Strategic Management

ABBOTT LABORATORIES
1) Strategic management is the management of an organization’s resources to achieve its
goals and objectives. Strategic management involves setting objectives, analyzing the
competitive environment, analyzing the internal organization, evaluating strategies, and
ensuring that management rolls out the strategies across the organization.
(https://www.investopedia.com/terms/s/strategic-management.asp)

2) The term ‘strategic management’ is used to denote a branch of management that is

concerned with the development of strategic vision, setting out objectives, formulating
and implementing strategies and introducing corrective measures for the deviations (if
any) to reach the organization’s strategic intent.
( https://businessjargons.com/strategic-management.html)

3) Strategic management is a continuous process of strategic analysis, strategy creation,

implementation and monitoring, used by organizations with the purpose to achieve and
maintain a competitive advantage.
(https://strategicmanagementinsight.com/topics/strategic-management-planning.html)

Strategic Management Process:

The pharmaceutical industry in Pakistan is growing at a rapid pace, contributing

significantly to the national economy. In the last couple of years, the Pakistani economy
has been suffering due to bad economic conditions and also been under strain due to
the war against terrorism. The economy is also facing the problem of domestic inflation,
slow economic growth, as well as the devaluation of the Pakistani rupee against other
major currencies.

Pakistani pharmaceutical and healthcare industries are very competitive and

challenging. There are nearly 759 pharmaceutical companies operating in Pakistan,
with major global leaders having a presence in the country. The industry presents a lot
of growth opportunities for drug makers, with the opportunities being driven by the
rising burden of chronic disease and launch of the Pakistani national health insurance
program.
 However, there are many challenges that the industry faces, with regulatory and pricing
challenges being at the top of the list. With the government's focus on boosting the
pharmaceutical and healthcare market, the industry is poised for good growth, with
many opportunities present for drawing in foreign investment. In terms of monetary
value, the size of the pharmaceutical industry in Pakistan is $3.10 billion (Rs. 325, 596
billion, as per IMS). Given that the total size of the global pharmaceutical market is
estimated to be over $ 1 trillion, Pakistan is hardly 0.5 percent of the market

Industry Players

 Abbott Laboratories (Pakistan)  Hilton Pharma

 Efroze Chemical Industries  Novartis Pakistan
 Ferozsons Laboratories  Pfizer Pakistan Limited
 Getz Pharma  Sanofi-Aventis
 GlaxoSmithKline Pakistan  SEARLE Company Limited

Abbott Laboratories Information:

 Employees =107,000  Sales or Revenue = 31.90 Billion
 Sector Pharmaceuticals  Industry Health Care/Life
Sciences

Description Abbott Laboratories
Abbott Laboratories engages in the discovery, development, manufacture, and sale of a
broad and diversified line of health care products. It operates through the following
segments: Established Pharmaceutical Products, Nutritional Products, Diagnostic
Products, Cardiovascular and Neuro-modulation Products, and Other. The Established
Pharmaceutical Products segment refers to the international sales of a line of branded
generic pharmaceutical products. The Nutritional Products segment caters to the
worldwide sales of adult and pediatric nutritional products. The Diagnostic Products
segment markets diagnostic systems and tests for blood banks, hospitals, commercial
laboratories, and alternate-care testing sites. The Vascular Products segment trades
coronary, endovascular, structural heart, vessel closure, and other medical device
products. The Other segment comprises of Abbott Medical Optics. The company was
founded by Wallace Calvin Abbott in 1888 and is headquartered in Abbott Park, IL.

Pakistan:
Abbott Laboratories (Pakistan) Limited (the Company) is a public limited Company
incorporated in Pakistan on July 02, 1948, and its shares are quoted on Pakistan Stock
Exchange. The address of its registered office is opposite Radio Pakistan Transmission
Centre, Hyderabad Road, Landhi, Karachi. The Company is principally engaged in the
manufacture, import and marketing of research based pharmaceutical, nutritional,
diagnostic, diabetic care, hospital and consumer products.
Vision Statement of Abbott Laboratories:
To be premier health care company in Pakistan

Mission Statement of Abbott Laboratories:

To deliver consistently superior products and services which contribute significantly to
improve the quality of life of consumers

Product Division of Company:

Abbott Pharmaceutical products:

Arinac, Klaricid, Brufen, Citro-soda, Cremaffin, Mospel, Daycor, Flexin etc…

Abbott Nutritional products:

Ensure, Pediasure, Similac, Glucerna etc.

Abbott Diagnostics services:

Ensure, Pediasure, Similac, Glucerna etc.

Abbott Diabetes care:

Freestyle.

SWOT Analysis of Abbott Laboratories:

i) Internal Factor Evaluation (IFE)

(a) Strengths:

1) Brand image. 5) Market leader in

2) Product quality. immunoassays
3) Antibiotic producers. 6) Experience of 100+ years in
4) Diverse product line. Pharmaceutical Industry

(b) Weaknesses:
 1) Development of new product is 3) Centralized decision making.
very slow. 4) Lack of advertisement.
2) Few cardiac medicines are 5) Labor Turnover
available in market.

