Abbott Laboratories' (ABT) second-quarter profit dipped 2.6% on acquisition and cost-cutting charges, while revenue growth continued to sag due to generic drug competition and unfavorable currency rates.

The Abbott Park, Ill., health-products company had benefited in recent years from a diversified product lineup ranging from baby formula to a high-priced biologic drug, outpacing rivals more heavily concentrated in a decelerating U.S. market for prescription drugs.

But more recently Abbott's financial performance has suffered, including a slowdown in its biggest unit, pharmaceuticals. Sales of anti-seizure drug Depakote have dropped after losing U.S. patent protection last year, and sales growth for the blockbuster arthritis drug Humira has slowed. Sales growth for Humira did accelerate in the second quarter, but it's still below the brisk growth seen in the last few years.

Abbott shares tumbled 3.7% to $44.77, which Leerink Swann analyst Rick Wise chalked up to disappointment that Abbott didn't exceed Wall Street estimates or boost its full-year 2009 outlook.

"I think in this environment at this point in time, we've pretty much chosen to keep our powder dry," Abbott Chief Financial Officer Thomas Freyman told analysts on a conference call, referring to Abbott's full-year outlook.

Abbott is hoping an expansion of its cholesterol-drug business, plus the introduction of new drugs for other diseases in coming years, helps revive pharmaceutical growth. Also, Abbott has tried to further diversify, buying up vision-care company Advanced Medical Optics Inc. in February for about $1.4 billion cash. Abbott Chief Executive Miles White has said the company is interested in more such non-pharmaceutical deals.

Abbott's second-quarter earnings matched analysts' expectations, but its revenue fell shy of forecasts. The company also issued a third-quarter earnings outlook range that left room for missing current Wall Street expectations, though it reiterated its full-year 2009 forecast range.

For the three months ended June 30, Abbott said it earned $1.29 billion, or 83 cents a share, down from $1.32 billion, or 85 cents a share, a year earlier. The latest quarter included charges totaling about 6 cents a share for costs associated with the Advanced Medical purchase and cost-reduction initiatives. Excluding these items, earnings would have been 89 cents a share.

Second-quarter sales rose 2.5% to $7.5 billion, short of the Thomson Reuters consensus estimate of $7.55 billion. Unfavorable currency-exchange rates reduced growth by 8 percentage points.

Pharmaceutical sales declined 4.3% to $3.95 billion. Humira sales rose 20.4% to $1.3 billion. Foreign-exchange reduced non-U.S. sales growth by a hefty 24 percentage points to 20%, while U.S. sales rose 21%. Abbott said Humira gained market share in the U.S. There are signs the overall market for similar drugs has picked up after a weak first quarter - Johnson & Johnson (JNJ) on Tuesday reported an acceleration in sales growth for competing drug Remicade.

Abbott reiterated its forecast of Humira sales growth of 15% to 20% for full-year 2009. Humira sales rose 47.6% in 2008 to $4.5 billion.

Depakote sales dropped 75% to $102 million due to the availability of generic copycat versions. Sales of HIV drug Kaletra dropped slightly, while combined sales of cholesterol drugs TriCor, Trilipix and Niaspan increased.

Abbott's nutritional-products unit, which makes Similac baby formula, had worldwide sales of $1.28 billion, up 4%. Sales of diagnostics products declined 6.2% to $878 million. Leerink analyst Wise said diagnostics sales missed his estimate and contributed to the overall revenue shortfall versus Wall Street expectations.

Abbott's vascular sales rose 34% to $658 million. Coronary stent sales jumped 83.5% to $397 million thanks largely to the introduction of the Xience V drug-coated stent, which has taken market share away from rival products made by J&J and others since its introduction last year. Abbott said Xience and a related product made by Boston Scientific Corp. (BSX) together have more than half of the U.S. market.

The broader economic weakness hurt certain areas of Abbott's business. Diabetes-care sales dropped 10% to $593 million, which Abbott attributed to the economy.

-By Peter Loftus, Dow Jones Newswires; 215-656-8289; peter.loftus@dowjones.com