Is Abbott Laboratories (ABT)’s Universal Microbe Detector a Big Deal?

According to an article published last year in The Telegraph, “only two new classes of antibiotics have been found in the past three decades and sales shriveled to $14.4 billion in 2010 from $16.1 billion in 2005.” The only major companies currently researching new antibiotics are GlaxoSmithKline plc (ADR) (NYSE:GSK), Johnson & Johnson (NYSE:JNJ), and AstraZeneca plc (ADR) (NYSE:AZN).

An increasing focus on higher-margin drugs, such as biologics, is further compounding the problem. It also doesn’t help much that GlaxoSmithKline and AstraZeneca are among the worst performers in big pharma, which puts their programs at the top of the list for funding cuts. Only Johnson & Johnson showed encouraging signs as its infectious drug portfolio grew 21.5% last year over 2011, and that is after excluding Levaquin, which lost full exclusivity last year.

Foolish bottom line
While the PLEX-ID system certainly tips the scales in coolness factor, investors must realize that the machines will likely not sell in eye-popping amounts. That would limit doctors’ access to the novel machine, thus increasing diagnosis times and negating its advantage in the first place. Price and size will limit the device’s adoption and contribute to its “nice to have” label — something in the health care industry that is more of a luxury than a necessity. Maybe I’m wrong. Maybe one of these systems will find its way into hospitals scattered across the globe. I just wouldn’t bet the house and kids on Abbott for solely this reason.

The article Is Abbott’s Universal Microbe Detector a Big Deal? originally appeared on Fool.com and is written by Maxx Chatsko.

Fool contributor Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio, his CAPS page, or follow him on Twitter @BlacknGoldFool to keep up with his writing on energy, bioprocessing, and emerging technologies.The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson.

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