(ii) External Factor Evaluation(EFE)

(a) Opportunities:

1) Increasing population. 5) Support from Govt.

2) Increasing different diseases. 6) Increasing Technology in
3) Increasing number of doctors. Health Care
4) Increasing heart diseases.

(b) Threats:

1) Tax laws 4) Large pharmaceutical

2) Political instability industry (i.e. competitors)
3) High inflation rate

Strategies:

 S-O Strategies:
 Antibiotics may help to overcome different diseases.
 Advantage of diverse product by subscription of more medicines to patients.

 W-O Strategies:
 Increase new researchers in R&D.
 Increase cardiac medicines.

 S-T Strategies:
 High inflation rates will have an impact on company’s profit margin as
company has a diverse product line.
 W-T Strategies
 Lack of advertisements will provide an opportunity to competitors to
overcome the market.

Corporate Structure of Abbott Laboratories:

Balance Statement Sheet:
Statement of Financial 2019 2018 2017 2016 2015
Position

Total Equity 13,372,393 13,235,011 14,355,835 14,593,240 12,949,247

Non-Current Liabilities 537,336 429,124 231,147 203,477 219,144

Current Liabilities 6,842,951 6,617,122 4,601,128 2,848,467 3,319,884

Total Equity and Liabilities 20,752,680 20,281,257 19,188,110 17,645,184 16,488,275

Non-Current Assets 8,414,818 7,283,126 5,492,322 4,523,033 4,108,183

Current Assets 12,337,862 12,998,131 13,695,788 13,122,151 12,380,092

Total Assets 20,752,680 20,281,257 19,188,110 17,645,184 16,488,275

Comments on Balance Statement:

 Non-current liabilities have increased by 25.2% as compared to last year on account of
lease liabilities.
 Non-current assets have increased by 15.5% over last year on account of capital
expenditure for expanding manufacturing capacity, enhancement of productivity and
improvement of plant efficiency.
 Decrease in current assets by 5.1% is mainly on account of lower cash and bank
balances.

Income Statement Sheet:

Statement of Profit or Loss 2019 2018 2017 2016 2015
Sales - net 30,155,875 29,719,279 26,088,233 23,387,915 21,170,446
Cost of sales 21,628,135 19,917,837 15,999,247 14,020,416 12,943,213
Gross Profit 8,527,740 9,801,442 10,088,986 9,367,499 8,227,233
Selling and distribution 5,061,510 4,503,521 3,611,882 3,258,175 2,876,407
expenses
Administrative expenses 731,620 610,885 468,172 450,297 383,612
2,734,610 4,687,036 6,008,932 5,659,027 4,967,214
Other income 352,023 458,654 445,317 420,937 476,868
Other charges 522,802 786,315 602,244 486,064 431,721
2,563,831 4,359,375 5,852,005 5,593,900 5,012,361
Finance costs 53,090 15,606 10,060 6,759 5,884
Profit before taxation 2,510,741 4,343,769 5,841,945 5,587,141 5,006,477
Taxation 1,210,856 1,649,436 1,636,713 1,565,349 1,419,741
Profit for the year 1,299,885 2,694,333 4,205,232 4,021,792 3,586,736

Comments on Income Statement:

 Net sales for the year increased by 1.5% over previous year. ( Chart 1)
 Cost of sales increased by 8.6% mainly on account of currency devaluation and
inflation. (Chart 2)
 Selling and distribution expenses increased by 12.4% mainly driven by inflation, higher
salaries and increase in advertising and sales promotion expenditure. (Chart 3)
 Other charges decreased by 33.5% mainly on account of lower exchange losses and
statutory charges versus last year.
 The profit after tax of the Company decreased by 51.8% in line with the reasons
mentioned above.

Charts:

1. Net Sales:
35000000
30,155,875
30000000 29,719,279
26,088,233
25000000
23,387,915
21,170,446
20000000
Sales - net
15000000 year

10000000

5000000

0 2019 2018 2017 2016 2015

2019 2018 2017 2016 2015

2. Cost of Goods Sold or Cost of Sales:

Cost of Goods Sold

25000000
21,628,135
20000000 19,917,837

15,999,247
15000000
14,020,416
12,943,213

10000000

year
5000000
Cost of sales

0 2019 2018 2017 2016 2015

1 2 3 4 5

3. Selling & Distribution Expenses:

 Selling & Distribution Expenses
6000000
year

5000000 5061510 Selling and distribution

expenses
4503521
4000000
3611882
3258175
3000000 2876407

2000000

1000000

0 2019 2018 2017 2016 2015

1 2 3 4 5

4. Administrative Expenses:
 Administrative Expenses
800000
731,620
700000

600000 610,885

500000 468,172 450,297 year

383,612 Administrative expenses
400000

300000

200000

100000
2019 2018 2017 2016 2015
0
0