Abbott Laboratories

FOUNDED: 1888

Contact Information:

HEADQUARTERS: 100 Abbott Park Rd., Dept. 393-AP51
Abbott Park, Illinois 60064-3537
PHONE: (847)937-1608
URL: http://www.abbott.com

OVERVIEW

Founded in 1888, Abbott Laboratories is a global, diversified, healthcare company that discovers, develops, manufactures, and markets pharmaceutical, diagnostic, nutritional, and hospital healthcare products. Headquartered in Chicago, Illinois, it is one of the top healthcare product makers in the United States. Abbott employs 70,000 people worldwide, and it has 150 facilities and 60 manufacturing sites. The company focuses on advancing medical science and the practice of healthcare, and it has demonstrated expertise in the therapeutic areas of diabetes, pain management, respiratory infections, HIV/AIDS, men and women's health, and pediatrics. Its products are sold in 130 countries. Abbott has five business segments: Pharmaceutical Products, Diagnostic Products, Hospital Products, Ross Products, and International. Its Ross Products division makes such well-known nutritionals as Similac, an infant formula, and Ensure, an adult nutrition supplement. Pharmaceuticals and hospital products make up about one-half of the company's sales.

COMPANY FINANCES

In 2000 the company's sales and net earnings were $13.7 billion and $2.8 billion, respectively, with diluted earnings per share of __BODY__.78. For the fiscal year ended December 31, 2001, sales rose 18 percent to $16.29 billion; net income fell 44 percent to __BODY__.55 billion. The company's hospital and pharmaceutical segments have been receiving higher unit sales, which is reflected as higher revenues. Approximately __BODY__.33 billion of its 2001 revenues went into research and development.

ANALYSTS' OPINIONS

Abbott Laboratories boasts an impressive record of long-term financial performance and continuous growth. It is one of 25 companies to appear in all six annual editions of The 100 Best Stocks to Own in America. In 2001, the company ranked high on lists compiled by financial magazines and experts. It was number 166 in the performance rankings of the S&P 500, number 77 in Business Week magazine's "Global 1000," and ranked number 70 in Forbes magazine's "500 Top Companies." Abbott Laboratories was also named to the Deloitte and Touche "Fast 50 Companies" list. It has posted sales growth for 47 consecutive years, and it has showed dividend growth for 312 consecutive quarters since 1924.

Further, the company holds a first or second market position in the following business segments: adult nutritionals, anti-infectives, blood screening for infectious diseases, hematology diagnostics, immunodiagnostics, infant formulas/nutritionals, inhalation anesthetics, and vessel closure devices.

In 2001 analysts and observers believed that Abbott Laboratories' new AIDS drug, Kaletra, would give its pharmaceutical division an economic boost. They pointed to the fact that Abbott's Kaletra proved effective in more patients than Viracept, a drug produced by top competitor Pfizer. Analysts expected that Kalestra would improve Abbott's share of the $6.5 billion market for HIV and AIDS treatments and that it would generate $500 million in global sales in the early part of the twenty-first century. The news made investors happy, as they felt Kalestra would place a much-needed "blockbuster" drug in Abbott's product portfolio.

HISTORY

Abbott Laboratories was founded in 1888 by Wallace Calvin Abbott, MD, a Chicago physician, who proved to be a pioneer in the science of pharmaceuticals by producing a new form of medicine called "dosimetric granules." These pills enabled a precisely measured amount of drug. Within two years, the demand for these granules became overwhelming, setting the stage for the continual growth the company would consistently demonstrate through the years.

In 1900 Dr. Abbott officially incorporated the company as the Abbott Alkaloidal Company, and in 1915 he changed the name to Abbott Laboratories. Product demand spurred Dr. Abbott to build a new manufacturing facility in 1920. The building served as the company headquarters for 40 years, and it remains Abbott Laboratories' primary manufacturing location today.

In 1931 the company established its first international affiliate in Montreal, Canada. Five years later, it introduced the anesthetic agent Pentothal, which was developed by Abbott scientists Drs. Ernest Volwiler and Donalee Tabern, who were later named to the U.S. Inventors Hall of Fame for their discovery. Ten years later, Abbott started commercial production of penicillin. In 1945 the company entered the field of radiopharmaceuticals, which are radioactive drugs used for diagnostic or therapeutic purposes.

