Abbott Laboratories

• 1. Introduction

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  Abbott Laboratories makes a repair clip for leaking heart valves, and it also makes the Pedialyte given to a child with a stomach bug. The American health care company operates in over 160 countries. It buys from at least 62 suppliers worldwide, and Fortune ranks it 107th on its list of the largest American companies.

  How does a single business end up selling infant formula, rapid virus tests, glucose sensors and implants for the brain? The answer starts with one physician and a problem with liquid medicine. It runs through decades of buying companies and splitting them off again. It also runs through courtrooms, where Abbott or its subsidiaries have paid some of the largest penalties of their kind.

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• 2. Dosimetric Granules

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  In 1888, a 30-year-old physician named Wallace Abbott founded the Abbott Alkaloidal Company in Ravenswood, Chicago. Born in 1857, he had graduated from the University of Michigan in 1885 and owned a drug store. He would live until 1921.

  His idea was small, literally. Morphine, quinine, strychnine and codeine are the active parts of medicinal plants. Doctors usually prescribed them as liquids, and liquids deteriorated over time. Abbott pressed the active ingredients into tiny "dosimetric granules." They gave patients a more consistent and effective dose. In 1922, the company moved from Ravenswood to North Chicago, Illinois.

  The first affiliate outside the United States opened in London in 1907. An affiliate in Montreal, Canada followed. The India business has a longer paper trail than most. It was incorporated on the 22nd of August 1944 as Boots Pure Drug Company (India) Ltd. It was renamed in 1971-1991 and 1995, becoming Boots Pharmaceuticals and then Knoll Pharmaceuticals. It took its present name, Abbott India Ltd, on the 1st of July 2002.

  Pakistan came in 1948, when Abbott started operating there as a marketing affiliate. It now employs over 1500 people, and two factories in Karachi, at Landhi and Korangi, still make pharmaceutical products.

  In 1962, Abbott formed a joint venture with Dainippon Pharmaceutical Co., Ltd., of Osaka, Japan, to manufacture radio-pharmaceuticals. Two years later it merged with Ross Laboratories, which became a wholly owned subsidiary. Richard Ross took a seat on Abbott's board and kept it until he retired in 1983. The deal brought Similac under Abbott's roof. Pedialyte and Ensure were then introduced by Ross while it was under Abbott's leadership.

  In 1965, offices opened in Italy and France. Not every claim about this era is flattering. Harvard professor Lester Grinspoon and Peter Hedblom wrote that in 1966 the company sold the equivalent of two million doses of powdered methamphetamine to a criminal dealer on Long Island.

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• 3. Deals and Divestitures

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  In 1985, Abbott partnered with Taisho Pharmaceutical for the international rights to clarithromycin, a second-generation macrolide antibiotic. The FDA approved it under the brand name Biaxin in October 1991. Generic versions were approved in Europe in 2004 and in the United States in mid-2005. The drug is on the World Health Organization's List of Essential Medicines.

  The 2000s were a decade of shopping and selling. In 2001, Abbott bought Knoll, the pharmaceutical division of BASF, for $6.9 billion. In 2002 it sold the Selsun Blue brand to Chattem. Later that year, it sold Clear Eyes and Murine to Prestige Brands. In 2004, it completed the spin-off of Hospira, its hospital products division, which Pfizer later acquired in 2015.

  That same year, Abbott bought TheraSense, a diabetes-care company, and merged it with its MediSense division. The result was Abbott Diabetes Care. In 2006, Abbott helped Boston Scientific buy Guidant Corporation by purchasing Guidant's vascular device division.

  In 2007, Abbott paid $3.7 billion in cash for Kos Pharmaceuticals, which marketed Niaspan and Advicor. That year it also planned to sell two diagnostics divisions to General Electric, but the parties could not agree on terms. Ross Products was renamed Abbott Nutrition. In 2009, Abbott acquired Advanced Medical Optics of Santa Ana, California, and sold it to Johnson & Johnson in 2017.

  In February 2010, Abbott acquired the pharmaceuticals unit of Solvay S.A. for US$6.2 billion, or €4.5 billion. The purchase added many pharmaceutical products and a larger presence in emerging markets. Later in 2010, it bought STARLIMS, a laboratory information management company in Hollywood, Florida, for $123 million, or $14 per share. It also said it would buy the large generic drugs unit of India's Piramal Group for $3.72 billion.

  Then the company divided itself. Effective the 1st of January 2013, Abbott completed the spin-off of AbbVie. The pharmaceutical research business went to AbbVie, while Abbott kept the name and the nutrition products. In preparation for the reorganization, it cut 550 staff members.

