Abbott Labs Problem Identification: Mini

Abbott Labs

Problem identification: Mini business plan

Insufficient protection against problems inherent in healthcare industry

Unlike Johnson & Johnson, a firm which possesses many different kinds of personal care as well as medical and pharmaceutical product lines, Abbott Laboratories' product line is extremely concentrated in several specific areas of the healthcare field. When the economy is hard-hit, many people cut back on spending money on healthcare and focus their income on what they see as the most essential items. The types of personal care products that Abbott does possess include animal care and vision care products, which fall into the line of less necessary products than Johnson & Johnson's shampoos and baby care items.

One way to diversify further is to focus more upon its lines of nutritional products, such as Similac, Ensure, Glucerna, AdvantEdge, Body-for-LIFE and ZonePerfect (Products by category, 2011, Abbott Laboratories). These products are specifically designed to address the needs of people with diabetes or who wish to live a healthier and/or lower-carb lifestyle. As a leading provider of such personal care products to a growing world population of seniors and diabetics, Abbott could gain a competitive advantage over Johnson & Johnson and other personal care product providers.

Problem 2: Insufficient diversification of pharmaceutical products

Abbott's anti-inflammatory product Humira has gained it considerable market share. This anti-tumor necrosis factor (TNF) drug has shown considerably better performance than any of the comparable products of Abbott's competitors (Zacks analyst blog highlights, 2011, Yahoo). However, focusing too closely on one or two highly-desirable products can backfire as a strategy for a pharmaceutical company. First of all, given the rate at which drugs can 'go generic,' even the most successful pharmaceutical product is only assured of gaining astronomical profits for a finite period of time. Patents have a definite expiration date and when generic, cheaper medications are available, patients, insurance companies, and hospitals are more apt to choose the cheaper alternatives. Even investment analysts remain concerned about Abbott's dependence on Humira as its 'cash cow,' one reason that they have remained neutral on recommending its purchase, despite its strong showing in recent months with better-than-expected earnings (Zacks analyst blog highlights, 2011, Yahoo).

Abbott must expand its pharmaceutical research endeavors to ensure that it is consistently generating new drugs that are superior in quality to its competitors. Good research requires constant infusions of new talent and knowledge into the company.

Problem 3: Too much emphasis on high-cost product lines

Some of Abbott's product lines target a higher-end clientele, such as its animal wellness and vision care products, for which there may not be sufficient demand during lean times. Abbot must seek out a more diversified line of products economically, as well as in terms of its product offerings. Expanding into over-the-counter medications such as analgesics, antacids, or cold treatments, which form a core segment of the pharmaceutical industry, would be one way to ensure that consumers across the economic as well as health spectrum purchase Abbott products.