Throughout the next two decades, Abbott Laboratories continued to be an innovator. In 1952 it introduced Erythrocin, an antibiotic used to fight gram-positive bacteria. In 1962 Abbott entered a joint venture with Dainippon Pharmaceutical Co., Ltd., of Osaka, Japan, to manufacture radiopharmaceuticals. This venture would become Dainabot, which would grow to become the company's largest operation outside the United States.

The company continued to grow during the 1960s, 1970s, and 1980s. In 1964 Abbott merged with M&R Dietetic Laboratories of Columbus, Ohio, the maker of Similac infant formula. M&R would eventually become Abbott's Ross Products Division. Abbott formed its Diagnostics Division in 1973. That same year, it introduced the product Ensure, which would become the world's leading adult nutritional product. In 1977 Abbott entered into a joint venture with Takeda Chemical Industries, Ltd., which resulted in the formation of TAP Pharmaceuticals Inc., now known as TAP Holdings Inc. In 1980 Abbott acquired Sorenson Research of Salt Lake City, Utah.

As the company continued to grow, Abbott Laboratories' strong focus on research and development produced significant medical advancements. In 1985, the U.S. Food and Drug Administration (USFDA) gave the company clearance to market the world's first diagnostic test to detect AIDS. During the same period, TAP received approval to market Lupron, a new therapy for prostate cancer. Two years later, Abbott received USFDA approval for Hytrin (terazosin), a new cardiovascular drug used for treatment of hypertension. In Abbott's centennial year of 1988, the company introduced the IMx diagnostic instrument, which would become the world's leading immunoassay system and one of the Abbott's all-time best-selling new products.

In the 1990s, Abbott introduced Clarithromycin, a macrolide antibiotic that would become one of the world's leading respiratory antibiotics. Abbott also ventured into the hematology testing market when it acquired Sequoia-Turner Corp. As a result, it introduced several major products including Survanta (for treatment of neonatal respiratory distress syndrome), disease-specific medical nutritionals, and a second-generation diagnostic test for hepatitis C. The decade also saw Abbott launch AxSYM, a labor-saving diagnostic system for high-volume laboratories.

In 1995 Abbott scientists researched chemical interactions inside the brain in order to develop new therapies for neurological and psychiatric disorders. This resulted in the company's introduction of a new treatment for bipolar disorder. That same year, the company received expanded indications for Clarithromycin for both prevention and treatment of Mycobacterium avium complex, an infection common in AIDS patients; sought new drug applications for Norvir, to help combat AIDS, and tiagabine, to treat patients with epilepsy; and launched Abbott PRISM, the first fully automated, high-volume blood analyzer.

In 1996 Abbott scored another key acquisition when it bought MediSense, Inc., a company that produced blood glucose self-testing systems for diabetics. Also, it formed strategic alliances with Berlex Laboratories, Magnevist, and Ultravist, and SONUS Pharmaceuticals. The same year, Abbott's research into AIDS treatment resulted in Norvir being cleared for marketing around the world. Its HIV antigen assay for use in blood screening centers was cleared by the USFDA for the detection of the HIV-l antigen.

In 1997, on the nutritional front, the Ross Products division introduced an improved version of Similac, which featured a specialized blend of ingredients similar to breast milk, a new protein system, and an improved fat blend. That same year, four of Abbott's inventors were named 1997 National Inventors of the Year for developing protease inhibitors, a class of drugs for the treatment of HIV infection and AIDS.

As Abbott Laboratories forged ahead into the future, 1998 proved to be pivotal when Miles D. White elected chief executive officer. During the next two years, White would make several important acquisitions and agreements. (That was also the year that the USFDA granted marketing clearance for TriCor, a drug for patients with very high triglyceride levels.) In 1999, the year that White was elected chairman of the board, Abbott acquired Perclose, Inc., the leading arterial closure device manufacturer. Also, Abbott and Triangle Pharmaceuticals Inc. formed a worldwide alliance for six antiviral products.

