Abbott Laboratories 2013 Annual Report Download - page 4

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ABBOTT 2013 ANNUAL REPORT
LETTER TO OUR SHAREHOLDERS
This rare combination of achievements says a great deal
about our company. On the one hand, it’s remarkable
for any enterprise to endure as long as 125 years. On the
other, it’s unusual for a company to make such a change,
separating its original and largest business.
But doing so was entirely consistent with our long history
of success — another example of Abbott reinventing itself
in new ways that reflect its changing environment and
opportunities. This readiness to adapt for the future is
why the Abbott of today is ready to attain new levels of
achievement in the years ahead.
There are four primary bases for our future success, all
clearly at work in the strong performance we delivered in
2013. Today’s Abbott is:
BALANCED
Business diversity has long been our fundamental
strategy. But its essence is balance. We don’t want to be
over-dependent on any single part of our mix. And today’s
Abbott is better balanced than ever before — and
in multiple dimensions of our profile.
First is business balance. Our four major businesses —
Nutritionals, Medical Devices, Established
Pharmaceuticals, and Diagnostics — are of roughly the
same size. This provides us consistent opportunity to
participate across the spectrum of healthcare, without
over exposure to the challenges of any given sector. Next is
geographical balance. Not even a decade ago, the majority
of Abbott’s business was in the United States. Today the
U.S. accounts for a more proportionate amount of our
worldwide sales, approximately 30 percent. Another 30
percent of our sales come from other developed markets,
and 40 percent from faster-growing “emerging” markets.
Again, this balance provides access to opportunity without
over reliance on any particular area. We have significant
presence and strong positions in the faster-growing
developing markets, and leadership positions that oer
durable performance in developed markets.
And, finally, we’ve achieved a new kind of customer
balance, as well: today approximately half of our sales
are direct to the consumers who use our products, up
from only 25 percent before our separation. This allows
us to build direct relationships with the people doing the
purchasing, and makes us less reliant on the decisions of
third parties.
GLOBAL
With roughly 70 percent of our sales now outside the U.S.,
today’s Abbott is one of the most global of all healthcare
companies. We’ve long had sales operations around the
world; but we are now a truly globalized organization,
in every sense, combining worldwide strength and
perspective with deep local roots.
Today approximately 70 percent of Abbott people are
employed outside the U.S. And we’re locating more
research and manufacturing operations in-region to better
understand and respond to local needs and preferences.
NET SALES WORLDWIDE
(dollars in billions)
OPERATING MARGIN
EXPANSION
12.0%
’12’11 ’13
In 2013, Abbott
sales increased
approximately
4 percent over
2012, excluding
the impact of
foreign exchange.
Abbott’s 2013
operating margin
increased by 320 basis
points over 2012.
8.8%
7.6%
$21.8
’12 ’13
$21.5