Abbott Went All In on Covid Tests, And It’s Just Getting Started

(Bloomberg) -- As the world moves on to vaccines, health-care giant Abbott Laboratories is doubling down on Covid-19 tests.

Chief Executive Officer Robert Ford, who took over in March 2020 just as the pandemic hit the U.S., put all the company’s weight behind tackling the global pandemic last year, spending hundreds of millions of dollars on developing products in record time. The Herculean effort paid off financially: Abbott sold 300 million coronavirus tests in the fourth quarter alone, generating $2.4 billion in sales from products that didn’t even exist a few months earlier.

But Ford isn’t done. He’s betting that frequent testing, along with masks and social distancing, will be key to turn the tide on the outbreak, helping get workers back into offices, students into classrooms and travelers into the skies. For BinaxNOW, a disposable test the size of a credit card that costs as little as $5, Abbott has signed long-term leases and built entire facilities.

“We need to take a little risk,” said Ford, 47, who expects robust demand for Abbott’s tests through 2022 or 2023. “It’s going to take a while for everyone to get vaccinated. Even when you’ve had a vaccine, if you have a sniffle, a fever, a body ache, some people will want to do a Covid test.”

Although tests aren’t 100% accurate and can miss early cases or yield positive results in people who aren’t infectious, it’s hard to overstate the scientific prowess Abbott and its rivals have pulled off when they rushed novel diagnostics to the market in the spring of 2020.

Yet testing has been one of the major stumbling blocks in the U.S. response to the pandemic, and is still not universally used almost a year later.

That may change under President Joe Biden’s administration, which pledged to invest $50 billion in a massive expansion of testing. The same amount was included in a relief package proposed Feb. 1 by a group of Republican senators, making it a rare bipartisan issue in Washington.

At more than a dozen University of Wisconsin campuses, students are already tested weekly with BinaxNOW, which provides results in 15 minutes. The approach has driven the positivity rate below 1% and helped ensure that none of the professors teaching in person have been infected, said Tommy Thompson, president of the University of Wisconsin System and former governor of the state.

 “It could help everybody,” said Thompson, who has ordered another half-million tests for this semester. “It’s not 100% perfect, no question about it, but if you test frequently enough you are going to catch quite a few, and you take that individual who tests positive out of there.”

The diagnostics division is now the fastest-growing unit at Abbott, a corporate giant that makes cardiac implants, the Freestyle Libre glucose-monitor system for people with diabetes and Ensure nutritional shakes. Analysts expect Abbott to generate as much as $7 billion from Covid testing products this year — 17% of the company’s total estimated revenue.

Ford’s vision for the business goes well beyond the current pandemic. He sees BinaxNOW as a model for ailments including influenza, sexually transmitted diseases and hepatitis.

“We are playing a role in Covid, but at the same time we are building a market for rapid point-of-care testing,” he said. “Covid is the seed that will allow that to happen.”

The success wasn’t preordained. Before Covid-19, tests for Zika infections had been the fastest work in Abbott’s testing lab history, developed in just nine months in 2016. By the time they arrived, the outbreak had dissipated, taking demand with it.

For Covid, the timeline was compressed to a few weeks.

To achieve that, Ford blew up the company’s notorious focus on fiscal discipline and expense management. When the CEO was told that the bulky equipment Abbott needed to produce its ID NOW rapid test in upstate New York was located in Asia and it would take a month to ship it, he leased half a dozen of Antonov An-124s, the massive Russian cargo aircrafts, to move the machines within a week.

To make BinaxNOW, Abbott gutted and rebuilt factories that contain more than seven football fields of manufacturing space in 90 days, rather than the two years such a process would normally take. In the early days, when a supplier of key components ran out of protective gear mandated to run its plants, Abbott sent the manufacturer thousands of its own N95 masks, a rare commodity at the time.

Ford was still CEO-in-waiting in mid-February when he decided to pour the company’s resources into developing tests for the emerging virus.

A long-time veteran at Abbott, Ford pulled his most valuable scientists and manufacturing experts off their projects to create four all-star teams. They were each tasked with designing a specific diagnostic — three types of tests detecting an active infection and one that finds signs of past infection.

