abbott india

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INDEX

Sr.No Particulars Pg.no

1. Pharmaceutical Sector Current Scenario

2. Company - Abbott India Ltd.

3. Company Policies

4. Financial Analysis - Trend Analysis

5. Balance sheet Analysis

6. Factors influencing the growth

7. Future upcoming

8. Conclusion


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Indian Pharmaceutical Sector

The Indian pharmaceutical industry currently tops the chart amongst India's science-based

industries with wide ranging capabilities in the complex field of drug manufacture and

technology. A highly organized sector, the Indian pharmaceutical industry is estimated to be

worth $ 4.5 billion, growing at about 8 to 9 percent annually. It ranks very high amongst all the

third world countries, in terms of technology, quality and the vast range of medicines that are

manufactured. It ranges from simple headache pills to sophisticated antibiotics and complex

cardiac compounds, almost every type of medicine is now made in the Indian pharmaceutical

industry.

The Indian pharmaceutical sector is highly fragmented with more than 20,000 registered units. It

has expanded drastically in the last two decades. The Pharmaceutical and Chemical industry in

India is an extremely fragmented market with severe price competition and government price

control. The Pharmaceutical industry in India meets around 70% of the country's demand for

bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals

and injectibles. There are approximately 250 large units and about 8000 Small Scale Units, which

form the core of the pharmaceutical industry in India (including 5 Central Public Sector Units).

Current Senario

India's pharmaceutical industry is now the third largest in the world in terms of volume and

stands 14th in terms of value. According to data published by the Department of

Pharmaceuticals, Ministry of Chemicals and Fertilizers, the total turnover of India's

pharmaceuticals industry between September 2008 and September 2009 was US$ 21.04 billion.

Of this the domestic market was worth US$ 12.26 billion.

The Indian pharmaceuticals market is expected to reach US$ 55 billion in 2020 from US$ 12.6

billion in 2009. The market has the further potential to reach US$ 70 billion by 2020 in an

aggressive growth scenario.

Moreover, the increasing population of the higher-income group in the country, will open a

potential US$ 8 billion market for multinational companies selling costly drugs by 2015. Besides,


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the domestic pharma market is estimated to touch US$ 20 billion by 2015, making India a

lucrative destination for clinical trials for global giants.

Further estimates the healthcare market in India to reach US$ 31.59 billion by 2020.

http://www.cci.in/pdf/surveys_reports/indian-pharmaceuticals-industry.pdf


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ABBOTT INDIA LIMITED

Introduction:

Abbott, is a company that focuses on turning science into caring ABBOTT, A Promise for

Life. For more than a century, Abbott Laboratories has been working to advance health care for

people around the world. Founded in 1888 by a young Chicago physician, Dr Wallace Calvin

Abbott, Abbott Laboratories has evolved into a diversified health care company that discovers,

develops, manufactures and markets innovative products and services. Products and services of

Abbott, span the continuum of care from prevention and diagnosis, to treatment and cure. Abbott

today is a global, diversified health care company devoted to the discovery, development,

manufacture and marketing of pharmaceutical, diagnostic, nutritional and hospital products. The

company now employs approximately 65,000 people and markets its products in 130 countries

worldwide. Abbott's news releases and other information are available on the companys web

site www.abbott.com

Abbott extends this commitment with a strong presence in India as it has grown and evolved it's

operations in India over many decades. Company was originally incorporated on August 22,

1944 under the Companies Act, 1913 as Boots Pure Drug Company (India) Limited. Its name

was then changed to The Boots Company (India) Limited on November 1, 1971, thereafter to

Boots Pharmaceuticals Limited on January 1, 1991. On October 31, 1995 the name was changed

to Knoll Pharmaceuticals Limited, thereafter to Abbott India Limited on July 1, 2002. Our

products encircle life from newborns to ageing adults. Abbott has built expertise and leadership

in primary care therapeutic areas like Gastroenterology and Paincare. Our specialty areas include

Neuroscience, Metabolics and Hospital Care.

Abbott serves the needs of Indian consumers with products backed by science and R&D. We

have locally developed brands like Digene, Cremaffin, Epilex, Zolfresh and Obimet. Abbott has

also brought global products including Brufen, Prothiaden, Ganaton, Sevorane, Thyronorm and

Leptos to Indian consumers. Abbotts pioneering products like Survanta help infants.

Abbott India, today has strong brand equity and commands esteem in the market place. To reach

the customer, Abbott India has a network of 18 distribution points, which cater to 11,000


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stockists and 70,000 retailers. Behind Abbott Indias success, is a team of competent, committed

people, driven by the principles of Value Based Management, and aided by strong alliances and

partnerships.

