Abbott

Implementation Program: 2007-2011

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Background:

  • By June 2007, Abbott was facing increased pricing, reimbursement and regulatory pressures
  • The company had already spun off its Hospital Products Division in 2004 and was considering selling its Diagnostics Division to General Electric
  • Before doing so, wanted to see whether the division could be turned around by implementing shareholder value management disciplines

Actions:

  • The financial and strategic assessment of the Diagnostics Division highlighted the concentration of economic profits in markets across the globe and the opportunity to better focus the strategies and resources of the Division on profitable products, regions and customers while significantly decreasing the economic profit losses
  • The increased cash flow allowed the division to continue investing in product innovations and gain further share of profitable customers
  • The same approach to improving business performance was subsequently implemented across the corporations Diagnostics, Nutritional and US Pharmaceutical businesses

Results: (subsequent 5 year performance)

  • Since 2007, Abbott Laboratories has outperformed the average shareholder returns in the healthcare and pharmaceutical industries