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The Recession Proof Business of Abbott in India

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Abbott Laboratories is an American pharmaceuticals and health care products company, founded by Chicago physician, Dr. Wallace Calvin Abbott in 1888. The company is headquartered in North Chicago USA, with operations in over 130 countries. Abbott employs over 90,000 employees.

Abbott also has a broad range of medical devices, diagnostics and immunoassay products as well as nutritional products, including Ensure, a line of well known meal replacement shakes, and EAS, the largest producer of performance based nutritional supplements. Abbott’s in vitro diagnostics business is a world leader in immunoassays and blood screening.

Product Line

The company produces drugs like:

  • Humira, a drug for rheumatoid arthritis, spondylitis
  • Norvir, a treatment for HIV
  • Depakote, an anticonvulsant drug
  • Synthroid, a synthetic thyroid hormone

Abbott in India

Some of their brands are Diegene, Cremaffin, Epilex, Zolfresh, Survanta and Obimet plus.

  • Abbott India has a network of 18 distribution points
  • 11,000 stockists
  • 70,000 retailers
  • Over 1000 employees
  • Formulation plant at Verna in Goa

Read about Medical Billing Companies in India – List of Top Indian Medical Transcription,Coding Companies.

Business Units of Abbott in India

  • Primary Care – Deal with the products in the areas of Pain Management, Gastroenterology, with brands like Brufen, Digene (the largest selling antacid in the country)
  • Specialty Care – Metaboloics & Urology – The unit provides solutions in the areas of Thyroid, Obesity, Diabetes and Benign Prostratic Hyperplasia.
  • Specialty Care – Neuroscience – As the name very well suggests the business unit provides specialty products in the Neurology and Psychiatric segments.
  • Hospital Care – This unit offers products in the field of anesthesiology and neonatology namely Forane and Sevorane.


In 2011, Abbott earned over $38 billion in revenue and a net income of $4.78 billion. The table below shows the key valuation multiple of the company. We can see that the company has improved in its Market Capitalization as compared to sales, other multiple being moderate. A sharp decrease in P/E ratio indicates investors’ un-willingness to pay for company’s share.

Dec-11 Dec-10 Nov-09 Nov-08
Price Earning (P/E) 27.1 34.05 13.6 9.01
Price to Book Value ( P/BV) 5.7 5.88 3.68 2.43
EV/EBIDTA 14.58 15.24 6.52 3.69
Market Cap/Sales 2.02 1.72 1.25 0.76

The company has no debt and is very high in its Current Ratio which is continuously improving. The fixed assets have been performing well for the company. The interest cover ratio has improved manifold from previous years. The return on capital employed and also on net worth has improved to a great extent. Thus indicating strong company performance over the past years.

Dec-11 Dec-10 Nov-09 Nov-08 Nov-07
Key Ratios
Debt-Equity Ratio 0 0 0 0 0.01
Long Term Debt-Equity Ratio 0 0 0 0 0.01
Current Ratio 2.76 2.76 2.58 1.95 1.26
Turnover Ratios
Fixed Assets 9.92 8.55 7.78 7.89 8.45
Interest Cover Ratio 6,004.33 2,353.50 587.65 4,716.00 5,094.00
ROCE (%) 42.41 30.12 47.62 41.55 42.51
RONW (%) 28.34 19.5 31.46 27.8 28.7

If we see the shareholders pattern, we find nearly 75% of the company’s shares are held by the foreign promoters.

Ownership Pattern as on 30-09-2012

% Share Holding
Foreign (Promoter & Group) 74.9862
Indian (Promoter & Group) 0
Non Promoter (Institution) 6.0493
Non Promoter (Non-Institution) 18.9645

New Product Launch

Recently Abbott has brought into the country its drug-eluting absorbable stent, said to be the first of its kind, globally. The bioresorbable vascular scaffold (BVS), as the device is called, is used in the treatment of coronary artery disease (CAD). It is used to remove blocks in a blood vessel but, unlike a metallic stent, here the device dissolves into the body in about two-three years.

The launch of the device is expected to attract huge customers and soon the company will achieve huge market in India and abroad where its launch is scheduled soon. India is among the first large countries in the Asian region as well to get the product which is a matter of pride for the country and the company operating in the Indian Territory. With the patents issue going in the pharmaceutical industry, the company is expected to face some problem in time to come but the product launch will give the company a first mover’s advantage to occupy the market. This will help the company to raise sufficient revenue.

Abbott Stock Analysis

Company’s stock is a definite buy at the moment and is among some of the hot scrip to track. The current level of 1380 is trading at 80% of all time high. Stock could gain momentum owing to the fact that the company launched its first BVS in India which will mark an achievement in the pharmaceutical industry. Due to the immense opportunity in Indian Pharma industry, company will continue to perform well. We could see a long term target of 1700 for the stock.


Niraj Satnalika

Niraj is an MBA in International Business (Finance). Prior to this he completed B.Tech in Electronics and Instrumentation. He is currently working with Confederation of Indian Industry (CII), Kolkata in capacity of Consultant. Satnalika is actively involved with an NGO and works towards promoting education among the underprivileged.

One Response so far | Have Your Say!

  1. Zubin George

    No mention of its hit product in India, Pediasure which has been a flop in global markets