The company has over 1000 employees and a state-of-the-art formulation plant at Verna in Goa.

The manufacturing locations are designed to produce quality, high volume formulations using

cost efficient processes. The plant has well equipped laboratories and trained personnel to ensure

international standards of quality at each step of the manufacturing process.

The company has in-house development and medical teams to undertake product and clinical

development tailored to the needs of the Indian market. Abbott provides quality health care

worldwide by creating healthcare solutions, which directly affects the life of the common man.

Products:

Abbott India Limited provides healthcare solution through 4 main business units:

1. Primary Care: It consists of products in the area of Pain Management,Gastroenterology, etc (Brands includes: Brufen, Digene, Cremaffin).

2. Specialty Care: Metabolics and Urology provides solution in areas of Thyroid, obesity,Diabetes, etc.

3. Specialty Care: Products in Neurology and Psychiatrics segment4. Hospital Care:products in Anesthesiology and neonatology (e.g: Forane, Survanta)

http://www.abbott.co.in/Aboutus.htm


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Company Policies:

Vision

To be the worlds premier health care company

Dedication

To employees, customers, shareholders, suppliers and the public

Strategy

Value Based Management is our integral philosophy, directed towards maximizing long-term

cash flow and shareholder value through:

y Focus on the Company's core profitable segments to build up our position as one of theleading pharmaceutical companies

y Investments in information technology to improve planning and control of operationy Increased investments in Human Resources Training & Development to upgrade and

broaden the skill base of the organization in consonance with changing needs

y Build flexible cost-efficient manufacturing base through a balanced mix of in-house andcontract manufacturing

Our Work Culture

Abbott India is an equal opportunity employer and provides a congenial and professional work

environment for all its employees, with great emphasis on teamwork. We stimulate innovation,

encourage calculated risk taking and accept mistakes as a part of the learning process.

We encourage experiential learning, and believe in clear delegation of authority and acceptance

of personal accountability. We value the involvement of our colleagues in bringing the best to

our organization in a spirit of understanding, trust and appreciation of cultural differences. We

are open to discussing alternative views and build on constructive feedback.


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Abbots Basic Principle

Respect people:

Our people are our strength

Serving Global Health Care Needs:

We are a global, broad-based health care company devoted to discovering new medicines, new

technologies and new ways to manage health. Our products span the continuum of care, from

nutritional products and laboratory diagnostics through medical devices and pharmaceutical

therapies. Our comprehensive line of products encircles life itself - addressing important health

needs from infancy to the golden years.

Abbott has sales, manufacturing, research and development, and distribution facilities around the

world, close to where our customers need us to be. We are recognized for our global reach and

our ability to serve our customers around the world.

Turning Science into Caring

Throughout our 120+ year history, Abbott people have been driven by a constant goal: to

advance medical science to help people live healthier lives. It's part of our heritage. And, it

continues to drive our work. Today, approximately 90,000 employees around the world share the

passion for "Turning Science Into Caring." It's a commitment to focusing on what matters most:

life and the potential it holds when we are feeling our best.

Winning in the Workplace

Abbott prides itself on being recognized as a good place to work because we strive to provide an

environment that enables employees to succeed. We have received numerous local, national and

international distinctions for our commitment to workplace excellence. Our programs range from

award winning health care benefits to a variety of convenience and wellness services and long-

term retirement benefits

Advancing Access to Health Care Around the World

Our commitment to improving life extends to humanitarian causes. We recognize that as a

leading provider of innovative health care products, we have a unique responsibility and


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opportunity to ensure people have access to them whether they are among the poor and

underprivileged or victims of natural disasters. Were determined to do our part through creative

and varied social programs.

The promise of our company is in the promise that our work holds for health and for life

Abbotts Promise

Our "Promise for Life" is a statement that describes for our customers, our communities, our

shareholders and all of our stakeholders what we believe in, what we value, and what we strive

to deliver in our day-to-day work. For Abbott employees, Our Promise is our compass guiding

us in our actions and decision making, to ensure we live up to the high expectations weve set for

ourselves in order to serve our stakeholders better. Our Promise challenges us to continually

improve and inspires us to always aim higher.

A Promise for Life

Turning Science into Caring

We are here for the people we serve in their pursuit of healthy lives. This has been the way of

Abbott for more than a century passionately and thoughtfully translating science into lasting

contributions to health.

Our products encircle life, from newborns to aging adults, from nutrition and diagnostics through

medical care and pharmaceutical therapy.

Caring is central to the work we do and defines our responsibility to those we serve:

y We advance leading-edge science and technologies that hold the potential forsignificant improvements to health and to the practice of health care.

y We value our diversity that of our products, technologies, markets and people andbelieve that diverse perspectives combined with shared goals inspire new ideas and better

ways of addressing changing health needs.


