Operating Review

Abbott medicines treat some of the world’s most serious and prevalent diseases, including rheumatoid arthritis, plaque psoriasis, Crohn’s disease, lipid disorders, kidney disease, prostate cancer, thyroid disease and HIV.

Pharmaceuticals Highlights:

• Submitted fixed-dose combination cholesterol medication, Certriad, for U.S. FDA approval
• Diversified sources of growth with acquisition of Solvay Pharmaceuticals
• Received approval in Japan for Humira for plaque psoriasis and submitted it for Crohn’s disease

In 2009, we achieved several important milestones in our pharmaceuticals business. Abbott and AstraZeneca announced the FDA regulatory submission for Certriad, designed to provide comprehensive lipid management, targeting all three key lipids — HDL, LDL and triglycerides — in a single pill.

We recently acquired Solvay Pharmaceuticals, further diversifying our pharmaceuticals portfolio. The addition brings on-market products that complement our current offerings. It also bolsters our presence in key Eastern European and emerging markets and accelerates our investment in pharmaceutical research and development.

Immunology: broader access for Humira
Humira is Abbott’s biologic for the treatment of six different autoimmune diseases: moderate to severe rheumatoid arthritis (RA) and moderate to severe polyarticular juvenile idiopathic arthritis (JIA), painful diseases that can lead to damage of the joints and hinder a patient’s ability to perform daily activities; moderate to severe Crohn’s disease, characterized by inflammation in the gastrointestinal tract; moderate to severe chronic plaque psoriasis, characterized by very dry, scaly and often irritating areas of skin; psoriatic arthritis, characterized by both arthritis and psoriatic skin disease; and, ankylosing spondylitis, an inflammation of the spine that can result in episodes of acute pain and physical limitation.

Tumor necrosis factor (TNF), a protein produced by the body, plays a role in the disease activity of each of these disorders. Humira is a fully human recombinant monoclonal antibody that blocks the negative effects of TNF, reducing the inflammation and some of the complications associated with these diseases.

In Japan, we submitted regulatory applications for Humira for the treatment of Crohn’s disease and ankylosing spondylitis. And, in early 2010, Humira was the first biologic approved in Japan for the treatment of plaque psoriasis and psoriatic arthritis.

Humira is currently approved in 83 countries and treats approximately 425,000 patients worldwide. With the global penetration rates of biologics still low across indications, there continues to be significant potential for many more patients to benefit from treatment with Humira.

Lipid management: building market leadership
Abbott’s lipid management product portfolio addresses the three main lipid parameters that contribute to cardiovascular disease: high triglycerides, low HDL (good cholesterol) and high LDL (bad cholesterol). Abbott’s cholesterol franchise includes a number of therapies including Trilipix, TriCor, Niaspan and Simcor.

Of the 34 million people treated for lipid disorders, approximately 23 million are not reaching recommended levels for all three parameters. The majority of patients are taking single therapies primarily focused on reducing LDL. Many patients may benefit from a combination treatment approach to help manage all three key lipid levels. Abbott is uniquely positioned to address the growing need for add-on or combination therapies — treatments that help patients achieve recommended lipid targets.

In 2009, Abbott and AstraZeneca submitted a regulatory application for Certriad, the fixed-dose combination of Trilipix and Crestor. The regulatory filing is supported by data from multiple studies of Trilipix used in combination with Crestor. In these large clinical trials, HDL and triglycerides were measured to study the potential impact of combination therapy.

Also in 2009, Abbott submitted an application with the FDA for 500/40 mg and 1000/40 mg dosage strengths of Simcor, a fixed-dose combination of Niaspan and simvastatin (generic Zocor) that addresses both HDL and LDL in a single pill. Abbott’s Niaspan is a leading medication for boosting HDL.

Strengthening our global position: Solvay Pharmaceuticals
Abbott acquired Solvay Pharmaceuticals to expand our global infrastructure, further strengthen our position in emerging markets and enhance our pharmaceutical R&D investment.

