Medical products: new technologies improving patient care

Our Medical Products Group achieved double-digit sales growth in 2005, with a steady stream of new product launches focused on highly innovative technologies that improve patient care. This includes the U.S. Food and Drug Administration (FDA) approval of our carotid stent, Xact, a new minimally invasive treatment for people at risk of stroke, as well as Abbott Prism, the world’s first fully automated blood screening instrument.

In recent years, we reshaped our Medical Products Group to enhance our ability to participate in high-growth, technology-driven markets. At the same time, we steadily grew our established medical products businesses through market expansion and the introduction of new products. Our eight strategic businesses in medical devices include: Vascular, Diabetes Care, Diagnostics, Molecular, Point of Care, Nutrition, Spine and Animal Health.

In 2005, we continued to execute on our plan to build billion-dollar businesses in markets where innovation drives preference, such as Abbott Diabetes Care, which surpassed the billion-dollar sales mark. We also made significant progress in advancing a strong pipeline of promising new technologies. This includes FreeStyle Navigator — a device that could change the way people manage their diabetes, and ZoMaxx — our drug-eluting stent in global development for coronary artery disease.

Vascular: transforming the treatment of vascular disease

Abbott offers a comprehensive portfolio of coronary, endovascular and vessel closure products that are recognized internationally for their safety, effectiveness and ease of use in treating vascular disease.

We reached a number of important milestones toward our goal of becoming a leader in this market: the continued clinical development of our drug-eluting stent, ZoMaxx, and the U.S. launches of our carotid stent system, Xact and Emboshield, and vessel closure device, StarClose.

Drug-eluting stents, such as ZoMaxx, are tiny metal scaffolds placed in diseased arteries to keep them open and re-establish blood flow. We completed enrollment of ZOMAXX I, our 400-patient drug-eluting stent clinical trial outside the United States, and initiated enrollment of ZOMAXX II, our larger, primarily North American trial. Both studies investigate the performance of the ZoMaxx platform, which combines three proprietary technologies: TriMaxx, a flexible stent designed for easier placement; zotarolimus, Abbott’s immunosuppressant drug shown to reduce vessel renarrowing; and Pharmacoat, a unique polymer coating intended to enable steady drug elution. TriMaxx is approved in Europe.

ZoMaxx is poised to become an important part of Abbott Vascular’s growing line of new technologies. Preliminary data from studies with ZoMaxx indicate that it has the potential to become a strong global competitor in the growing $5 billion drug-eluting stent market. We anticipate European approval for ZoMaxx in 2006. Our next-generation development program features two drugs on one stent: zotarolimus and dexamethasone, an anti-inflammatory drug. The goal is to target a tough-to-treat patient population, such as people with diabetes.

In our endovascular business, Abbott became the second company to enter the U.S. carotid stent market with the September 2005 FDA approval and launch of the Xact Carotid Stent and Emboshield Embolic Protection System. Carotid stenting is a new, less invasive treatment option for patients at risk of stroke from a partially blocked carotid artery, a major artery that runs through the neck and supplies blood to the brain.

Patients with severe carotid blockages have traditionally undergone surgery to remove plaque, but surgery can cause complications such as nerve damage and neck scarring. As a result, interventional physicians have begun to use less invasive procedures, such as stenting, to treat patients at high risk for developing complications from surgery.

Abbott’s new stent system features Xact, a stent specifically designed for placement in the carotid artery, and Emboshield, a filter developed to treat patients at risk of stroke who are not favorable candidates for surgery, by catching plaque fragments (emboli) that may be released during carotid stenting.

We also initiated enrollment in a groundbreaking carotid stent clinical trial known as ACT I. The first trial of its kind, ACT I compares carotid stenting to surgery in patients who have not displayed symptoms of stroke, but are at risk, and who normally would be referred for surgery. An indication in this patient population could greatly expand the carotid stenting market over time.

