Abbott Laboratories' Post-COVID-19 Strategic Shift

Changes in Product Focus and Portfolio

Abbott Laboratories is strategically shifting its product focus and portfolio by emphasizing innovation, cost reductions, and productivity improvements. The company is investing in high-growth areas like vascular and endovascular segments, continuously evaluating its portfolio, and making ongoing investments to enhance its pipeline and overall business performance.

"We’re focused on the things that we can control and execute on, and in particular some of this great portfolio contribution from our sales top line performance, particularly in accretive businesses, is a contributor here, and one that we anticipate will continue to expand here throughout the year. We have dedicated teams in each one of our businesses focused solely on gross margin improvement, productivity yield improvements, cost reductions, innovation that brings accretion to the portfolio." --- (ABT, earning call, 2024/Q2)

"New products like Esprit combined with the investments that we made in our vascular business, both organically and inorganically, have expanded our presence in faster growing areas and increased the future growth outlook for this business.In summary, we exceeded expectations both the top and bottom lines and, as a result, we raised our financial outlook for the year." --- (ABT, earning call, 2024/Q2)

"If you focus on innovation on meeting needs, unmet needs, you can turn a market around.From a vascular perspective, as I said in my comments, we’ve been repositioning the portfolio to more higher growth areas, peripheral areas, endovascular areas, but we started that a little bit later than what we did in CRM, so I expect to start to see our vascular business start to also contribute to a higher growth rate, the same way that CRM is, and that just kind of bolsters our entire med tech portfolio and gets us into that 12%, 13% growth rate, at least that’s our target." --- (ABT, earning call, 2024/Q2)

"Robert Ford: Well, we look at our portfolio on an ongoing basis. I don’t think there’s this one moment in the year that we do it - we’re doing it on an ongoing basis, and the company has a history of ensuring that the portfolio that is assembled is not only delivering value to patients and governments and healthcare systems, but it’s also delivering value to our shareholders." --- (ABT, earning call, 2024/Q2)

"So I think that you'll continue to see that. We'll continue to make investments in this business, continue to make investments in the pipeline." --- (ABT, earning call, 2024/Q1)

R&D Investments and Innovation

Abbott Laboratories has strategically increased its R&D investments, allocating 6.3% of sales to R&D in Q2 2024. This focus has led to significant innovations, such as the FDA-approved Esprit™ BTK system. The company balances these investments with strong financial performance and a commitment to dividends and M&A opportunities.

"R&D (3) (2) — (16) (21) SG&A (14) (9) — (11) (34) Other (income) expense, net 12 — — (38) (26) Earnings before taxes $ 6 $ 53 $ 472 $ 68 599 Taxes on Earnings (d) 95 Net Earnings $ 504 Diluted Earnings per Share $ 0.28 The table above provides additional details regarding the specified items described on tables titled 'Non-GAAP Reconciliation of Financial Information.' a) Acquisition-related expenses include integration costs, which represent incremental costs directly related to integrating acquired businesses, as well as other costs related to business acquisitions." --- (ABT, press release, 2024/04/17)

"Adjusted R&D was 6.3% of sales, and adjusted SG&A was 27.7% of sales in the second quarter." --- (ABT, earning call, 2024/Q2)

"Abbott projects full-year diluted EPS on a GAAP basis of $3.30 to $3.40 and projects adjusted diluted EPS of $4.61 to $4.71.Abbott narrowed its full-year 2024 organic sales growth guidance range, excluding COVID-19 testing-related sales, to 9.5% to 10.0%, which represents an increase at the midpoint of the range2.In April, Abbott announced U.S. Food and Drug Administration (FDA) approval of the Esprit™ below-the-knee (BTK) system, a breakthrough innovation for people living with peripheral artery disease." --- (ABT, press release, 2024/07/18)

"Dividend and buybacks are--you know, the dividend is definitely core to our investment identity, and we intend to continue to grow our dividend, so that is a balanced approach.Even with all of that, we also, as you’ve probably seen, we have opportunity from a balance sheet perspective to deploy that from an M&A perspective, and we’ve been spending time talking about our strong top line and the pipeline that we’ve developed, and that allows us to be a little bit more selective." --- (ABT, earning call, 2024/Q2)

