Chairman's Letter

Miles D. White / Chairman of the Board and Chief Executive Officer

Dear Fellow Shareholder: 2007 was an outstanding year for Abbott as we delivered strong growth across our broad mix of leading health care businesses. Together, these businesses provide our company — and our investors — with a diverse mix of cash flows and multiple sources of profitable growth. Our strength is our balance. With each goal we achieve, we build further on this balance, positioning Abbott for sustained, double-digit performance in the years ahead.

When we look at the uncertainty of the global economic environment, we see challenges for most companies across virtually every market sector. Nonetheless, we see Abbott becoming stronger and more successful as we continue to shape it around three main defining attributes: today, our company is balanced, global and strong.

BALANCED

The diverse mix of our business portfolio is our core strength and Abbott's greatest differentiator. It's the foundation of our stability, and it provides us the opportunity for sustained growth across our four major business groups: pharmaceuticals, nutritional products, diagnostics and medical devices.

We've chosen to compete in attractive health care businesses, where our science can have the greatest impact on patients' lives and where we have strong commercial positions. We've aligned our commitments with society's most pressing health care needs. In doing so, we're addressing pervasive, high-priority health conditions through multiple technologies and approaches.

For instance, Abbott helps patients and physicians treat heart disease through all of its major businesses: we are a leader in testing to identify cardiovascular conditions, in pharmaceutical treatments to improve patients' cardiovascular health, in nutritional products that help to improve cardiovascular status and in stents to relieve acute vascular conditions by reopening blocked arteries. We provide similarly balanced arrays of products to address other high-priority public health challenges, such as diabetes and HIV.

This broad base of technological expertise and market strength provides Abbott a wealth of opportunity that distributes our growth across a number of different sectors — and that allows us to sustain the quality of our performance. Longer term, our goal remains a balanced mix of sales among our broad base of businesses.

GLOBAL

We strive to balance our portfolio among businesses, as well as geographically. Abbott has long been an international business; today, we are truly a global company. While the United States is still by far our largest single national market, it no longer accounts for the majority of our total sales, as it had since the company's founding. In 2007, for the first time ever, our revenues outside the United States slightly exceeded those within.

While we expect the United States to remain an important market for many years to come, we also recognize that, with the rise of major new market economies, such as China, India, Russia and Latin America, the rest of the world will play a much larger role than ever before in our future growth. Consequently, we are building our business around the world to capture the continued emergence of new international markets.

Separating our international nutritional products and pharmaceuticals businesses into distinct, focused organizations has paid significant dividends. Both businesses have grown stronger apart than they did previously as a single, multiline division. In 2007, our international pharmaceuticals business delivered sales growth of nearly 17 percent, and our international nutritional products business grew more than 18 percent.

We've seen similar results with medical products, where Abbott Diabetes Care achieved revenue growth of 18 percent internationally. In addition, most of our diagnostics sales are outside the United States and performing well in emerging markets. Achieving this kind of international growth is a priority in all our major businesses. As rapid population growth in emerging economies increases demand for health care products, we see significant long-term opportunities around the world.

STRONG

Of course, our breadth is an advantage only because of the strength across our businesses. Abbott is a major player with promising opportunities in every market in which we participate.

Pharmaceuticals

In 2007, Humira, our treatment for a variety of autoimmune diseases, became Abbott's most successful product in our history. It was approved for the treatment of Crohn's disease and quickly captured 30 percent of the U.S. market. Since February, we've launched Humira for the treatment of psoriasis in both Europe and the United States, as well as for juvenile rheumatoid arthritis in the United States. We continue to develop Humira for ulcerative colitis. To keep up with Humira's growth and expected demand, last year, we completed construction of our largest capital investment ever, the state-of-the-art Abbott biotechnology manufacturing plant in Puerto Rico.

