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ABBOTT 2014 ANNUAL REPORT
2
LETTER TO OUR SHAREHOLDERS
In 2014 we saw the new Abbott in full.
2012 was our year of separation, 2013 a
year of establishing the template of the
new company we’d become. Last year
was our first opportunity to run that
company flat out. And we were very
happy with what we saw and how we
performed. 2014 was a very good year for
Abbott — one that clearly demonstrated
how we’ll compete and succeed in the
years ahead.
Throughout the year, we built for the
future in multiple ways. All of them
made our company stronger, more
competitive, and better able to help
more people in more ways. Our strategic
actions in 2014 significantly enhanced
our established competitive strengths:
BALANCE
Well-balanced diversity is the foundation
of Abbott’s strategy and success. Our
four major businesses are of roughly
equal size, and that balance extends
across geographies and our mix of
payers. We constantly shape our
portfolio to ensure that we’re in the
right markets and that our success
isn’t over-reliant on any single therapy,
technology, or country.
This year, we took several actions in
our Established Pharmaceuticals
business, strengthening its product
portfolio, building its geographic
presence, and increasing its focus on
growth markets. First, we expanded
this business through our acquisitions
of CFR Pharmaceuticals and Veropharm,
which significantly enhanced our
product portfolio and our presence
throughout Latin America and Russia,
respectively, making Abbott a top-ten
player in both regions. At the same
time we agreed to sell our developed-
markets branded-generics business
to Mylan Inc., focusing this business
entirely on faster-growing markets.
We further focused our company on
enhancing human health by agreeing to
sell our Animal Health business to Zoetis
and by entering a large and growing new
therapeutic area — electrophysiology for
people with atrial fibrillation — through
our acquisition of Topera.
GLOBAL PRESENCE
Today’s Abbott is one of the most
globalized of all healthcare companies,
with about half of our sales now in
faster-growing geographies. To support
our strong global growth, we’re
expanding infrastructure around the
world. In 2014, we added a new vaccine
facility in the Netherlands, nutrition
plants in China, India, and the United
States, and are adding a new optics
facility in Malaysia to meet growing
demand in those regions.
In a highly innovative move, we also
agreed to co-develop a dairy-farm hub
in China, which will deepen our roots
in the country and strengthen our
supply chain. These investments are
a reflection of the strong underlying
demand for high-quality adult and
pediatric nutrition products. Our intent
is to design and manufacture products
around the world to ensure that they’re
geared to local needs and preferences,
that we can produce them eciently,
and that we build our presence and
strengthen our relationships with key
stakeholders in every country in which
we do business.
RELEVANCE
Abbott is well positioned to grow with
the major trends in our business and the
broader global environment.
The growth of developing economies
and the global middle class has vastly
expanded our markets and ability to help
more people around the world. A related
and equally powerful trend driving
our business is the aging of the global
population. Today, about 23 percent of
the people in the key markets we serve
are age 50 or older; the United Nations
projects this to grow to 40 percent
by 2050.
Abbott has a wide range of leading
products designed specifically for older
people — who use more healthcare than
others. Cataract removal, for instance,
is the world’s most-performed surgery;
we’re currently the No. 2 provider of
cataract surgical instruments and lenses,
and are gaining market share through
the introduction of new products such
as our new Catalys system. This patient
group also often requires intraocular
lenses to help them focus their sight. To
that end, this year we began the global
rollout of two new Tecnis Symfony lenses.
And in our Vascular business we
launched our MitraClip device in the
U.S. to treat mitral valve regurgitation,
a heart condition that is strongly
correlated with age.
STRONG CASH FLOW
$3.5 Billion
Returned to shareholders
through dividends and
share repurchases