In our U.S. vessel closure business, we received FDA approval to launch StarClose, an entirely new closure device designed to enable fast, safe and secure closure following a catheterization procedure — allowing patients to get out of bed sooner. Introduced successfully in Europe in 2004, StarClose is a novel clip-based technology that closes the femoral artery securely in a matter of seconds. As a new method of vessel closure in the United States, StarClose has the potential to change the current standard of vessel closure.

Diabetes Care: improving patient comfort and convenience

Abbott is a leader in developing products that reduce the discomfort and inconvenience patients experience with blood glucose monitoring. Our focus is on introducing systems that are easier to use, require smaller blood samples and provide faster results to help patients better manage their diabetes.

FreeStyle Flash (FreeStyle Mini outside the United States) is the world’s smallest glucose monitor and returns an accurate reading with a tiny 0.3 microliter sample in an average of just seven seconds. Precision Xtra (Precision Optium/Xceed outside the United States) is the only home-use meter that measures glucose and ketone levels.

Driven by the success of the FreeStyle and Precision product lines, Abbott Diabetes Care solidified its number-three position in the $6 billion global blood glucose testing market — exceeding $1 billion in annual sales. Blood glucose testing is a rapidly growing business. The market is expected to exceed $9 billion in sales within the next five years.

Looking to the future of blood glucose monitoring, two next-generation products in our late-stage pipeline have the capability to improve diabetes management and significantly reduce the discomfort and inconvenience of blood glucose testing. FreeStyle Navigator, a new continuous glucose monitoring system, is awaiting FDA approval. Designed to measure patient glucose levels as frequently as once per minute, 24 hours per day, it features a sensor worn on the body that wirelessly transmits readings every minute to a pager-like device kept in a pocket or purse. Also in development is a fully integrated blood glucose monitor that combines both test strips and lancing capabilities in one device, enabling simple point-and-click testing.

Diagnostics: enhancing patient care through state-of-the-art technology

With nearly 70,000 customers in more than 100 countries, Abbott has the world’s largest installed base of diagnostic instruments — more than 80,000 — and one of the category’s broadest menu of tests. In 2005, Abbott Diagnostics continued to build its brand and grow market share. We placed more than 1,600 new Architect instruments with customers around the world and launched a number of important new products.

We strengthened our position in cancer, cardiac, metabolic and infectious disease testing, introducing new assays in the United States on both the Architect and AxSym analyzers. On Architect, this includes tests for ovarian and breast cancer, as well as myoglobin, which completes the Architect acute cardiac panel. In addition, we launched the Architect BNP (B-type P natriuretic peptide) test worldwide, one of the most important tests in cardiology. On AxSym, we launched two key metabolic assays and anticipate FDA approval of additional assays in 2006, which will complete the AxSym metabolic panel. We also launched an important test for hepatitis C on AxSym, and additional hepatitis tests for both Architect and AxSym are currently under FDA review.

Abbott will continue to serve its laboratory customers and grow market share with an expanded line of Architect analyzers. This includes the c16000, a clinical chemistry analyzer, and the ci16200, an integrated analyzer, both in development to expand Abbott’s position in high-volume laboratories. Additionally, Abbott is developing the i1000SR — the successor to AxSym, which will serve the needs of smaller laboratories.

In 2005, we launched Abbott Prism, introducing it to blood banks across the United States. Abbott Prism is the world’s first fully automated blood screening instrument. The advanced automation capabilities of Abbott Prism eliminate many manual, time-consuming steps currently necessary to screen blood donations. Its capabilities also reduce the risk of accidents, errors and sample tampering. The U.S. launch follows the FDA approval of Abbott Prism HBcore, an assay used to screen blood donations for hepatitis B. Additional hepatitis screening tests for Abbott Prism are currently under FDA review. Outside the United States, Abbott Prism is used in more than 30 countries — nearly half of which use the system to screen 100 percent of their blood donations.

In our hematology business, we launched Cell-Dyn Sapphire, a high-volume automated hematology analyzer that incorporates monoclonal antibody tests to address laboratories’ most critical and complex patient samples. Cell-Dyn Sapphire enables better results faster by reducing the need for manual analysis. In 2006, we expect to launch Cell-Dyn Ruby, an automated hematology analyzer for the mid-volume segment.

