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Abbott Laboratories : company profile

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Abbott Laboratories is a US-based healthcare group specialising in nutrition, medical products, diagnostics and generics. It is the world leader in infant and clinical nutrition with brands such as Ensure and Similac, and among the leader in diabetes care with products such as FreeStyle blood glucose monitors. The acquisition of Indian manufacturer Piramal in 2010 put the group among the world's biggest manufacturers of generic pharmaceuticals. However several other divisions have been sold, of which the biggest by far was its proprietary pharma division, spun off to shareholders in 2013 as AbbVie.


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Prior to 2013, Abbott had accumulated a strong collection of important pharmaceutical products, but lacked blockbusters. For many years, its sole billion-dollar drug was Prevacid, handled by joint venture TAP. Abbott needed a new star product, and it certainly found one in the form of Humira, which grew unexpectedly into not only the biggest product in the company's history, but also the overall global top-seller, with effectiveness in a number of different treatment areas. Three other products had joined Humira in the blockbuster club by 2011. Seizing the opportunity to make the most of that growth, in 2011, Abbott announced plans to split into two separate companies, one housing pharmaceuticals, and the other grouping together the medical devices, infant nutrition and diagnostic operations as well as generics. That process took place in January 2013. The pharmaceutical company adopted the new name AbbVie, while the diversified products business remains Abbot Laboratories.

The newly slimmed down Abbott Laboratories comprises four main businesses: nutrition, established pharmaceuticals (or generics), diagnostics and medical products. The biggest of these is Abbott Nutrition, a world leader in clinical and infant nutritionals, known until 2007 as Ross Products. Brands include Similac and Eleva infant products, PediaSure for children, Ensure adult nutrition, Glucerna for diabetics and Isomil. Abbott was the leader in the US baby formula sector in 2015 by a slender margin, with 39.7% market share and sales of $1.62bn (IRI 52 weeks to Jan 2016, all retail channels, Grocery HQ, powder and RTD). Its main competitors are Mead Johnson, with Enfamil and others (39.1% share) and Nestle/Gerber Good Start (14.5% share, though Gerber dominates the separate prepared baby food market). The Ensure portfolio is the main competitor in the weight control products to SlimFast, and is itself challenged in clinical nutrition mainly by Nestle. Recent acquisitions have included nutritional bar brands ZonePerfect in 2003, followed by Body For Life and other brands in 2004. Myoplex is a leading range of athletic nutritional products. The nutritionals division accounted for just over a third of group revenues in 2015, generated combined worldwide sales of $6.98bn in 2015, of which around 55% came from pediatric products and 45% from adult.

The established pharmaceuticals division derives a significant proportion of its revenues from generic copies of what used to be its own drugs, until they were demerged as AbbVie. So it produces copies of TrCor, Synthroid, Creon, Biaxin and Lipanthyl, all still produced under trademark by AbbVie. It has also expanded its network considerably through acquisition, not least with the purchase of Piramal Healthcare Solutions of India for around $4bn. Combined sales from generics and other "established pharmaceuticals" were $4.97bn in 2013, making it the global #4 in generics after Teva, Novartis-owned Sandoz and Mylan. In 2014 the group agreed to acquire Russian manufacturer Verofarm for $495m. Later the same year the group split its generic business in two, with a deal to transfer operations in all developed markets such as Europe, Japan, Canada and Australasia to rival Mylan for around $5.8bn in stock. Following the sale of some of these share in 2015 it ended up with a 14% stake in the enlarged Mylan, and retains full control of its generic business in developing markets. The group also sold a small portfolio of animal health drugs to global sector leader Zoetis. Sales from established pharmaceuticals were $3.72bn in 2015.

