to keep on doing that, and we'll beat this. I mean, Jim, we've got to beat this, and we will beat this.
JIM CRAMER: Well, Robert, if people took, had the BinaxNOW, and they took it, and they saw that they had it, they'd stay home from work, I have to believe that the infection rate would drop dramatically if people just knew they shouldn't go to work.
ROBERT FORD: I think that's spot on. And like I said, I think companies, if companies would buy these tests and provide it to their employees. I mean, we've been doing, we've been testing our employees since, you know, since we had the test available here in the U.S. and overseas also. And the impact that that has for employees, to feel better about coming back to the office, I think that's going to be an important aspect here. So, we're working with a lot of companies who want to figure out, okay, how do I deploy this, how do I give this out to my employees as an investment in my reopening strategy.
JIM CRAMER: At the same time, I guess could maybe I feel like I'm, I want to be a capitalist but a caring capitalist. If the government were to say, "Listen, you've got to give the intellectual property up," I don't know if that's necessarily the right way to go. I mean, they're doing it for vaccines, but I don't know if they said, "Listen, we want BinaxNOW to be given away in other countries," that would be a disincentive for Abbott to develop the next thing but also be humanitarian. How do you balance these things?
ROBERT FORD: I'd say, first of all, you have to understand if there is a bottleneck. I'd say right now there is no bottleneck in terms of test manufacturing. There's a lot of capacity that not only Abbott but other industry players have invested in to build that. So, I don't think that, you know, talking about how to build the test is going to increase capacity. All the right players that, you know, have the experience and the know-how, we've all made the investment. So that's there. Second I would say, listen, you talk a lot about Binax, but, you could see it behind me, probably not, but I have a similar test called Panbio. And it's a similar test and we manufacture it outside the United States and we supply those to international markets. And we have just as much capacity in those manufacturing sites than the sites we built here in the U.S. So we're treating this on a global scale here, Jim, as you would expect Abbott to do.
JIM CRAMER: And at the same point, I do want to make a pitch. There are others that I don't think have the same capacity, others that people aren't using, others that have been put out there that haven't worked. The Abbott is approved and available in all these stores.
ROBERT FORD: Now, one of the things that we did from the get-go was we knew that scale was going to be important. So, we built, you know, two new manufacturing sites here in the U.S. to be able to build Binax and not be constrained. So, the scale is, is unparalleled, to be quite honest with you. It's unmatched. We can do about a 150 million tests per month if we need to.
JIM CRAMER: Wow, okay. I don't want us to need to, but I know that Abbott is there for us. Robert Ford, President and CEO of Abbott, ABT, great company, great people. Thank you so much, Robert.
ROBERT FORD: Thanks, Jim.