Abbot Laboratories: Problems or Opportunities Research Paper

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3% compared with the previous year, but earnings declined 14.1% to $0.55 per share. Analysts remain wary of investing in Abbott, due to widespread uncertainty about the direction of U.S. health reform and generic competition. Its most successful drug at present is Humira, an anti-tumor necrosis factor (TNF) drug (Abbot Laboratories, 2011, Zacks Equity Research). However, exclusive dependence on a single drug does not bode well for the company's future. The eternal problem for profitability with drug companies is that all new drugs patents expire after a certain period, and are allowed to be produced more cheaply in generic form. A pharmaceutical company needs to show consistent innovation to stay afloat. Combined with the difficulties in curtailing overhead costs, Abbott should reconsider its approach to spending, trimming administrative costs and emphasizing R&D.

Abbott needs to show sustained innovation in its R&D sector, specifically in drugs that are likely to yield a high profit.

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It must also promote more aggressively its personal care products, such as Ensure (a nutritional supplement), Pedialyte (an electrolyte drink for toddlers), and antacids. Abbott has shown substantial innovation in its drugs designed to treat AIDS and other autoimmune disorders, and it must continue to distinguish itself as a unique company, to encourage healthcare providers to select its products over its competitors. However, to ensure a steady stream of revenue, it must also 'shore up' its non-drug related product lines and its medical equipment (such as its stents). Abbott must demonstrate that its products are worth the price consumers pay and emphasize their superiority of effectiveness and functioning, versus cheaper generic or low-cost brands......

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