ORGANIZATION STRUCTURE

ABBOTT INDIA LIMITED

Module:1
Introduction to OS & Company History and Profile

1.1 BACKGROUND AND HISTORY:

Abbott India Ltd is one of the largest MNC pharma companies operating in India. It is a subsidiary of
Abbott Laboratories of USA. Abbott Laboratories held 75% stake in Abbott India as on 31 March 2018.
The company is engaged in the discovery development manufacture and marketing of pharmaceutical
diagnostic nutritional and hospital products. They are having their presence in both OTC drugs and
formulations. Their manufacturing facilities are located at Verna in Goa. The company's global products
include Brufen Prothiaden Thyronorm and Leptos.

The company has four divisions. The Primary Care division markets products in the areas of pain
management and gastroenterology. The Specialty Care-Methabolics and Urology division provides
solutions in the areas of thyroid obesity diabetes and benign prostatic hyperplasia. The Specialty Care-
Neuroscience division has a varied portfolio with specialty products in neurology and psychiatric
segments. Hospital Care offers products in the field of anesthesiology and neonatology such as Forane
Sevorane and Survanta.Abbott India Ltd was originally incorporated on August 22 1944 as Boots Pure
Drug Company (India) Ltd.

The company name was changed to The Boots Company (India) Ltd on November 1 1971 thereafter to
Boots Pharmaceuticals Ltd on January 1 1991. In October 31 1995 the name was changed to Knoll
Pharmaceuticals Ltd and in July 1 2002 they got their present name Abbott India Ltd.In the year 2002 the
company sold their Jejuri Undertakings together with assets and liabilities as a going concern. In the year
2003 the company's wholly owned subsidiary company Lenbrook Pharmaceuticals Ltd was amalgamated
with the company. In the year 2004 the company started the production of Capsules with the capacity of
27 Millions Nos.

In the year 2005 they further increased the capacity to 56 Million Nos. Also they started a new project of
producing Nutritional Products with the installed capacity of 600 Tonnes. In the year 2006 the company
increased the production capacity of Tablets by 236 Million Nos to 686 Million Nos. In the year 2008
they further increased the production capacity of Tablets by 769 million Nos to 1455 million Nos.

They launched Digene Total buffered pantoprazole tablet for quick and sustained antacid action and
Brugel a novel formulation for sprains and strains. Also they launched Thyronorm 150 Digene Sugar Free
Tablet and Gel during the year.The Buy-Back Committee of the Board of Directors of Abbott India at its
meeting held on 9 July 2008 approved buy-back of 7.97 lakh fully paid-up equity shares of the company
via the tender offer method at a price of Rs 630 per share.
The swap ratio for the merger recommended is 2:3. In other words every two shares of the Solvay
Pharma India Ltd. will entitle their holder to three shares of Abbott India Ltd. On 17 May 2011 Abbott
Capital India Limited sold 2.24 lakh shares out of its total holding of 94.28 lakh shares in Abbott India
Limited by way of an on-market transaction. As a consequence, the promoter shareholding in Abbott
India Limited after the merger of Solvay Pharma India Limited into Abbott India Limited will be 74.98%.
Therefore, the listing of shares issued pursuant to the share exchange ratio in the merger will not result
in the public shareholding in Abbott India Limited falling below 25% as required under Clause 40A of the
Listing Agreement.

On 7 September 2011 Abbott India completed the allotment of 75.74 lakh equity shares to the
shareholders of Solvay Pharma India Ltd in the ratio of 2:3 in terms of the Scheme of Amalgamation of
Solvay Pharma India Ltd with Abbott India. The Board of Directors of Abbott India at its meeting held on
3 June 2013 decided to defer the proposal received by the company for the sale and transfer of or other
appropriate restructuring of the proprietary pharmaceuticals division (PPD) of the company.

Abbott Laboratories the ultimate parent corporation of Abbott India has separated into two publicly
traded companies - one in diversified medical products and the other in research-based
pharmaceuticals. The parent company for the research-based pharmaceutical companies is AbbVie Inc. a
Delaware corporation. For the year ended 31 December 2012 the PPD business accounted 4.73% of net
sales of Abbott India. With effect from the financial year ended 31 March 2014 the company changed its
accounting year from year ended 31 December 31 to year ended 31 March. Accordingly, financial
statements are prepared for 15 months' period from 1 January 2013 to 31 March 2014.

