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 U.S. JAPAN Germany Netherlands Italy Canada France Spain U.K. Others Total Growth (%) 5.1 27.4 24.6 11.1 -2.4 14.9 26.8 9.9 14.0 31.4 14.3 rate

2010 ($ millions) 15194 2025 1846 2001 1144 1036 1216 1066 888 8751 35167

2009 ($millions) 14453 1590 1481 1801 1172 902 959 970 779 6658 30765

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 Emerging revenues market of business sales 2011 Q1 ($ millions)

Growth Percentage rate 2011 revenues Q1 of business Emerging markets (%) 117.4 18.3 21.1 12.8 45 10.7 38.4 30.92 25.1 17.9 13.2 6.1 6.7 100

Established pharmaceuticals 5532 4.7 15.7 Nutritionals 19894* 20.7 56.6 Proprietary Pharmaceuticals 6 10.8 Core diagnostic 3794 Diagnostics 3194 18.6 9.1 Vascular 2753 1 7.8 Other 35167 14.3 100 Total *sales of proprietary and established combined.

726 589 422 310 144 157 2348

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 Diversify sources growth Solvay Acquisition y Adds > $3bn annual revenue, out of which 75% comes from outside U.S. and 70% comes from branded generics y Complementary product portfolio in cardiology, neuroscience, and gastroenterology y Adds a growing global vaccines business and modest molecular diagnostics business emerging y Solvay infrastructure is platform for expansion y Has significant presence in emerging markets including eastern Asia and Europe y Strong brand recognition of

Expand markets

into

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 Diversify sources growth

Piramal Acquisition of y Adds > $500 million sales annually y Piramal has 350 leading branded generics in various therapeutic areas. y y y 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.

Expand markets

into

emerging

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 y Strengthens position in key emerging markets y Complements established products strategy and augments business with broad portfolio of generic drugs y 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 y Provides focus, structure, and resources to optimize emerging markets opportunity y Builds on Solvay, Piramal acquisition and agreement with Zydus cadila y 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 y y 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 India Inorganic y Acquired Piramal formulations y Acquired Wockhardts nutritional business y Entered into licensing & marketing agreement with Zydus cadila Organic

Russia China

y y y y

y y y Brazil y

Launched nutritional brands ENSURE and GLUCERNA 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 Abbotts 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 y y y y y 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

y y

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