Emerging markets are growing faster and increasing in importance due to evolving demographics, modernization of health systems, rising incomes and expanded treatment of chronic disease. With Solvay Pharmaceuticals, Abbott gained access to a broad Eastern European and emerging markets infrastructure, with significant presence in key markets such as Russia, India and Brazil.

Abbott also added several important new brands including Creon, for cystic fibrosis and chronic pancreatitis; AndroGel, a testosterone replacement therapy for men, and Lipanthyl for high triglycerides. Solvay Pharmaceuticals also provided an entry into the global vaccines market.

Abbott’s pharmaceutical products also include: Lupron Depot, for the management of symptoms associated with advanced prostate cancer, endometriosis and precocious puberty; Synthroid, for the treatment of thyroid disease; Norvir and Kaletra, for the treatment of HIV; Zemplar, for chronic kidney disease; as well as a number of other brands marketed around the world.

Abbott offers some of the world’s most trusted brands in pediatric nutrition, adult nutrition, therapeutic nutrition, performance nutrition and nutritious snack products. We also provide specially formulated medical nutrition products for patients with unique dietary needs due to illness or injury.

Nutritional Products Highlights:

• Global sales of $5.3 billion
• Advanced to #1 position in U.S. infant formula market
• Leader in adult nutritionals with Ensure and Glucerna
• Fastest-growing nutrition company in international markets

U.S. nutrition: expanding our product portfolio
We continue to deliver products that better meet the changing needs of consumers and health care professionals. Our Similac Advance EarlyShield infant formula has set a new standard in infant nutrition. Closer than ever to breast milk, Similac Advance EarlyShield has a unique blend of nucleotides, prebiotics and antioxidants to support a baby’s natural immune system. Abbott has gained a significant market-share lead over its nearest competitor with the launch of Similac Advance EarlyShield.

Abbott’s leading pediatric product portfolio also includes Similac Sensitive for babies with formula-tolerance issues; Similac Go & Grow, designed for older babies and toddlers; and Similac Organic formula. We also market PediaSure, a complete, balanced nutritional formula for toddlers and children, and Pedialyte, to replace fluids and electrolytes to help prevent dehydration.

Abbott is also dedicated to developing therapeutic nutritional products for people with special dietary needs. Our Glucerna products are specially formulated for people with diabetes and contain unique carbohydrate blends to help manage blood glucose.

As a leader in the adult nutrition and nutritious snacks segment, we market a number of products for active adults seeking convenient, balanced nutrition. Our Ensure, ZonePerfect, EAS and EAS Myoplex brands all offer a variety of meal and snack options. In 2009, we introduced ZonePerfect Indulgence Nutrition Squares. We also reformulated Ensure with key ingredients designed to support the immune system.

International nutrition: growth in emerging markets
Increasing personal incomes and growing populations in markets such as China, Southeast Asia and Latin America are driving demand for our nutritional products. The fastest-growing segments are products for toddlers and children. As a result, demand has increased significantly for Abbott’s pediatric nutritional products — including Similac Advance infant formula, Gain Advance formula for older infants and PediaSure formula for children.

Abbott is the fastest-growing nutrition company in international markets. We have focused our business on these developing opportunities and are investing in new products for our growing customer base. In 2009, we opened a state-of-the-art manufacturing facility in Singapore that will help us meet global demand.

Abbott drives innovation in the fast-paced medical technology market. Our medical products are advancing disease diagnosis, vision care, diabetes management and the treatment of vascular disease.

Medical Products Highlights:

• Launched our next-generation drug-eluting stent, Xience Prime, in select international markets
• Expanded into structural heart repair
• Entered the large and growing vision care market
• Launched a new diagnostics system for small to midsize testing labs

In 2009, our medical products business introduced new products and advanced a promising pipeline in high-growth, technology-driven markets.