The Drug Price Control Order 2013 has brought several of the company's products under price control.
The company reduced the prices of the products covered under the new DPCO which resulted in an
adverse impact of Rs 1100.00 Lakhs on Sales and Profits of the company during the period 2013-14.
During the period the company sold residential properties which yielded a profit of approximately Rs
1220.00 Lakhs. During the period under review the company's General Care therapeutic segment
achieved a turnaround moving from a negative growth of 4.6% to positive double digit growth of 13.5%.
This was possible through stellar performance in key brands: Betonin Kinetone Digecaine and Digene
growing faster than their participated market. For the central nervous system (CNS) therapeutic area the
persistent emphasis on a continuum of care approach made the company's Zolfresh brand number 2
brand through the period 2013-14. During the financial year ended 31 March 2015 the company's
General Care Division launched a new product Arachitol Nano. During the financial year ended 31 March
2016 Abbott India launched 17 new products in various therapy segments which together contributed
1.9% of the Net Sales of the company. During the year under review the company entered into a
licensing arrangement with Bharat Biotech India Limited to market vaccines in immunology segment.
During the financial year ended 31 March 2017 Abbott India launched 10 new products in various
therapy segments which contributed 0.7% of the sales of the company. Abbott India formed new
Business Unit GI Advance in January 2018 to build new products on a build operate transfer model.
During the financial year ended 31 March 2018 the company Women's Health & Gastrointestine division
launched 2 new products - Cystofert (Polycystic Ovary Syndrome) and Letrolife (Ovulation).

The Gastroenterology division launched 4 new products - Duphalac Bulk (Gut Health) Duphapro
(Constipation) Udiliv 450 (NAFLD) and Duphalac Lemon Flavor (Laxative). The GI Prospera division
launched 3 new products - Velpaclear (Hepatitis C) Antoxipan (Pain Management in chronic pancreatitis)
and Heptral T (ALD/NAFLD). During the year under review the Metabolics business unit launched one
new product - Combinorm (Probiotic - Bacterial Vaginosis).

The Central Nervous System business unit launched 2 new products - Inderal 20 (Migrane) and Cerebion
(Stroke/Brain Injury).The Consumer Care Division launched 5 new products - Rashfree Natural Cream
(Diaper Rash Cream) Digene Paan Flavour (Antacid) Digene Pudina Pearls (Digestive) Cremaffin Fresh
(Laxative) and Brufen Active (Pain Relief Ointment).During the year under review Abbott India received
approvals to conduct phase 3 studies in adults/elderly and pediatrics in parallel for its Influvac
Quadrivalent Vaccine (QIV) Program.

1.2 VISOIN & MISSION:

MISSION STATEMENT:
At Abbott, we’re committed to helping you live your best possible life through the power of health. For
more than 125 years, we’ve brought new products and technologies to the world -- in nutrition,
diagnostics, medical devices and branded generic pharmaceuticals -- that create more possibilities for
more people at all stages of life. Today, 74,000 of us are working to help people live not just longer, but
better, in the more than 150 countries we serve.

VISION STATEMENT:
At Abbott, we're all about helping you live the best life you can through good health. We keep your
heart healthy, nourish your body at every stage of life, help you see clearly, and bring you information
and medicines to manage your health.

1.3 GOALS & OBJECTIVES:

1. Be the best you can be

Our purpose is to help people live their best possible lives, through the enabling power of
health. This starts with giving our employees the best chance to realise their potential.
At Abbott, we help our people do this by:
 Leveraging the scale and diversity of our businesses to create unique career paths
 Providing accelerated development for high performers; and
 Offering best in class curated learning experiences to support role transitions  
            
2. Be inspired by what you do
There is great joy and pride in doing ‘work that matters’. The work we do every day at Abbott
touches millions of people, helping them live not just longer, but better.
At Abbott, we foster a sense of purpose by:
  Empowering our employees, and providing the platform to challenge conventional
ways of thinking and operating, so they may shape healthcare in India
 Operating with the highest standards of ethics and integrity; and
 Actively encouraging our employees to give back to the community, and partner with
our customers and stakeholders to do the same.