  Buying resumed quickly. In May 2014, Abbott announced a $2.9 billion deal for Kalo Pharma Internacional S.L. in order to secure its 73% stake in the Chilean company CFR Pharmaceuticals. Abbott said this would more than double its branded generic portfolio. In December 2014, it paid $410 million for the Russian manufacturer Veropharm of Voronezh, which came with three manufacturing facilities. Abbott already employed 1,400 people in Russia.

  In January 2017, Abbott announced it would acquire St. Jude Medical for $25 billion in stock. In October 2017, it bought Alere for $5.8 billion. Alere came with a subsidiary, Arriva Medical, which at one point was the largest mail-order diabetic supplier. Arriva closed facilities in December 2017.

  The pattern continues. In November 2025, Abbott announced an agreement to acquire Exact Sciences Corp. in a deal worth roughly $21 billion.

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• 4. Four Businesses

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  In 2024, medical devices produced 45% of Abbott's revenues. Nutrition produced 22% and diagnostics 20%. Pharmaceuticals sold outside the United States made up the remaining 13%.

  The nutrition division sells pediatric products such as Similac, Isomil and Gain. It also sells adult products such as Ensure and ZonePerfect. Special dietary needs are served by Glucerna and Juven. In India, Glucerna goes by the name Ensure Diabetes Care.

  Diagnostics covers core laboratory work, molecular testing, point-of-care devices, rapid diagnostics and informatics. One point-of-care analyzer, the i-STAT, was designed for human patients. It has also proved useful to veterinarians, and it is marketed to them by Abaxis.

  The devices division spans rhythm management, electrophysiology, heart failure, structural heart, neuromodulation and diabetes care. Its heart products include Xience, HeartMate, CentriMag, CardioMEMS and the Amplatzer Piccolo Occluder. Neuromodulation includes the Proclaim neurostimulation systems and the Infinity Deep Brain Stimulation System.

  The fourth division, Established Pharmaceuticals, sells branded generic drugs exclusively in developing markets.

  The financial table shows how the scale grew. Revenue was about $22.3 billion in 2005 and about $43.1 billion in 2021. Net income in 2021 was about $7.1 billion. Employee counts are listed from 2013, when the figure was 69,000, and reach 113,000 in 2021.

  Miles D. White joined the company in 1984 and held posts including senior vice president of diagnostic operations and executive chairman. In November 2019, he announced he was stepping down as CEO after 21 years. Robert B. Ford had joined in 1996 and ran the medical device business as an executive vice president. In March 2020, Ford became president and CEO, and later chairman.

  In 2015, Abbott became the title sponsor of the World Marathon Majors. The Galien Foundation named Abbott's FreeStyle Libre the best medical technology of the 50 years from 1970 to 2020. That sensor is the subject of the next chapter.

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• 5. Sensors and Valves

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  In September 2017, the FDA approved the FreeStyle Libre glucose monitoring system. It reads glucose levels through a sensor the user applies themselves, with no finger pricks. In November 2018, the FDA cleared FreeStyle LibreLink, a smartphone app that works as a glucose reader. In May 2022, the FDA gave 510(k) clearance to FreeStyle Libre 3, the latest version of the continuous glucose monitor. Fast Company also ranked Libre Sense number 10 among the most innovative companies in sports.

  The heart has been a longer project. In September 2015, Abbott bought Tendyne Holdings, a private company developing minimally invasive therapies to replace the mitral valve, for $250 million. In January 2019, it acquired Cephea Valve Technologies, which was working on a less invasive replacement heart valve for people with mitral valve disease.

  In January 2020, the Tendyne Mitral Valve became the world's first commercially available solution for mitral valve replacement. With a CE Mark, doctors in Europe could implant it outside a clinical setting.

  On the 5th of July 2023, the FDA approved the Aveir DR, a leadless pacemaker system. Abbott's other cardiovascular work includes the MitraClip.

  Neuromodulation targets pain. In August 2022, the FDA approved Proclaim Plus, a multi-use spinal cord stimulation system for chronic pain. It can treat six independent pain sites and has a recharge-free battery life of up to 10 years.

  In January 2022, Abbott introduced Lingo, a line of consumer biowearable sensors. They collect a range of biological readings to help people tune their exercise and nutrition. In September 2023, the company bought Bigfoot Biomedical, a developer of smart insulin management systems for people with diabetes.

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• 6. Pandemic Testing

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  In March 2020, Abbott received emergency use authorization from the FDA for a SARS-CoV-2 test. The device was about the size of a small toaster and produced results within 13 minutes. Detroit received these tests on the 1st of April 2020.

  That was only the first of many authorizations. Also in March, a molecular test running on the m2000 RealTime laboratory platform was authorized. In April, an antibody test for the IgG antibody on the ARCHITECT laboratory instruments followed. In May, another IgG antibody test on the Alinity i system was authorized, as was a molecular test on the Alinity molecular instrument.