Andrea Wainer, executive vice president of rapid and molecular diagnostics, devised a plan on Feb. 27 with more than two dozen advisers to bring products to the market in four months – twice as fast as the Zika test. Ford’s response wasn’t what she expected.

“He looked at us and said ‘You have a month,’” Wainer said. “It was that point in time that our mindset shifted,” she said. They had permission to “relentlessly prioritize Covid.”

Testing has a long history at the Abbott Park, Illinois-based company, which crafted the first test to detect HIV in 1985.

The initial challenge with designing a molecular test for Covid-19 was finding the right piece of the pathogen to target. Using probes and primers to latch onto the genome of the virus required technical experts to test combinations of components over and over, until they returned consistent, accurate results.

“It was like a rollercoaster ride with no seatbelts,” said Gavin Cloherty, head of infectious disease research for the diagnostics business. “We all knew there was a tsunami coming and we had to expedite the process.”

The teams worked overnight to get results the minute they came off the machines. The goal was to take a process that usually would run for two or three years, and crunch it into days, said Mary Rodgers, principal scientist from the infectious disease research group.

For Richard Roth and Katharine Qiu, who led the team responsible for creating the ID NOW rapid test, the initial days of development in early March were alarming. They had no luck homing in on the virus and no hints as to what would be successful, Qiu said. The team had breakfast, lunch and dinner delivered. Many of the men stopped shaving. Sleep was limited.

After two intense weeks peering at computer monitors, they saw progress in the form of an S curve, indicating the test was tracking the virus.

“We were silent, overcome with emotion,” Qiu said. “It was nearly impossible to imagine in the beginning of the project, but yes, we actually did it.”

Chris Slachta, divisional vice president of operations and supply chain for molecular diagnostics, knew, based on the infection numbers emerging worldwide, that the demand would be insatiable.

“As we were going home at night, as we were waking up in the morning, we couldn’t get away from the fact that in the news, on the radio, you always heard there was a shortage of testing,” he said.

So he took a shortcut and formulated a manufacturing plan for molecular coronavirus tests known as PCR by hijacking the production in place to make HIV diagnostics. It covered everything from bottles to labels.

On March 18, Abbott announced that it received authorization from the U.S. Food and Drug Administration for its first coronavirus test, the PCR molecular diagnostic using lab equipment. The next week, the company had approval for the ID NOW test, followed by a blood test detecting previous infections.

The only product that didn’t meet Ford’s 30-day demand was the rapid antigen test BinaxNOW, which got approved for emergency use by health-care workers in August and for at-home use in December.

John Murphy, vice president of supply chain for Abbott’s nutrition business, was pulled in to manage the complex BinaxNOW production. He oversaw the gutting and rebuilding of newly leased facilities. They are manned by 3,000 employees hired in nine months who produce 50 million BinaxNOW tests a month.

“It was hundreds of millions of dollars in investment, in the backdrop of a pandemic,” Murphy said. “Manufacturers were closed, many suppliers weren’t operating. There was a fair bit of anxiety here. We did it faster than I have ever seen it done before.”

Abbott isn’t alone in betting on strong demand for tests. More than a dozen competitors, including Roche Holding AG, Laboratory Corporation of America and Quest Diagnostics Inc., have captured shares of the market. The U.S. government recently announced a  $231.8 million deal with Australia-based Ellume Ltd. to help ramp up the production of its at-home tests and open its first U.S. factory.

For now, the near-term future of testing envisioned by Ford is a reality at Abbott’s world headquarters in suburban Chicago. Every employee gets tested twice a week.

Mondays and Thursdays are Ford’s days. Upon arrival at the testing station, the CEO runs a swab inside his nose and hands it to a health-care worker who inserts it into the test’s folded cardboard packaging and squirts on a couple of drops of a buffer solution.

Fifteen minutes later the results pop up on a free app called Navica – green background for negative. It displays a digital QR code, like the ones on a boarding pass, that could be scanned by participating airlines, offices or stores to provide proof of his negative status.

Ford is careful to put the proper parameters around the test, saying it’s not a license to get back to the good old days.

“Once I get my green pass, I’m not going to do a Prince and party like it’s 1999,” he said. “I’m still going to wear a mask and social distance, but this helps reduce the risk in the environment. You can use it at schools, universities, companies. We’re a great test case.”

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