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Running Abbott Laboratories.
Module 2: Assignment 2 Abbott Laboratories Research Analysis Dale Laszig, Daniel Wierzbinski, and Michael Turskey Strategic and Operational Planning Argosy University Professor: Vicky Black January 21, 2010
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According to CEO Miles D. White, in times of economic uncertainty, global climate change and political instability, Abbott Laboratories remains guided by the values that have sustained us for more than 120 years, continuing to deliver on our commitments to our many stakeholders around the world. (Abbott.com, 2010). A tradition of innovation and quality has made Abbott a globally recognized and trusted brand in healthcare. The companys consistent positive earnings and sustainable strategies for growth have solidified its reputation in the financial community as a blue chip stock. Abbott is a diversified conglomerate of 72,000 employees working in facilities around the world and five distinct business units: Pharmaceutical products, Nutritional products, Diagnostic Instruments and Tests, Medical and Surgical Instruments, and Animal Health. Its statement of Global Citizenship includes nine promises renewed by the company each year to preserve and protect the following nine areas: Innovating for the Future; Public Policy Engagement; Governance, Ethics and Compliance; Suppliers; Safeguarding the Environment; Global Workforce; Global Communities; China Profile. These key areas represent the core values of Abbott Laboratories, unchanged since the company was first established in 1888. The challenge of upholding these ideals resides in the day to day operations and organizational structure of the publicly held corporation, so that it can continue to deliver shareholder value and innovative new product lines that advance healthcare around the world. Each key area has its own unique set of challenges that affect its ability to meet performance standards and optimize production. Business best practices and process flow are written on paper but proven in implementation. The difference between a great plan and a great result can be found in how effectively a company evaluates and manages its operations. When
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the products are pharmaceutical drugs, details become paramount. Compliance and certification are as important as scientific method and climate controlled environments where clinical trials and precision instruments measure the effectiveness and accuracy of an array of pharmaceutical products. Additionally, the finished products have to pass through a cumbersome approval process by federal governments before they can be marketed to a wide audience. Any perceived lapse in standards or mistreatment of the environment manufacturing in practices will inhibit the approval process. Abbotts enlightened policy of Global Citizenship addresses each of these challenges, and increases awareness of potential organizational challenges. The company recognizes that challenges will still occur, and the objective of this report is to recommend new procedures and guidelines to enable Abbott and its key business units to overcome potential obstacles, particularly in the areas of ethics, legality and politics. A few recent examples of challenges faced by Abbott Laboratories can be found in a recent lawsuit which the company lost (ABCnews.com, 2010), and a high profile acquisition of Wockhardt, a drug manufacturer that was challenged by a group of concerned investors. (LiveMint.com, 2010). In an announcement made on January 7, 2010, Abbott agreed to pay $22.5 million to settle allegations that it tried to block generic competition to a popular cholesterol medication. (ABCnews.com, 2010). The charges against Abbott alleged that the company tried to change TriCors formula in order to renew its patent. Abbott spokespersons have stated that they believe the company acted lawfully, and that the formulations provided useful options to patients in terms of dosing and convenience. (ABCnews.com).
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An attempt to block the Wockhardt acquisition, which was widely publicized by Abbott as one of the nine major drug company acquisitions of 2009, was reported on January 15, 2010. A group of investors who own Wockhardt bonds are concerned about protecting their investments. The hedge fund, along with a few other investors in FCCBs, has filed a winding up petition in the Bombay high court after rejecting Wockhardts proposal that envisaged a significant loss to the bondholders. As per a corporate debt recast, or CDR plan, approved by Wockhardts lenders, the company would buy back the bonds at a 65% discount or convert them into equity shares by 2015. (LiveMint.com, 2010).
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References
ABCnews.com (2010). Abbott Labs pays $22.5 million to settle allegations it blocked generic drug competition. Washington: The Associated Press. Retrieved on January 21, 2010: http://abcnews.go.com/Business/wireStory?id=9502906 Abbott.com (2010). Global Citizenship. Retrieved on January 21, 2010: http://www.abbott.com/global/url/content/en_US/40:40/general_content/General_C ontent00035.htm Abbott.com. (2010). A Message from the Chairman and CEO. Retrieved on January 21, 2010: http://www.abbott.com/global/url/content/en_US/40.8:8/general_content/General_C ontent_00253.htm LiveMint.com (2010) Wockhardt Abbott deal may be blocked. Retrieved on January 21, 2010: http://www.livemint.com/2010/01/15001013/WockhardtAbbott-deal-may-be-b.html