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y We focus on exceptional performance a hallmark of Abbott people worldwide demanding of ourselves and each other because our work impacts peoples lives.

y We strive to earn the trust of those we serve by committing to the highest standards ofquality, excellence in personal relationships, and behavior characterized by honesty,

fairness and integrity.

y We sustain success for our business and the people we serve by staying true to keytenets upon which our company was founded over a century ago: innovative care and a

desire to make a meaningful difference in all that we do.

The promise of our company is in the promise that our work holds for health and life.


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FINANCIAL ANALYSIS

Trend Analysis:

Total Revenue (Sales and Other Income)

The graph shows a growth from 2006 to 2007. 2008 shows low total revenue due to recession.

The growth is then continues from 2008 to 2010.

Total expenditure on Advertising and Publicity:


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EBIDTAMargins:

PROFITAFTERTAX (PAT):

RETURNON EQUITY OR NET WORTH:


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DPSAND EPS:

Debt equity ratio is zero for all the five years.

Current Ratio:

0

0.5

1

1.5

2

2.5

3

2006 2007 2008 2009 2010

CURRENTRATIO(%)

YEAR

CURRENT RATIO


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RETAINED EARNINGS:

(Mahdiah please insert the balance sheet right above this write up of balance sheet

analysis also provide one or two liners on the above graphs/charts)

There has been a decrease in the amount invested as Share capital by the proprietors from 2006

to 2010. Nearly 200 lacs which were earlier invested as Share Capital from the firm have been

withdrawn. The Reserves and Surplus of the firm had also dropped 2 years consistently that is in

2007 and 2008 beyond which there has been a considerable increase in the amount set aside as

Reserves and Surplus. If we consider both of these factors together the total funds employed by

the proprietor have fallen in the first two years that is in 2007 and 2008 and after that there has

been a major increase. This also states that the company has started setting aside more money as

Reserves and Surplus and not blocks them as the share capital.

The company had initially borrowed a lot of funds from external sources which they started

paying off in 2007 and 2008, by 2009 the company had no loan liability from external sources.

0

1000

2000

3000

4000

5000

6000

2006 2007 2008 2009 2010

RETAINEDEARNINGS(lakhs)

YEAR

RETAINED EARNINGS


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There has been an increase in the amount invested as fixed assets every year which is an

essential investment for the company as it helps to increase the overall production and income of

the company. The current assets of the company had dropped in 2007 and 2008 beyond which

there has been a considerable rise in the amount invested.

If we see the overall growth of the company there could have been a drop in the Reserves and

Surplus and Current Assets to pay off the external debt. The company in 2010 was standing at a

good position as there were no loans which were to be repaid and there was a consistent increase

in the assets of the company.

FACTORS INFLUENCING THE GROWTHOFTHE COMPANY:

1. Indian Pharmaceutical Market Growth:

The Indian pharmaceutical market grew by 16.5% for the 12 month period ending December

2010. Patients willingness to continue spending on healthcare has prevented the pharmaceutical

market from declining. Increasing household spend on healthcare is expected to continue driving

pharmaceutical market growth in the coming decade.

2. Strong Growth of Chronic Therapy Segment:

The chronic therapy segment, which accounts for about 27% of the total market, continues to

grow faster at 19% as compared to the larger acute therapies segment (comprising 73% of the


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total market), which is growing at 15.7%. In the chronic therapy segment, Anti-diabetic,

Neurology/ Psychiatry and Cardiovascular therapies have outperformed the overall market, while

Gastroenterology along with Vitamins and Minerals segments have performed well in the acute

category.

http://www.abbott.co.in/PDF/AnnualReport2010.pdf

3. Increasing Competition:

Competition is increasingly becoming fragmented and regionalized especially in the acute

therapies. The local companies gaining high success in regional markets are now going national.

These players, who predominantly have had a low price strategy, are putting greater pressure on

the incumbent leaders to deliver a superior value proposition to the customer. The new

competitive dynamic has been positive for the healthcare sector as companies have developed

innovative models of patient and doctor engagement in order to further differentiate their brand.

The patient has also benefited as a result of greater awareness, better diagnostic methods, greater

treatment options and stronger compliance programs.

The companies are taking clear positions within therapy areas through focused investments,

scaling/sizing of the field organization and sheer intensity of customer engagement program.


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Some national players are aggressively pushing penetration in selective Tier II VI and rural

markets through new business models. As demand in these markets picks up, driven largely by

increasing disposable incomes, availability of healthcare and market shaping by incumbent

companies, these business models are expected to be scaled up.