Molecular: improving testing through automation

In 2005 in Europe, Abbott Molecular launched a less labor-intensive, automated instrument for molecular testing based on real-time PCR (polymerase chain reaction) technology, with infectious disease assays for HIV and hepatitis C. Infectious disease testing represents nearly 50 percent of the rapidly growing molecular diagnostics market. In Europe in 2006, we launched an additional test for chlamydia and gonorrhea, the two most common sexually transmitted diseases in the world. The HIV and chlamydia/gonorrhea assays are also expected to launch in the United States in 2006. In addition, we expect to introduce tests for hepatitis B and hepatitis C genotyping outside the United States in 2006. We are also researching tests for certain types of cancer, including cervical, esophageal and melanoma.

Our UroVysion test was also approved for use as an aid in the initial diagnosis of bladder cancer in patients with hematuria (blood in urine). This expanded claim makes UroVysion the first gene-based test available both for diagnosis and monitoring of bladder cancer recurrence.

Point of Care: accurate results at the patient’s bedside

Our i-STAT point-of-care system provides physicians with the information they need to make life-saving decisions at the patient’s bedside. We built on our leading position in the rapidly growing point-of-care market by expanding our menu of tests. We launched i-STAT CK-MB (creatine kinase MB), which aids in the diagnosis of a heart attack, and i-STAT Chem8+, which combines eight tests from the most commonly requested chemistry panel onto a single cartridge.

We also submitted i-STAT BNP (B-type natriuretic peptide) for regulatory approval and plan to launch in 2006. This test aids in the diagnosis of heart failure. Our expanding portfolio gives us a broad presence in this market and creates a unique and compelling offering to help emergency department physicians attend to patients more rapidly.

Nutrition: strengthening focus in a long-established business

In 2005, Abbott International focused on addressing emerging consumer markets in Asia and Latin America with hallmark brands, including our infant formula, Similac Advance, as well as nutritionals for children ages 1 to 10, such as PediaSure, Gain Advance and Grow Advance. In Europe, we remained the market leader in adult nutritionals with Ensure and continued to drive growth for specialty products such as Glucerna. Our products were available to consumers in more than 130 countries around the world.

Abbott’s Ross Products Division, which markets our nutritional products in the United States, holds a leading position in the nutritional market with strong consumer brands: Similac Advance, Isomil Advance and Alimentum Advance in infant nutritionals; PediaSure and Pedialyte for children; Ensure, ZonePerfect and EAS for healthy, active adults; and Glucerna for people with diabetes.

In 2005, we introduced Ensure Healthy Mom shakes and snack bars — designed to help meet the unique nutritional needs of pregnant women and nursing mothers.

Spine: building leadership with minimally invasive technology

We offer a line of innovative, less invasive devices for the treatment of spinal disorders and injuries. This includes PathFinder, which allows a surgeon to perform spinal fusion procedures through two small incisions, reducing recovery time. Another Abbott innovation is InFix, an interbody spacer assembled inside the patient during surgery, enabling the surgeon to more accurately restore the patient’s anatomy and provide greater stability to the lower spine.

Our pipeline is largely focused on nonfusion, motion-preserving technology. In 2005, enrollment began in our U.S. clinical trial for the Wallis System, a dynamic stabilization device that has been used successfully in Europe. Unlike disc replacement or fusion, the Wallis System stabilizes the spine with an insert that can be implanted through the back. It’s designed to ease lower-back pain while preserving spinal mobility. In addition to the Wallis System, we have an artificial disc program in development.

Animal Health: growing our global presence

For more than a decade, we’ve applied our fundamental strengths in human health to advance veterinary medicine. Our broad surgical suite product line addresses veterinary needs in anesthesia, fluid therapy and medical devices and includes products such as SevoFlo, PropoFlo and Nexaband. Our growth strategy is to expand our presence in the $5 billion companion animal market by focusing on bringing value to small-animal veterinarians and pet owners. In 2006, we launched the AlphaTRAK blood glucose monitoring system for cats and dogs.