Moody's might downgrade Abbott

Moody's Investors Service said it placed Abbott Laboratories' A1 senior unsecured notes and Abbott Japan Co., Ltd.'s A1 backed senior unsecured notes under review for possible downgrade following the announcement that it plans to acquire Piramal Healthcare Ltd.'s branded generic drug business for about $3.7 billion. The Prime-1 short-term rating was affirmed.

The agency said Piramal should provide Abbott with a stronger presence in the high-growth Indian market as well as expansion opportunities in other emerging markets, where branded generic drug penetration is still low.

However, this relatively rich transaction comes on the heels of Solvay and Facet Biotech earlier in 2010, Moody's said, and after the Piramal acquisition closes, Abbott will have significant short-term borrowings coupled with modest cash levels constrained by the need to post $1.8 billion in collateral for the recent Centocor/NYU jury award related to alleged patent infringement by Humira.

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