  The product that most people saw was BinaxNOW. In August 2020, the FDA authorized this credit-card-sized, 15-minute portable antigen test. It cost $5 and worked with the NAVICA mobile app. In October 2020, an IgM antibody blood test was authorized for laboratory use. In December 2020, a rapid 20-minute BinaxNOW antigen test was authorized for home use.

  The volume was enormous. Forbes reported in January 2021 that Abbott had delivered more than 400 million COVID-19 tests, including 300 million in the fourth quarter of 2020.

  The testing business kept going. In October 2022, the FDA authorized Alinity m MPXV, a real-time PCR test. It was the first FDA emergency authorization for commercial monkeypox testing.

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• 7. Fines and Tax Shelters

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  In October 2001, the US Department of Justice, state attorneys general and TAP Pharmaceutical Products settled charges against TAP, an Abbott subsidiary. The charges covered Medicare fraud and illegal marketing of the drug leuprorelin. TAP paid a total of $875 million, a record for a pharmaceutical settlement.

  The money was divided in three parts. There was $290 million for violating the Prescription Drug Marketing Act and $559.5 million for overcharging Medicare. There was also $25.5 million reimbursing 50 states and Washington, D.C. for false Medicaid claims. The case began with claims filed by Douglas Durand, a former TAP vice president of sales, and Joseph Gerstein, a doctor at Tufts University's HMO practice. Durand, Gerstein and Tufts shared $95 million.

  Later lawsuits over leuprorelin, focused on over-prescription or missing warnings, have not succeeded. Between 2010 and 2013, the FDA updated the Lupron label with new safety information on thromboembolism, loss of bone density and convulsions.

  In October 2003, Abbott and two of its units agreed to pay a total of $600 million. It was the first combined civil settlement and criminal conviction for offering kickbacks to agents in Operation Headwaters, an undercover FBI investigation.

  A dispute over royalties for Humira began in March 2003, when the British company Cambridge Antibody Technology went to the High Court of London. In December 2004, the judgment favored CAT. Abbott had to pay $255 million in place of royalties that the Medical Research Council, the Scripps Research Institute and Stratagene would have received. Some of the sum was to be passed to development partners, including $191 million for the UK Medical Research Council.

  On the 2nd of October 2012, the company was charged a $500 million fine and a $198.5 million forfeiture for illegal marketing of Depakote for uses the FDA had not approved. The court also sentenced Abbott to five years of probation and court supervision. Shareholders then brought derivative suits against directors for breach of fiduciary duty. Abbott no longer holds the commercial rights to Humira or Depakote after the AbbVie spin-off.

  In 2021, Arriva Medical LLC and Alere Inc paid $160 million to resolve claims that they had fraudulently billed Medicare for glucose monitors. The Department of Justice said Arriva handed out free monitors to induce patients to order more supplies, then took kickbacks on the extra sales. It was also accused of billing Medicare for monitors given to ineligible patients, or even dead ones.

  Taxes drew scrutiny too. Abbott allegedly used the double Irish arrangement, a then-legal but controversial tool used by US multinationals to cut US taxes on foreign profits. Its Bermuda-resident Irish holding company, Abbott Laboratories Vascular Enterprises, employed no staff in 2017. Yet it distributed Abbott's products and licensed its technology worldwide.

  The company was incorporated in 2003. In 2016 and 2017 it earned a pre-tax profit of €2 billion on revenues of €5.2 billion, and paid no tax on those profits. It had never filed accounts in Ireland because it was an unlimited liability company. New EU accounts rules forced it to file in 2018. Its registered office was the address of Matheson, Ireland's largest tax-law firm.

  In September 2021, the Irish Times reported that Abbott was using the single malt tax structure to shield profits on its COVID-19 testing kits.

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• 8. Infants and Implants

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  In 2023, Abbott recalled its Proclaim and Infinity implantable pulse generators because patients could not exit MRI mode. Using the affected devices could require surgery to remove and replace them. There were 186 reported incidents and 73 reported injuries. No deaths were reported. Gita Amar, a PR representative for Abbott, said: "The company has communicated this action to physicians and regulatory bodies. No products need to be returned to the company or replaced."

  The biggest crisis involved babies. In February 2022, Abbott recalled infant formulas and shut down its Michigan plant after complaints of illness and death in infants from serious bacterial infections. After Abbott met the FDA's initial requirement, the facility reopened in June 2022.

  On the 26th of July 2024, a jury ordered Abbott to pay $495 million in the case of Margo Gill vs. Abbott Laboratories. The award was $95 million in compensatory damages and $400 million in punitive damages. The suit alleged that Abbott's formula for premature babies increased the risk of necrotizing enterocolitis. That is a gastrointestinal disease that can cause intestinal tissue death and can be life-threatening.

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