Investors focused on Abbott Laboratories' blockbuster medical devices and nutrition lines may be missing a quieter growth story in its older drug portfolio. According to UBS, the company's Established Pharmaceuticals Division (EPD) — which sells off-patent medicines in emerging markets — could deliver roughly 7% organic growth on its own, with an additional boost from biosimilars adding about $400 million in sales by 2029.
The call highlights a part of Abbott that often flies under the radar. EPD is not the flashy side of the business, but it has consistently generated steady revenue from mature drugs that no longer face patent protection. UBS believes the market is undervaluing this unit's potential, particularly as Abbott builds out its biosimilar pipeline.
What are biosimilars and why do they matter?
Biosimilars are near-copies of biologic drugs — complex medicines made from living cells, often used to treat conditions like arthritis, diabetes, or cancer. When the original biologic's patent expires, other companies can create a highly similar version that is typically sold at a lower price. For patients and healthcare systems, biosimilars can mean more affordable access to expensive treatments. For drugmakers like Abbott, they represent a chance to capture new revenue without the massive research costs of developing a brand-new medicine from scratch.
Abbott's EPD already has a broad portfolio of generic and branded generics in regions like Asia, Latin America, and Africa. Adding biosimilars to that mix could give the division a higher-growth product line, since biosimilars generally command higher prices than traditional generics and face less competition.
UBS's projection of $400 million in biosimilar sales by 2029 is not huge for a company Abbott's size — total revenue is in the tens of billions — but it could meaningfully improve the growth profile of a division that investors often treat as a slow, steady cash cow.
Why the market might be missing this
Wall Street tends to focus on Abbott's newer, faster-growing segments, such as its continuous glucose monitors and heart devices. The legacy drug unit, by contrast, is often lumped into the "other" category. UBS argues that this neglect creates an opportunity: if EPD can hit that 7% organic growth rate — a solid clip for an off-patent portfolio — and add biosimilar upside, the division could be worth more than the market currently gives it credit for.
This is not the first time UBS has flagged hidden value in a company's overlooked businesses. The bank has recently made similar calls on other names, such as Spectrum Brands' turnaround and Diageo's organic sales growth. The pattern: find a business line that is underappreciated, and argue that the market is pricing it too cheaply.
For Abbott, the biosimilar opportunity is still in its early innings. The company has been investing in biosimilar development, but the payoff is likely several years away. That timeline means the $400 million sales figure is a 2029 target, not an immediate catalyst.
What it means for investors
For everyday investors, the UBS note is a reminder that large conglomerates often contain hidden gems — or at least underappreciated divisions. Abbott's stock is widely held in index funds and retirement accounts, so any improvement in the growth outlook for EPD could provide a modest tailwind to the overall company's valuation.
However, it's important to keep the numbers in perspective. A $400 million sales contribution by 2029 is a small slice of Abbott's overall revenue, which exceeds $40 billion annually. Even if biosimilars hit that target, the impact on the company's bottom line would be relatively modest. The bigger takeaway may be that EPD's core business is healthier than many assume, which could support the stock's multiple.
Investors should also consider the risks. Biosimilars face regulatory hurdles, pricing pressure, and competition from larger players like Amgen, Pfizer, and Samsung Bioepis. Emerging-market operations carry currency and political risks. And organic growth of 7% is a projection, not a guarantee — it depends on continued demand for older drugs in developing economies.
Still, the UBS analysis adds to a growing chorus of voices that see value in Abbott's less glamorous segments. As the company prepares for its next earnings report, investors will likely watch for any updates on the biosimilar pipeline and EPD's performance. For now, the message is clear: don't overlook the old drug business.
For more on how analysts are finding value in unexpected places, see our coverage of Citigroup's fee-driven earnings beat and Albertsons' business review.