Also in 1998, Abbott's Depakote became the most prescribed agent by psychiatrists for treating manic episodes associated with bipolar disorder. On the acquisitions and agreements front, Abbott and Boehringer Ingelheim of Germany agreed to co-market Boehringer Ingelheim's meloxicam in Latin America. Abbott acquired control of International Murex Technologies Corporation, a medical diagnostics company. The USFDA cleared the way for Abbott to market Zemplar, a treatment for secondary hyperparathyroidism associated with chronic renal failure, and Synagis, a monoclonal antibody for the prevention of serious lower respiratory tract disease caused by respiratory syncytial virus (RSV) in pediatric patients. Nutrition news included the launching of Similac Lactose Free, the Ensure Glucerna nutritional bar, and Ensure Glucerna OS beverage. The last two products were formulated for diabetics to help them better manage their blood glucose levels.

As the century drew to a close, Abbott's product portfolio continued growing. In 1999 Abbott received USFDA clearance for Depacon, for the temporary treatment of certain types of epilepsy, and for PREVACID, for treatment of ulcers. Also that year, Abbott expanded its hospital products area when it acquired the parenteral products business of Sanofi Pharmaceuticals, Inc.; this move gave Abbott worldwide rights to pre-filled, single-dose syringe technology with Sanofi's proprietary Carpuject drug delivery system. Also, Abbott received approval for Norvir soft-gelatin capsules and the right to market Precedex (dexmedetomidine hydrochloride injection), a sedative for the use in patients hospitalized in intensive care settings.

STRATEGY

Committing itself to innovation, Abbott strives to push the limits of pharmaceutical science and product development. Its corporate strategy focuses on developing highly integrated franchise areas, specifically in anti-infectives, anti-virals, neuroscience, urology, vascular medicine, and oncology. Utilizing both internal and external resources, and employing more than 5,000 international scientists, the company is committed to developing innovative healthcare technologies. To support the advancement of medical science, the company spends more than __BODY__ billion each year toward research and development. The company's drug discovery efforts involve teams of specialized scientists working with advanced technologies including genomics, structural biology, combinational chemistry, and Structure Activity Relationships (SAR) by Nuclear Magnetic Resonance (NMR).

In the area of genomic research, Abbott scientist employ bioinformatics to analyze genetic data that leads to better understanding of the human genetic code. In the area of structural biology, Abbott researchers employ computer modeling to study the three-dimensional shape of molecules responsible for causing disease. In the area of combinational chemistry, Abbott scientists catalogue more than 250,000 compounds for analyzing. Abbott scientists have used SAR by NMR to identify inhibitors of a family of enzymes that affect cancer metastasis and arthritis.

In its anti-infective research, Abbott focuses on the development of potential new uses for existing antibiotics, as well as developing the next generation of anti-infectives designed to safely and effectively defeat emerging drug-resistant pathogens.

INFLUENCES

Abbott's continual growth and success, especially in the last two decades of the twentieth century, can be attributed to its focus on research and development and in its pursuit of strategic alliances and acquisitions. This approach has enabled the company to assume market leadership positions in the areas of AIDS/anti-viral drugs, anti-infectives, neuroscience, urology, and oncology.

Abbott's pharmaceutical business grew to nearly $9 billion in 2001, thanks to the development of core products such as Depakote, Flomax, and Kaletra, as well as through key business acquisitions. The company's medical products business, which includes its diagnostics, hospital products, and nutritionals businesses, reached more than $7 billion in sales.

Abbott's diagnostic division has become the recognized leader in the laboratory testing of body fluids, and the company has continually sought new ways to detect infectious diseases. Research areas focus on immunodi-agnostics, hematology, blood glucose monitoring, and DNA testing. In the late 1990s, Abbott researchers discovered a new strain of the hepatitis E virus and developed the world's first test to screen for HIV.

Another major focus for the company has been preventive health care through nutrition, which became a major concern for the U.S. population in the later part of the twentieth century. In the area of nutritionals, Abbott managed to take a top market position by utilizing the largest research industrial research team in the industry (more than 500 scientists). The company has developed and improved upon well-known products such as Similac infant formula and the Ensure brand of adult nutritionals.

CURRENT TRENDS

Abbott Laboratories has adopted an approach of innovation for sustained performance that is taking the company into the fields of biotechnology and molecular medicine. By combining biotechnology and traditional drug development, Abbott feels that it is creating a new model for pharmaceutical development. This, the company believes, will yield discoveries that have the potential to transform the practice of health care.