3. Be acknowledged for your effort

We believe in camaraderie and collaboration, and promoting a caring and encouraging work
environment.
At Abbott, we ensure this by:
 Cultivating a transparent, performance-based culture
 Prioritising the health and wellbeing of our employees and their families; and
 Providing opportunities to share opinions that make a real difference at work

1.4 SWOT ANALYSIS:

STRENGTH:
1. High Piotroski Score - Companies with strong financials.
2. Company with No Debt.
3. Strong cash generating ability from core business - Improving Cash Flow from operation for last
2 years.
4. Annual Net Profits improving for last 2 years.
5. Book Value per share Improving for last 2 years.
6. Company with Zero Promoter Pledge.
7. Brand Recognitions.
8. Diversified business operations.

WEAKNESS:

1. Companies with growing costs YoY for long term projects.

2. MFs decreased their shareholding last quarter.

3. Inefficient use of capital to generate profits - RoCE declining in the last 2 years.
 4. Decline in Net Profit with falling Profit Margin (QoQ).

5. Decline in Quarterly Net Profit with falling Profit Margin (YoY).

6. Declining Net Cash Flow : Companies not able to generate net cash.

7. Recent Results: Declining Operating Profit Margin and Net Profits (YoY).

8. Weak Momentum: Price below Short, Medium and Long Term Averages.

OPPORTUNITY:

1. As of now the Company has not considered any aspect as opportunity for the entity.

2. Abbott’s proposed split into two healthcare companies.

3. Alliances likely to help Abbott in strengthening its product pipeline.

4. Successful launch of approved products in major markets.

5. Emerging market growth.

6. Changing demographics.

7. Product innovation ensure a meal replacement shake.

8. Shift from acute to chronic heart disease, stroke, diabetes etc,.

THREAT

1. Stocks with high PE (PE > 40)

2. Healthcare reform in the US could negatively impact the company’s profitability.

3. Regulatory hurdles may affect intended benefits from proposed split into two companies.

4. Stringent Government regulations.

5. Competitive landscape.

6. Legal proceedings.

7. Litigation cases against Ranbaxy Laboratories.

 8. Government policies of DPCO 2013 affected Thyronorm, Obimet, Epilex.

1.5 PRODUCT PROFILE:

1.Women’s Health :
Products under this therapy enjoy a strong equity and have a high level of credibility and trust, which is
essential owing to their sensitive indications, with a high bar on safety (especially in pregnancy).This
portfolio has consistently shown strong growth over the last several years. This year it grew by 21.9% led
by Duphaston. Strong brand equity, coverage of gynecologists are drivers of growth. During the year, 5
new products viz. Femoston (Hormone replacement therapy or HRT), Femilon (Contraception), Novelon
(Contraception), Cetropro (Prevention of premature ovulation) and Parihep (Thromboembolic
conditions) were launched.

2.Gastroenterology :

The products under this portfolio focus on upper and lower gastrointestinal tract (GI) issues along with
hepatic care. Our differentiated offerings beyond pills in this area and strong equity amongst the
consumers are behind the sustained growth. The Company grew by 9.9% in this area during the year,
mainly driven by Cremaffin, Udiliv and Duphalac. Our differentiated offerings beyond pills, a strong
portfolio - from Gastro to GPs - and strong equity amongst the consumers are behind the sustained
growth. The focus remains on the launch of new products in the Gastrointestinal (GI) space. During the
year, 12 new products viz. Evitol (Non alcoholic fatty liver disease or NAFLD), Fidonal (Anal Fissures),
Udisyp (Liver Disorders), Tenfoplus (Hepatitis B), Viadek (Pancreatic Exocrine Insufficiency or PEI),
Udistrong Orange (Liver Diseases), Creon SD (Pancreatic Exocrine Insufficiency or PEI), Cremadiet + 300
(Constipation), Udistrong sachet – Cranberry (Liver Diseases), Antoxipan sachet, Duphalac Bears 1.6
(Constipation – Pediatrics) and Duphalac Chews 3.3 (Constipation - Pregnancy) were launched.

3.Metabolics :

Products cater to hypothyroidism, hyperthyroidism and also for newer sub-therapies. Increasing patient
awareness and reducing reluctance to seek treatment as well as our approach toward continuum of care
differentiate us from others in this segment. This portfolio grew by 27.9%, driven mainly by
NeoMercazole and Thyronorm, which retains flagship position in its respective segment. Introduction
and improvement of line extensions to facilitate differentiation, and entering bacterial vaginosis with
new subtherapy (pre-probiotics) to leverage equity with Gynecs are some of the major drivers of
performance. Increasing awareness remains the key priority for sustained growth.