Cardiovascular Devices: advancing our lead
Abbott is a leader in cardiac and vascular care with an industry-leading pipeline and a broad portfolio of coronary and endovascular products.

Coronary artery disease is the most common type of heart disease. It occurs when arteries that supply blood to the heart become blocked by a buildup of plaque. Drug-eluting stents (DES) are tiny metal scaffolds placed in diseased arteries to keep them open and reestablish blood flow — an alternative to open-heart surgery.

In 2009, we introduced Xience Prime in select international markets.This next-generation DES improves deliverability and is available in longer lengths. We also continued our market leadership with Xience V, which has demonstrated statistical superiority in key efficacy and safety measures over another DES.

Xience V was approved in Canada and China in 2009, and it was launched in Japan in early 2010.

We also expanded into the fast-growing structural heart market with an advanced technology designed to repair a patient’s leaky mitral valve without the need for open-heart surgery. The MitraClip system is available in Europe and is currently under FDA review.

Abbott also markets a broad portfolio of carotid stents, embolic protection devices, balloons, guide wires and vessel closure devices. In 2009, we launched the Emboshield NAV⁶ Embolic Protection System for use in a carotid stenting procedure, a less-invasive alternative to surgery for patients at risk of stroke from a partially blocked carotid artery.

Vision Care: entering a large and growing market
The need for vision correction is rising as the global population ages. Cataracts are the leading cause of vision loss among people 55 and older. More than 15 million cataract procedures are performed each year.

In 2009, Abbott expanded into the large and growing vision care market, becoming a leader in cataract and LASIK surgical devices, as well as corneal care products. We also added an advanced technology — Synchrony, a next-generation accommodating intraocular lens for cataract patients. Currently in U.S. development, it’s designed to mimic the eye’s natural ability to change focus to improve vision.

Diabetes Care: improving disease management
Globally, more than 220 million people have diabetes. Prevalence of the disease is expected to increase at an alarming rate over the next 10 years. People with diabetes can take steps to control their disease and lower their risk of complications through careful management.

Abbott markets blood glucose meters that are easy to use, require small blood samples and provide fast and accurate results. Our FreeStyle line of blood glucose meters improves patient convenience by offering technology that eliminates the manual coding required by other meters.

Diagnostics: a leading presence worldwide
Abbott is a global leader in clinical laboratory diagnostics. Health care professionals use Abbott’s diagnostic systems and tests to protect the blood supply, monitor medication levels and assist in the diagnosis and treatment of disease. We continue to transform the practice of medical diagnostics through new products and systems that lower costs, improve productivity and enhance patient care. In 2009, we introduced the Architect c4000, a clinical chemistry analyzer for small to midsize testing labs.

Our point-of-care hand-held diagnostic device provides physicians with the information they need to make lifesaving decisions in the intensive and acute care settings of the hospital. The i-STAT system is used in one of every three U.S. hospitals and in more than 500 emergency rooms. It features tests for cardiac diagnosis and routine diagnostic assessments.

Abbott’s molecular diagnostic tests provide physicians with critical information based on the early detection of pathogens and subtle changes in a patient’s genes and chromosomes. The tests’ ability to provide highly accurate detection of viruses and bacteria allows for earlier diagnosis, selection of appropriate therapies and monitoring of disease progression. We continue to explore opportunities in pharmacogenomics by developing DNA-based tests to identify patients likely to benefit from certain treatments.

Our PlexID Biosensor System has the potential to identify virtually all bacteria, viruses and fungi without requiring users to predict the testing outcome. It has numerous applications, including biological research, epidemiological surveillance and forensics, and offers significant potential for human diagnostics.

Animal Health: leveraging our expertise
Abbott leverages its strengths in human health to advance veterinary medicine and deliver value to small-animal veterinarians and pet owners. We market the AlphaTrak blood glucose monitoring system for cats and dogs, as well as products for wound care and nutrition. Our surgical suite product line addresses veterinary needs in anesthesia, fluid therapy and medical devices.