Abbott also feels that the companies best able to build on discoveries to create and commercialize differentiated, breakthrough products will have the advantage in the marketplace. To this end, Abbott acquired Knoll and formed an alliance with Millennium Pharmaceuticals, Inc. The acquisition of Knoll brought new scientific talent into the company, as well as new research centers in the United States, Germany, and Japan. Through its alliance with Millennium Pharmaceuticals, Abbott increased its investment in its genomics capability and established a major research program focused on diabetes and obesity. This, the company believes, will result in genetically based drugs and diagnostics to treat obesity and metabolism-related illnesses.

Also, Abbott strengthened itself in the area of genomics research with the acquisition of Vysis, Inc., a leading genomic disease management company. This acquisition brings with it new and innovative technology that detects subtle changes in genes and chromosomes. This, Abbott believes, will lead to a more precise diagnosis and monitoring of diseases.

Abbott also intends to build upon past successes. Since the 1930s, Abbott Laboratories has led discovery in the anesthesia market, and it continues seeking ways to develop new products in that area. Its Ross Product Division is in the process of developing next generation "Nutriceuticals," specially formulated products to help manage disease and enable self-treatment of lifestyle and health concerns.

PRODUCTS

Abbott Laboratories is involved in four significant business areas: nutritional products, pharmaceutical products, diagnostic products, and hospital products.

Abbott's nutritional brands are produced by its Ross Products Division, which has made the company a leader in adult and pediatric nutritionals. The adult products are designed to promote, maintain, and restore physical health. The division's best-known products include the adult nutritional product Ensure, and Similac and Similac 2, leading infant formulas. Other products include Isomil, NeoSure, Ensure Plus, Ensure High Protein, Ensure Light, PediaSure, Pedialyte, and Pulmocare. Most of those products are sold under the recommendation of healthcare professionals. The division's consumer products include Fact Plus Select and Fact Plus Pro pregnancy tests; Selsun Blue dandruff shampoo; and Murine eye care and ear care products.

Abbott's pharmaceutical products include anti-infective, cardiovascular, neuroscience, hormonal, and anti-ulcer drugs. The division produces a large line of adult and pediatric pharmaceuticals sold primarily by prescription or recommendation of physicians. Principal products include Depakote, Clarithromycin, Omnicef, Synthroid, TriCor, and the anti-virals Kaletra and Norvir (protease inhibitors for the treatment of HIV infection). Other products include Meridia for the treatment of obesity, Mavik and Tarka for the treatment of hypertension, and Vicodin and Vicoprofen for the treatment of pain.

Abbott's diagnostic products include diagnostic systems and tests for blood banks, hospitals, commercial laboratories, alternate care testing sites, and consumers. Principal products include reagents used to perform immunoassay tests (including Architect, AxSYM, IMx, and Abbott Quantum); Abbott PRISM; screening and diagnostic tests for hepatitis B, HTLV-I/II, hepatitis B core, and hepatitis C; tests for the detection of HIV antibodies and antigens, as well as other infectious disease detection systems; and cancer monitoring tests, including tests for prostate-specific antigens.

Other diagnostic products include the Vysis product line of genomic-based tests, including the PathVysion HER-2 DNA probe kit and the UroVysion bladder cancer recurrence kit; the LCx amplified probe system and reagents; the Abbott TestPack and Determine systems for rapid diagnostic testing; a full line of hematology systems and reagents known as the Cell-Dyn series; the MediSense product line of blood glucose monitoring meters, test strips, data management software, and accessories for diabetics, including Precision Xtra, MediSense Optium, Sof-Tact, Precision Q.I.D., MediSense II, ExacTech and ExacTech RSG, TrueMeasure strip technology, Precision Link Direct, and Precision Sure-Dose insulin syringes.

Hospital products include a full line of anesthetics, injectable drugs, infection-control products, diagnostic imaging agents, IV solutions, advanced drug-delivery systems, and other medical specialty products for hospitals, clinical labs, and alternate health care sites around the world. Specific products are hospital injectables including Carpuject and FirstChoice generics; ADD-Vantage and Nutrimix drug and nutritional delivery systems; anesthetics, including Pentotha1, Amidate, Ultane, Isoflurane, and Enflurane; Precedex for sedation; cardiovascular products, including Corlopam; Calcijex and Zemplar, injectable agents for treatment of bone disease in hemodialysis patients; and parenteral nutritionals such as Aminosyn and Liposyn.