4. Central Nervous System :

Highly innovative and trusted products under this therapeutic segment to alleviate the suffering of
patients with vertigo, epilepsy, migraine and depression, among others. This portfolio showed a growth
of 12.6% during the year. Vertin and Prothiaden continue as the market leaders in their segments.
Creation of hybrid structure, marketing resource allocation strategy and reduction of attrition on
account of team engagement have helped this portfolio to show good performance during the year.
Introducing new sub-therapies and life-cycle management support for older molecules remain key
priorities. Also, during the year, Epishield (Micronutrients/Epilepsy) was launched.

5.Multi-Specialty :
Differentiated products and marketing over conventional preparations for pain management, nutritional
supplements, vitamins and insomnia. The Company offers products for Pain Management, Insomnia,
Nutritional supplements and Vitamins. This portfolio showed a growth of 4.4% during the year which
was mainly driven by Zolfresh, Arachitol Nano and Brufen. Promotion of specialty brand matrix and
creation of the leadership academy for capacity building have helped maintain growth. Introduction of
new molecules and expanding the portfolio through scientific research and market studies remain the
key priority.

6.Vaccines :

A highly diverse portfolio catering to the immunology segment with products targeting influenza,
typhoid, and diarrhoea. The key brands in the vaccines portfolio are Influvac, Enteroshield and Rotasure.
The portfolio showed strong double-digit growth of 20.4% and contributed 3.9% of Sales for the year.
The growth was mainly driven by Influvac, a number 1 product in its participated market. A separate
task force was set up to target the untapped adult vaccination market. Focus is to expand the portfolio
beyond the current set of vaccines and target segments. The Company has a licensing arrangement with
Bharat Biotech India Limited to market vaccines in the immunology segment. During the year, Influvac
Tetra (Flu vaccine) was launched and was a big hit in the first three months of its launch.

7.Consumer Health :

Consumer-directed products, including all variants of antacids (antiflatulent) tablets, liquids and
powders. The Company offers a few consumerdirected products, including all variants of Digene -
tablets, liquids and powders. During the year, this portfolio showed strong growth of 19.5%. Cremaffin
was consumerised to revitalise the brand. Good strategy and sustained investment have helped achieve
growth. Our focus remains on expanding this portfolio. During the year, two new products - Brufen
Rapid (Analgesics) and Digene Ultra Fizz (Antacid) were launched.

1.6 MARKET SHARE :

Abbott India Ltd. Stock price is 14,616.25 as on 12-03-2021

1.7 PRESENT STATUS :

The company is engaged in the discovery, development, manufacture and marketing of
pharmaceutical, diagnostic, nutritional and hospital products.

1. Abbott India standalone net profit declines 5.12% in the December 2020 quarter
2. Abbott India standalone net profit rises 54.22% in the June 2020 quarter
3. Board of Abbott India appoints director

1.8 FUTURE PLANS :

Abbott has made concentrated efforts towards developing and strengthening its OTC business.
It has consistently undertaken measures to reach out to patients and increase the awareness /
build brands for certain drugs. With this, many patients self-prescribe certain specific drugs /
OTC drugs. This enhances Abbott’s brand recognition. Abbott also operates a platform called “A-
care” a technology led service that connects patients and doctors across multiple therapy areas.
Using the platform, a doctor can access the latest scientific research, medical education and
patient support services while consumers are able to access educational health information or
participate in motivational programs to help adhere to treatments prescribed by their doctors.
This augurs well for Abbott and goes toward strengthening the brand.
Secondly, Abbott’s top 10 products, are also known as the power brands of the company. Nine
out of its top ten brands produce over Rs1bn in revenue and have consistently outperformed
their addressable market. Its key brands, which include Thyronorm and
Duphaston hold a disproportionately large market share and cater to underpenetrated
therapies, indicating a strong potential for growth. Collectively, the above depicts the company’s
ability to create strong brand recognition and hence is a key growth driver for the company.
Abbott plans to launch around 100 products over the next five years. Our focus remains on
growing existing therapy areas such as gastroenterology, metabolics, vaccines, central nervous
system and women's health," the company's Managing Director Ambati Venu told in an
interview.