Abbott laboratories
Introduction and overview
Abbott laboratories, is a fully listed public limited company in the New York stock exchange market. It is a diversified pharmaceutical company that has got a wide network of subsidiaries world over. It has more than 130 branches in different countries and an estimated 68,000 employees (http://www.simplyhired.com/job-id/mwn3o3rzqy/manager-brand-jobs/.) with its head quarters in Abbott Park, Illinois. This huge pharmaceutical organization was a brainchild of a physician Wallace Calvin Abbott back in 1888.
At the age of 30, Wallace C Abbott a practicing physician and owner of a drug store founded Abbott Alkaloid Company. He innovated the use of Alkaloid part of a medical plant to form tiny pills that went by the same of “dosimetric granules “. With these pills he was able to successfully command a quite sizeable customer base due to the consistency and flexibility of the dosage for patients.
The company has grown tremendously from a single pill manufacturing unit into a multi- national organization that manufactures a diverse range of brands. These products include pharmaceutical, medical devices, diagnostic assays, nutritional and animal health products. Its drugs portfolio includes drugs that helps to cure rheumatoid arthritis to HIV treatment ones, while it’s medical device and diagnostic assays are virtually the most sought for by world biggest hospitals blood banks and laboratories in the diagnostic and monitoring of HIV, Cancer, Hepatitis and other major metabolic disorders. The four categories of Abbott’s products are what make up its core business base however; Abbott has marginal interests in less lucrative entrepreneurships that involve sales and spinoffs.
The company has got a proven track of acquisition and buying of other smaller medical related companies which helps to reduce competition and cut down cost of production, these acquisitions includes, Knoll a pharmaceutical company. Abbott has also embarked on otherwise business practices, which includes offloading of less lucrative subsidiaries to interested people, one such offloading was that of the UK manufacturing plant at Queens Borough to Aesica pharmaceuticals (http://www.abbottuk.com/.)
Being a Listed public limited Company, and having network of Subsidiaries in 130 countries across the globe, Abbott pharmaceutical is indeed a Company that commands a tall standing in the pharmaceutical industry. Its rapid expansion and aggressive venture into diverse jurisdictions has helped to spur positive customer sustainability. The reliable and high quality medical diagnostic devices that are internationally accredited is another factor that has helped the Company to succeed in face of cut-throat competition from rival companies like Johnson & Johnson and Pfizer which are the two leading Pharmaceutical companies. According fortune 500, 2006- CNN money journal Abbott is ranked third in the pharmaceutical industry after Pfizer and Johnson & Johnson and position ninety-three in the list of annual ranking of America’s largest corporations (http://money.cnn.com/magazines/fortune/fortune500/snapshots/10.html)
Major concerns
Due to its rapid expansion, Abbott has encouraged countless socio – political and economic obstacles include the war against patent system that has seen Abbott in and out of the courts. One such patent lawsuits was instituted against Thailand, a country that had ignored the intellectual property rights on patent in the manufactures of Kaletra by licensing its generic manufacture without recognizing Abbott as the owner of the patent rights governing the manufacture, sale and distribution of Kaletra.
Another equally impacting issue on Abbott is the Manufacturer and sale of Abbokinase a drug that is sold to health care providers for the treatment of hepatitis B and C virus, and HIV. This is an issue that raises concern with the US department of health and Human services. This is due to the discovery that the continued use of Abbokinase can pose potential health risks of other opportunist diseases. Although Abbott has indulged in numerous measures in efforts to comply with the food and drug Administration requirements on the manufacture of Abbokinase manufacture has made Abbott to incur huge cost in its quest for conformity with FDA regulation (http://www.fda.gov/cder/biologics/ltr/abb071499.htm.).
Abbott has also faced a series of other potentially harmful challenges that threatens to taint its name in home country, Law suits have been instituted against Abbott in regards to the side effect caused by some of it’s drugs e.g. Oxycotin which is claimed to be addictive. Other lawsuits include the pricing of its drug, with variations reported on different customers. A New Orleans physician John Lacorte launched one such claim that resulted in a lawsuit. Fraud cases have also been reported with an example in Florida, whereby the states Medicare and Medicaid programme is reported to have been pricing pharmaceutical products at a higher price than the recommended Abbott prices.
Ethically, pharmaceutical industry is dominated by constant research and inventions, which are normally governed by intellectual property rights (patents) which normally poses a greater challenge to Abbott in two ways. The first one is Abbott patent infringements by other unscrupulous business rivals and juridistictions, like was the case of Thailand over Kaletra manufacturing and the second one is Abbotts’ use of technologies and materials that are under patent ownership by other people to manufacture its products. This normally results into unnecessary lawsuits that end up affecting Abbott financially. However, legal suits are part of big corporations; sometimes they may taint a companies name and hence affect it negatively in terms of sustamability of customer trust. This therefore has been an issue under watch and it can only be minimized by engaging the services of reknown legal advisors whose legal advises concerning property rights and any other legal advises on matters concerning the industry will help steer Abbott away from treading on dangerous paths of patent rights wrangles.
The diverse range of products that Abbott offers to their wide base of customers has enabled them to command an increased revenue collection which has seen it to feature among top 100 biggest US corporations. This scenario is a healthy one in terms of solidifying its market grasp and also conquering new ones.