The group manages a substantial and varied medical products group. Abbott Diagnostics offers blood screening products and services, under the Architect and Prism brands, as well as i-Stat handheld blood analysis devices. A separate group specialises in vascular devices, formed primarily from the acquisition in 2006 of the $1bn vascular intervention products division of Guidant, then being acquired by Boston Scientific. The key product in this segment is the Xience range of vascular stents, now the market leader in its segment. Combined sales from diagnostics products were $4.65bn in 2015, with another $2.80bn from vascular products. In 2016, Abbott announced a $25bn deal to acquire St Jude Medical, a leading maker of pacemakers, defibrillators and other cardiac devices. The purchase is designed to boost Abbott's own stent business, which includes brands such as Absorb and MitraClip.

The group is currently a major player in medical optics, making Tecnis lenses for cataract patients as well as the Catalys and LASIK precision laser surgery systems. In 2009, the group agreed to pay around $1.4bn to acquire Advanced Medical Optics, which makes cataract and laser eye surgery devices. In 2016, it accepted an offer from Johnson & Johnson for its whole eye care unit worth $4.3bn. J&J plans to combine the business with its existing vision business, which includes Acuevue contact lenses.

Abbott Diabetes Care combines the group's Precision blood testing devices with the FreeStyle range of blood glucose monitors, acquired in 2004 as part of TheraSense. Combined revenues from these businesses were $2.27bn in 2015.


Boosted by a series of acquisitions including Piramal of India and Belgian pharmaceutical company Solvay, Abbott's group sales rose steadily in the late 2000s, hitting $38.9bn in 2011. The subsequent demerger of the proprietary pharma business split the company in two.

Revenues for 2015 were $20.41bn, up very slightly from the year before. Net earnings doubled to $4.42bn as a result of a $1.8bn profit from the sale of part of the established pharma and animal health division. However, even without that gain earnings from continuing operations jumped by 51% to $2.61bn. The US accounted for 31% of revenues in 2015, with another 12% from Western Europe and 9% from China.


Abbott Laboratories was founded in 1888 by Chicago physician Dr Wallace Abbott to make precisely measured pills from medicinal plants. He called these "dosimetric granules", and initially supplied only his own medical practice. Later he acquired and became editor of the medical periodical The Alkaloidal Clinic. Gradually Abbott's sideline business of pill manufacturing began supplying other physicians as well and was established as a separate company in 1915 under the name Abbott Laboratories. By this time, rapid developments in chemical science had led to the introduction of increasing numbers of wholly synthetic medicines, and Abbott plunged into this comparatively new area with the acquisition of the synthetic antiseptic Chlorazene, widely used during World War I.

The company went public in 1929 and a year later introduced what was to become one of its most successful products, the sedative Nembutal. The development of the anaesthetic Pentothal in 1936 was an even greater breakthrough, as was new antibiotic Erythrocin, introduced in 1952. The company took its first steps into Japan in 1962 forming a partnership with Dai Nippon Pharmaceuticals, known initially as Dainabot, which remains Abbott's main subsidiary in that market. In 1964 the group acquired M&R Dietetic Laboratories, makers of Similac infant formula. Ensure, the first adult medical nutritional, was introduced in the US in 1973. In 1977, Abbott formed a joint venture to market products developed by Takeda Chemical Industries of Japan in North America under the name TAP Pharmaceuticals.

During the 1980s the group was among the first to develop products to deal with the arrival of HIV and AIDS. In 1985, it developed the world's first diagnostic test for the disease, and later introduced treatment drugs Norvir and Kaletra. In 2001 the group acquired Knoll Pharmaceutical Products from BASF for $7.2bn. Responding to another new disease outbreak two years later, Abbott and German company Artus GmbH developed a worldwide marketing and distribution agreement for the first commercial test to detect a form of the virus suspected of causing Severe Acute Respiratory Syndrome (SARS).

The group's $2.4bn hospital products division, making drug delivery systems, generic pharmaceuticals and anaesthetics, was spun off to shareholders in 2004 under the name Hospira. In 2006, Abbott agreed to pay $3.7bn to acquire Kos Pharmaceuticals, as well as $4.1bn for the medical devices arm of Guidant. The TAP joint venture was dissolved in 2008.

Last full revision 14th June 2016

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