With our rapid integration of Kos Pharmaceuticals in 2007, we established Abbott as a significant player in the lipid management market. The addition of the Kos portfolio, particularly Niaspan, the leading product for raising HDL, or good cholesterol, complements the position we'd built with TriCor, our treatment for patients with high triglycerides. With our strong lipid pipeline, we expect to sustain the growth of this franchise in one of the world's largest health care marketplaces.

Nutritional Products

Our U.S. nutritional products business, of course, is a long-time leader. We're finding new ways to meet consumer needs with a renewed emphasis on product innovation, with products such as Similac Sensitive and NutriPals fruit bars. This is in addition to our strong international performance, perhaps best characterized by our second consecutive year of rapid growth in major Asian markets. To meet this surging regional demand, we are building a new production facility in Singapore that will come online in 2009.

Medical Products

In 2007, our medical products businesses grew double digits, with significant contributions to sales from our vascular business and nearly double-digit growth in our diabetes care business, driven largely by the success of our more convenient FreeStyle Lite meter, which is steadily gaining new user share.

After a late 2006 launch of our Xience V drug-eluting stent in Europe, we saw excellent acceptance and share gains throughout 2007. In November, the U.S. Food and Drug Administration (FDA) Circulatory System Devices Advisory Panel recommended approval in the United States, which we anticipate this year.

Our diagnostics business introduced new instruments and assays, and is growing faster than its market worldwide. Our molecular diagnostics unit grew sales significantly faster than its market in 2007, thanks to the successful launch of our m2000 system in Europe and the United States.

Abbott Science

The key to our strength in all of these markets is the quality of our products and of the scientific advances they provide. We carefully shape our considerable investment in research and development around what patients and health care professionals need. Our scientists and engineers are performing distinguished and distinguishing work, providing major advances across the spectrum of care.

We've made refinements to our pharmaceutical discovery process that are enhancing our productivity and delivering compounds that have breakthrough potential. We're doing highly innovative work in neuroscience, where we've developed compounds that target receptors in the brain that help regulate pain, mood, memory and other neurological functions to address such conditions as attention deficit hyperactivity disorder and Alzheimer's disease. We're also doing leading-edge work in oncology research. The National Cancer Institute and the journal Nature have recognized the strength of Abbott's science. In 2007, we also entered into an agreement with Genentech to codevelop two novel, Abbott-discovered cancer therapeutics.

“With each goal we achieve, we build further on this balance, positioning Abbott for sustained, double-digit performance in the years ahead.”

The effectiveness of our science spans our businesses. For example, we're developing next-generation drug-eluting stents, including a new bioabsorbable stent that could represent a significant advance in this area of medicine.

Our Organization

In 2007, Rick Gonzalez, my longtime friend and colleague, retired as Abbott's chief operating officer after an exemplary 30-year career. We thank him for his contributions over the years. With Rick's departure, we realigned our operating structure under four executive vice presidents — of pharmaceuticals, nutritional products, diagnostics and medical devices — reporting directly to me.

EXCELLING

In summary, Abbott is well prepared for its future. We understand the economic and environmental pressures that face companies today. Our confidence in delivering consistent results to our shareholders despite these challenges speaks to our ability to adapt, execute and optimize the many opportunities that our mix of businesses provides.

“We are ambitious, ready and determined to continue capturing the vast array of opportunities before us.”

Business diversity alone is not enough. It's the nature of Abbott's business diversity that sets us apart. We have chosen to participate in businesses with a high degree of relevance for the future of medicine, where technological and scientific superiority can advance the state of care and provide competitive advantage. As a result, we are ambitious, ready and determined to continue capturing the vast array of opportunities before us.

In 2007, we made Abbott a better and stronger company. Our goal is to do the same this year and every year. By doing so, we'll continue to deliver outstanding performance for the people who rely upon us, including patients, health care professionals and shareholders.

*Sales excluding Boehringer Ingelheim products. For sales including these items, see the Summary of Selected Financial Data.