"Abbott Laboratories and Subsidiaries Details of Specified Items First Half Ended June 30, 2024 (in millions, except per share data) (unaudited) Acquisition or Divestiture- related (a) Restructuring and Cost Reduction Initiatives (b) Intangible Amortization Other (c) Total Specifieds Gross Margin 2 74 943 5 1,024 R&D (4) (1) — (57) (62) SG&A (25) (19) — (47) (91) Other (income) expense, net (135) — — (36) (171) Earnings before taxes 166 94 943 145 1,348 Taxes on Earnings (d) 143 Net Earnings 1,205" --- (ABT, press release, 2024/07/18)

Market Expansion and New Opportunities

Abbott Laboratories is focusing on market expansion by refining products, leveraging encouraging U.S. data, and introducing biosimilars globally. They are strategically positioning themselves in both emerging and developed markets, emphasizing understanding product uptake in emerging markets before scaling manufacturing.

"The market expansion opportunity that we have, I think is going to still require some work on the product." --- (ABT, earning call, 2024/Q1)

"Now, that’s good, right - that provides a market expansion dynamic here in the U.S., but-.I mean, I’m really encouraged by some of the data that I’m seeing, and I think it starts with the data, right?" --- (ABT, earning call, 2024/Q2)

"You look at each of the businesses, EPD consecutive, three consecutive of double-digit growth, great margin expansion, and the teams are now working to be able to introduce biosimilars in all the markets that we are participating in." --- (ABT, earning call, 2024/Q1)

"been able to position our presence in these markets as an advantage to these players that really aren’t focusing on emerging markets, they’re focusing more on the opportunity that exists in developed markets, and now they can partner with one single company, reputable company to be able to use that capacity in other markets." --- (ABT, earning call, 2024/Q2)

"It’s a different dynamic in developed markets, as we know, but in emerging markets the category really expands, so what we wanted to do is to say, okay, before we start to think about manufacturing, before we start to think about that, we want to be able to understand what is the uptake of these products once you go ahead and put a concerted effort to developing these types of products in emerging markets." --- (ABT, earning call, 2024/Q2)

Financial Performance and Strategic Implications

Abbott Laboratories is strategically evaluating its business units for potential combinations or spins, reflecting a proactive approach to optimizing its portfolio. The company uses non-GAAP measures to provide clarity on its ongoing performance and has raised its guidance due to strong financial results, indicating confidence in sustaining top-tier outcomes.

"Josh Jennings: Understood, and thanks for that answer.Another kind of high level question you probably receive regularly, but just wanted--it’s our understanding as well that your team, the Board ever year at least once a year, maybe multiple times a year, is just considering the strategic fit of the four major business units for Abbott, and maybe just if we could get an update on your thoughts on the business combinations and the potential for spins down the line. Thanks a lot." --- (ABT, earning call, 2024/Q2)

"On today's conference call, as in the past, non-GAAP financial measures will be used to help investors understand Abbott's ongoing business performance." --- (ABT, earning call, 2024/Q1)

"Typically don't raise guidance in the first quarter, but given the strong performance and the outlook and the remainder of the year, we felt comfortable doing that and we're very well positioned to continue to sustainably deliver top tier results. With that, I'll wrap up and thank all of you for joining us today." --- (ABT, earning call, 2024/Q1)

Customer Engagement and Marketing Strategies

Abbott Laboratories is focusing on customer-centric marketing strategies to capture attention in a data-saturated environment. They are employing a mix of on-the-ground guerrilla marketing and TV advertising to open and sustain market engagement post-COVID-19.

"It's our brains adapting to data overload. As #CustomerCentric marketers, let's craft strategies to capture fleeting attention spans. Make every second count! #Marketing https://t.co/pCDRWcLT5e" --- (ABT, Twitter post, 2024/05/28)

"You’re going to have to do some on-the-ground kind of gorilla marketing - let’s call it like that, together with TV advertising to really be able to open up the market and then sustain it, right, and sustain its use." --- (ABT, earning call, 2024/Q2)