ABBOTT:

Compared to other MNC pharma, Abbott is less affected by drugs going off patent in the next few years. Its blockbuster drug Humira goes off patent only in 2016. Abbott is less dependent on proprietary pharmaceuticals and is a diversified firm with presence in Established pharmaceuticals, nutritionals (eg. Branded generics), molecular diagnostics, innovation driven devices, point of care/ diabetic care.

However Abbott made late entry into emerging markets compared to its peers. It is now looking at tapping the emerging markets opportunity in a big way.

Abbott has grown at 31.4% in emerging markets in FY2010

The following table gives the division of revenues of Abbott with respect to different markets it operates in. Abbott defines emerging markets as all other countries apart from the developed countries. Others in the table represent the emerging markets. It can be seen that there has been significant growth in emerging markets. Emerging markets contribute to 25% of total sales and Abbott is planning to increase this share to 33% by 2015.

Country/ revenues 2010 ($ millions) 2009 ($millions)

Growth rate (%)

U.S. 15194 14453 5.1JAPAN 2025 1590 27.4Germany 1846 1481 24.6Netherlands 2001 1801 11.1Italy 1144 1172 -2.4Canada 1036 902 14.9France 1216 959 26.8Spain 1066 970 9.9U.K. 888 779 14.0Others 8751 6658 31.4Total 35167 30765 14.3

Abbott focusing on Established Pharmaceuticals and nutritionals in emerging markets

The following table lists the businesses Abbott is present in, their global revenues in 2010, and corresponding growth rate of each business, revenues for Q1 2011 of each business from emerging markets and corresponding growth rates. It can be seen that there has been major growth in established pharmaceuticals in emerging markets in Q1 2011.

Business Global sales 2010 ($ millions)

Growth rate 2010 (%)

Percentage revenues of business

Emerging market sales 2011 Q1 ($ millions)

Growth rate 2011 Q1 Emerging markets (%)

Percentage revenues of business

Established pharmaceuticals 726 117.4 30.92Nutritionals 5532 4.7 15.7 589 18.3 25.1Proprietary Pharmaceuticals

19894* 20.7 56.6422 21.1 17.9

Core diagnostic Diagnostics

3794 6 10.8310 12.8 13.2

Vascular 3194 18.6 9.1 144 45 6.1Other 2753 1 7.8 157 10.7 6.7Total 35167 14.3 100 2348 38.4 100

*sales of proprietary and established combined.

Growth of Abbott in Emerging Markets achieved and to be achieved by

Inorganic

Acquisition of Solvay

Solvay is a well recognized brand in emerging markets. It has strong infrastructure which Abbott plans to leverage upon to increase its presence and obtain desired growth rates from the emerging markets

Abbott strategy Solvay AcquisitionDiversify sources of growth

Adds > $3bn annual revenue, out of which 75% comes from outside U.S. and 70% comes from branded generics

Complementary product portfolio in cardiology, neuroscience, and gastroenterology

Adds a growing global vaccines business and modest molecular diagnostics business

Expand into emerging markets

Solvay infrastructure is platform for expansion Has significant presence in emerging markets including eastern

Asia and Europe Strong brand recognition

Acquisition of Piramal

With the acquisition of Piramal healthcare Abbott now has become the leading pharma player in India. It has acquired a mass of 350 branded generics from Piramal.

Abbott strategy Piramal AcquisitionDiversify sources of growth

Adds > $500 million sales annually Piramal has 350 leading branded generics in various therapeutic

areas.

Expand into emerging markets

Abbott becomes leading player in Indian Pharma market India is one of the fastest growing markets Piramal has largest sales force in India (>7000). It has a unique

model to target high growth rural areas.

Licensing & marketing agreement with Zydus Cadila

Abbott has entered into a licensing agreement with Zydus cadila to access the companies branded generics.

Zydus cadila agreement Strengthens position in key emerging markets Complements established products strategy and augments business with broad portfolio of

generic drugs 24 products in 15 emerging markets and option for 40 additional products

Organic

Established Products Division (EPD)

EPD was formed early this year (2011) to focus, identify and leverage on the opportunities in Emerging markets. This division would be responsible for sales in emerging markets and currently has sales of $ 5 billion.

Established products division Provides focus, structure, and resources to optimize emerging markets opportunity Builds on Solvay, Piramal acquisition and agreement with Zydus cadila Expects to deliver double digit growth rates in emerging markets

New product launches in emerging markets

Depending on existing market opportunity, Abbott is now launching its established brands in nutritionals and other divisions in certain emerging markets

Launched ENSURE and GLUCERNA (nutritional brands) in Russia Launched Similac, an infant formula product in new geographies.

Strategies Abbott employed for different Emerging markets

Country/ strategy Inorganic OrganicIndia Acquired Piramal

formulations Acquired Wockhardt’s

nutritional business Entered into licensing &

marketing agreement with Zydus cadila

Russia Launched nutritional brands ENSURE and GLUCERNA

China Entered China in 1994 and emerged strong player in Nutritionals.

It is investing in Nutritionals to tap the market.

Opened a manufacturing facility with JV between Mei You Pharma in 2006 that catered to only Chinese market.

Opened a nutritional manufacturing facility Guangzhou, china in 2009

Opened Pharmaceutical R&D in Shanghai, china in 2009.

Opened an Asia pacific nutrition R&D in Singapore in 2010

Brazil Abbott’s revenues in Brazil are from its strong brands that are dual priced.

Follows dual pricing policy for its Anti-HIV drug Kaletra.

Abbott sees China as a very important market and invested significantly in it

Abbott has nearly 20% of its revenues coming from nutritionals ($ 5bn). 51% of these revenues from outside U.S.

Abbott entered China in 1994. Abbott is majorly seen as a nutritional brand in China. Abbott has a manufacturing facility that caters to only Chinese market

o Opened in 2006 with JV between Abbott and Mei You Pharmaceutical

It opened a nutrition manufacturing in Guangzhou, china in 2009.o Invested $20 million

o Will serve as packaging and dry blending facility for premilac gold, an infant

formula product that serves only Chinese market

o It is the only manufacturing facility that Abbott operates to cater to just one

market It recently opened nutritional R&D in Singapore to develop nutritional products specific

to Asia- pacific region in 2010.o Addresses most critical nutritional challenges, dietary needs and taste preferences

of customers in Asia Pacific region Apart from Nutritionals, it also has presence in Pharmaceuticals and medical products in

china Abbott has opened a pharmaceutical R&D in 2010 as well