CORPORATE CITIZENSHIP

Abbott Laboratories values and champions corporate social responsibility about as much as it does innovation and research and development. The company has established the Abbott Laboratories Fund, which contributes millions of dollars each year to health and human service organizations and sponsors programs that enhance science education, promote diversity, and provide access to healthcare for people in need. Through the fund, the company matches gifts employees make to hospitals, universities, secondary and elementary schools, and public broadcasting. The company also supports local communities through employee volunteerism and donations. Cash donations have helped support the United Way, the American Cancer Society, the American Heart Association, and other health and human service organizations.

Abbott also partners with health and human service organizations around the world, donating health care products to help alleviate human suffering. In recent years, Abbott has supported relief efforts for victims of the earthquakes in western Turkey, Taiwan, and Colombia; flooding in Venezuela; and the refugee crisis in Kosovo.

Abbott Laboratories also advocates environmental responsibility. It has developed ongoing partnerships with community organizations to provide education, opportunities for collaboration, and resources for environmental initiatives.

GLOBAL PRESENCE

Abbott's International segment produces a broad line of hospital, pharmaceutical, and adult and pediatric nutritional products marketed and primarily manufactured outside the United States. This segment also includes consumer products. While the largest part of Abbott Laboratories' sales are generated in the United States (63 percent), the company does 5 percent of its business in Japan, 4 percent in Germany, 3 percent in Italy, 3 percent in Canada, and approximately 20 percent in other countries.

Abbott has entered into joint business ventures with organizations around the world including Takeda Chemical Industries, Ltd. and Taisho Pharmaceutical Co., Ltd. (Japan), Antisoma plc (United Kingdom), Karo Bio AB (Sweden), and NeuroSearch A/S (Denmark).

EMPLOYMENT

Abbott Laboratories embraces a corporate culture that fosters workplace diversity, career encouragement, and a commitment to excellence and achievement, especially toward advancing science and the practice of healthcare. For its employees, it provides a full range of benefits in a nationally recognized package, as well as training and development opportunities across the entire company. (Money magazine has ranked the company's benefits package as one of the ten best in the United States.

Fortune magazine ranked Abbott Laboratories as one of the "Top 50 Companies for Minorities" for four consecutive years, while Working Mother magazine named it one of the "Best Companies for Working Mothers."

SOURCES OF INFORMATION

Bibliography

BioScorpio. "Abbott Laboratories," 1 April 2002. Available at http://www.bioscorpio.com/abbott_laboratories_inc.htm.

Chicagotribune.com. "Company Profile-Abbott Laboratories." CareerBuilder, 1 April 2001. Available at http://hire.chicagotribune.com.

Hoover's Online. "Abbott Laboratories," 28 March 2002. Available at http://www.hoovers.com.

NFIA. "Abbott Laboratories." Company Profiles, 2002. Available at http://www.nfia.com.

Spaulding, B.J. "Abbott Laboratories: Monkish No More." Pharmacogenomic Medicine, 31 August 1999. Available at http://www.biospace.com/articles/.

Yahoo! Finance. "Abbott Laboratories." Yahoo Market Guide, 28 March 2002. Available at http://biz.yahoo.com.

For an annual report:

on the Internet at: http://www.knoll-pharma.com/investor/annual_reports.html

For additional industry research:

Investigate companies by their Standard Industrial Classification Codes, also known as SICs. Abbott Laboratories' primary SICs are:

2099 Food Preparations, Not Elsewhere Classified

2834 Pharmaceutical Preparations

2844 Perfumes and Cosmetics

3841 Surgical And Medical Instruments

Also investigate companies by their North American Industry Classification System codes, also known as NAICS codes. Abbott Laboratories' primary NAICS codes are:

311423 Dried and Dehydrated Food Manufacturing

325412 Pharmaceutical Preparation Manufacturing

325620 Toilet Preparation Manufacturing

339112 Surgical and Medical Instrument Manufacturing