Life Sciences Insight

Abbott snags $1B U.S. government contract for rapid COVID-19 tests

While COVID-19 case counts are currently on the decline in the U.S., the Department of Defense (DOD) thinks we can’t be too prepared. 

To secure more rapid diagnostic kits, the U.S. Army has inked a $1 billion contract with Abbott for an unknown number of its BinaxNOW and ID NOW tests, due by the end of June.

At the same time, the DOD said that earlier this month the government had modified previous contracts with Abbott and California-based diagnostic manufacturer iHealth Labs to purchase an additional 176.8 million over-the-counter COVID tests—a step toward the Biden administration’s redoubled goal of delivering 1 billion free at-home tests following the rise of the coronavirus’s omicron variant.

iHealth Labs, a subsidiary of China-based devicemaker Andon Health, previously scored a $1.275 billion contract from the DOD in January—while Roche Diagnostics and Abbott signed $340 million and $306 million deals, respectively—to supply a combined total of 380 million over-the-counter diagnostics out of a planned 500 million for the White House’s plans to mail coronavirus tests to people’s homes free of charge.

The new contracts also follow the Biden administration’s plans to establish hundreds of nationwide “test to treat” centers—outlined during the president’s State of the Union address earlier this month—that will offer free COVID screening and, if a person tests positive, provide immediate treatments in a single location.

Since last December, the DOD has also awarded COVID test supply contracts to Siemens Healthineers, MilliporeSigma and several others to obtain millions of diagnostic kits and expand the manufacturing capacity of domestic production lines for test components.

Abbott’s COVID test sales made a late comeback last year after the delta and omicron variants rekindled demand, following a nearly billion-dollar dip in revenues in mid-2021 as daily case numbers dropped because of the widespread availability of vaccines in the U.S.

During that relative drought in rapid-testing revenues, Abbott cut back its R&D spending plans and began laying off workers on its test production lines. But the need for screening rose once again as vaccination rates plateaued and more contagious variants emerged: The company’s BinaxNow, Panbio and ID NOW tests brought in $1.6 billion during 2021’s third quarter alone.

For the full year, the ups and downs evened out to a total of $7.7 billion in COVID test sales, dwarfing 2020’s $3.9 billion. As of January, Abbott said it had distributed more than 1.4 billion diagnostics since the start of the pandemic.