4. Increasing Brand Awareness:

Industry experts expect the Indian pharmaceutical market to continue growing at a CAGR of

about 14% to 16% over the next 5 years. In essence, the industry is likely to double in size driven

largely by increasing affordability and accessibility. Companies, both national and multinational,

will drive market creation and growth to a significant extent through substantial investments in

field force expansion, therapy shaping, and new product introductions. Penetration of health

insurance is likely to aid the process of market expansion, as would the rapid proliferation of

hospitals and clinics. Growth will, however, be constrained by the limitation in the number of

treating physicians that are expected to join the profession. This limitation will be acutely felt in

the specialty practices.

Growth is expected to be pervasive across geographies and therapies. Metros and Tier I markets

will continue to contribute in large measure to incremental growth.

The Indian pharmaceutical market is quite fragmented due to the large number of brands in each

therapeutic segment. It is becoming increasingly difficult to create new brands. Thus, it is critical

to leverage the strong equity associated with reputed brands and focus on growing the brands.

The industry has shown robust growth in recent years, the number of new product introductions,

including line extensions, has diminished considerably. Companies focus on brand building

initiatives to insulate themselves from competitive attacks and price erosion.

5. Increasing Self Medication:

There is also an increasing trend towards self-medication on the part of patients in recent times.

This opens a significant opportunity for increasing awareness with patients for OTC solutions.


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6. Increasing Income and Corporate Hospital Chains:

There has been a sharp increase in the number of corporate hospital chains which are providing

world-class medical facilities in India. The increasing disposable income of the middle class has

resulted in a larger patient pool for corporate hospitals. This is also encouraging medical tourism

in the country which, due to affordability and higher benefit to cost ratio, will continue to grow

strongly.

Health insurance is an upcoming sector in India, and is poised to grow at over 40% in the coming

5 years. A survey conducted in the year 2008 showed that only 3% of the entire population

availed some sort of health insurance coverage. Rising awareness amongst Indians about the

health insurance, rising spend on health care, expansion of medical infrastructure, rising

prevalence of chronic diseases, adoption of product patents and aggressive market penetration

also present opportunities to the business in the coming years.

7. Increasing Government Funds in Rural Health Programs:

National Rural Health Mission program, the governments flagship healthcare program focused

on patients below the poverty line, which has, in recent times, received larger funding and

expansion in scope in terms of coverage.

8. Less patient awareness about certain diseases and poor availability of diagnostic

facilities:

A key challenge that the healthcare industry faces is the low level of awareness among the

population of many diseases/disorders. For example diseases such as epilepsy and

hypothyroidism, the level of awareness is abysmally low. Companies have implemented

innovative models of patient engagement which includes among other things awareness creation

to enhance the patient pool.

The growth of the diagnostics sector augurs well for the pharmaceutical industry as lack of

diagnostic facilities has been a key bottleneck in correct management of certain

disorders/diseases. The increased proliferation of diagnostic chains and the willingness of the

patient to invest in getting the necessary diagnostic tests done as against seeking empirical


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treatment will support the development of the pharmaceutical industry. Pharmaceutical

companies will need to collaborate with diagnostic companies and even healthcare providers to

tap some of the emerging opportunities.

9. Increasing Force Field and Sales Technology:

Major investments have been made by companies in expanding field forces for promoting

products. Technology solutions such as SFA (Sales Force Automation) have been used

successfully in improving performance of field forces by providing critical data and information

to enable better decisions.

10. R& D and New Product Launch:

Successful product launch is very important for successful sale of the product.

Identifying new product opportunities, developing innovative formulations, operationalizing

efficient and high quality manufacturing solutions, penetrating trade channels expediently and

commercializing well, is critical for succeeding.

Abbott India R&D investment is $ 3.7 Bn

11.Internal Control Systems and their adequacy:

The Company has an adequate system of internal controls which ensures that its assets are

protected against loss from unauthorized use or disposition and all transactions are authorized,

recorded and reported in conformity with generally accepted accounting principles. The internal

control systems are documented with clearly defined authority limits. The authority vested in the

various levels of management is exercised within a framework of appropriate checks and

balances. These systems are designed to ensure accuracy and reliability of accounting data,

promotion of operational efficiency and adherence to the prescribed management policies. These

policies are periodically updated to meet current business requirements.

The Company has a system for regular review of internal controls to assess its effectiveness and

the controls are suitably revised to keep pace with changing business environment. Internal


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control system and processes are reviewed and tested by Internal Auditors on a regular basis. The

scope of their Audit Program is agreed upon with the Audit Committee. Audit observations and

recommendations are reported to the Audit Committee, which monitors the implementation of

such recommendations.

Business risks are identified by a team of Risk Champions drawn from each function who also

drive the action plan to mitigate those risks. The management committee reviews the same

periodically.

abbott india

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