A commanding influence in the market also provides for a higher bargain when it comes to fixing of products price in accordance with the prevailing trade trends and also World Health Organization regulations on pharmaceuticals pricing. An example of pricing strategy on its products that can be attributed to its wide impact on pharmaceuticals is a case of 2003 about pricing of Norvir, a drug that is used in the treatment of HIV. The US government gave Abbott million of dollars in grants to develop this drug in expectation of reduced consumer price after the drug’s manufacture. However Abbott went ahead and sold the drugs at a gouged price, interventions from congress members did not yield fruits as the National Institute of Health argued that any decision to bring the price down would impact negatively on the entire pharmaceutical market. This is an indicator that Abbott’s market position has a large influence in terms of the pricing of its commodities (http://www.fool.com/investing/general/2004/05/24/abbott-labs-stirs-up-criticism.aspx).
Response to cost information systems
It is clearly from the above information on the manufacturing, marketing and pricing of products that Abbott is serious and committed in the utilization of science and technology so as to remain and maintain its niche in the market. All this is a product of careful cost analysis research which helps to dig for information regarding the future of the corporation in regard to the past and the present. The cost analysis process is a crucial endeavor in any large corporation of Abbott’s nature as it helps estimate the productions that comes by venturing into risky jurisdictions or even the risks associated with manufacture of drugs using new raw materials or new technologies which some times ends up in patent wrangles as people may claim the ownership of the patents like was with the example of Norvir.
Therefore cost information systems are highly maintained and constantly made into use, the case serves to underscore this argument. As the US government expected Abbott to produce HIV drugs at a lower price given that they had received millions of grants from the government. But acting on cost information systems Abbott went ahead to fix prices which according to congress members were very much unrealistic (400% increase). Acting on cost information management systems within the Organization Abbott has entered into business mergers with other big or small companies, this helps to reduce unnecessary competition, advice from its cost information team have also been utilized in offloading of un-lucrative subsidiaries.
Conclusion and recommendation
The success of Abbott pharmaceuticals is a product of complex measures but under the watchful eye of the cost information team. This part of the paper will seek to give out a general overview on some of the main factors that has made Abbott to reach where it is today. To begin with, its humble start back in 1888 is one of the main strong points Abbott boasts of, which has played a major role in terms of acquisition of major fixed assets and also the ownership of diverse number of patents. This has helped Abbot to minimize the cost of production as fewer expenses are incurred in the payments to use of patents owned by other people. The manufacture of diverse range of products has played a major role in widening the customer base and also creating the much needed revenue for research and development. The four main categories of Abbott’s products help to reinforce each other incase of poor performance of any of them. The diversification of product range has helped Abbott tin the venturing into other foreign jurisdictions. It’s products are highly recommended by the government due to their efficiency. Its wide geographical appeal has played a key role in the provision of ready market for all these products.
The company’s philosophy of being the number one pharmaceutical company that is devoted to discovering, development, manufacture and marketing of pharmaceutical products was helped to increase that sales with tangible figures estimated at and 23 billion in the year 2007. This was boosted by its diabetes care division that has embarked on innovation of hand – help systems for patients with diabetes problems. Generally Abbott enjoys a reputation of quality products especially in the area of pharmaceutical manufacturing with most of its drugs being recommended by the WHO and has hence been accepted in over 130 countries of the world. Similarly it’s nutritional and diagnostic products are highly sought for in the world market with free style freedom blood glucose monitor on a high demand especially within raising cases of diabetes.
A quick glance on all the major aspects of Abbott reveals that it is indeed a company that is committed to honour its quality obligations and also at the same time ensuring cost of production is checked. The highly skilled labour force (over 68,000) can be said to be the main asset towards quality sustamability and minimization of cost of production. However the utilization of cost information management system is what has put Abbott where it is today.
The paper having reviewed almost all the major aspects of the company has got the following recommendations to put across. Firstly, Abbott should fight bravely to end the patent rights infringements. This is the only way that its wide range of carefully researched, developed and manufactured drugs will remain in the market especially having in mind the current trends of the manufacture of generic drug all over the world patents are slowly being rendered obsolete. Because the generic drugs are sold at a price much lower than the original ones it becomes hard for the original drugs to fetch gains. Abbott should therefore strive to end such cases by making sure that it liaises with the relevant authorities in more than 130 countries it has got interests.
The company should also endevour to cut costs incurred in unnecessary lawsuits by making sure that it does not ventures into risky business deals with back street patent owners who end up changing terms later and demand for legal redresses. Due to its rapid growth, Abbott should also enter into business merger deals with its major rivals in some sensitive segments of the market. This will help reduce unnecessary competition and help to reduce marketing cost incurred when venturing into new jurisdictions.
Last but not the least the company should endevour to do more intensive research on the field of HIV treatment. The development and manufacture of Norvir by the comp[any is still not enough especially having in mind that HIV is yet to be suppressed in terms of medicinal cure and treatment. It’s much known reputation should not just be on fields that seems to be pharmaceutically unchallenging like diabetes and hepatitis cure, but they should seek to solidify its reputation by digging dipper in the field of research on the killer diseases. Any positive step towards developing and manufacturing a HIV cure will serve positively to lift up it’s popularity, market share, Improve customer trust and above all double its revenue collections through sales and awards while minimizing the cost of the production.
References:
1) Abbott pharmaceutical UK, available at;
http://www.abbottuk.com/, accessed on 28 September 2008
2) Fortune 5,000, 2006, available at;
http://money.cnn.com/magazines/fortune/fortune500/snapshots/10.html, accessed on 28 September 2008
3) Abbott pharmaceutical available at;
http://www.pharmaceutical-bussiness-review.com/company profile, accessed on 28 September 2008
4) Major concerns on Abbott pharmaceuticals, available at;
http://www.fda.gov/cder/biologics/ltr/abb071499.htm., accessed on 28 September 2008
5) Pricing problems available at;
http://www.fool.com/investing/general/2004/05/24/abbott-labs-stirs-up-criticism.aspx., accessed on 28 September 2008
