So here's a question for you. How does a company
that got its start simply by putting medicine
into these tiny consistent pills back in 1880s
Chicago, how does that company evolve into a,
well... 40 plus billion dollar global behemoth
that touches literally everything you can imagine.
It's an amazing story. I mean, we're talking
about the entire spectrum here from really basic
consumer stuff like baby formula and protein
shakes all the way up to incredibly complex heart
implants, deep brain stimulation systems. And
even those little credit card size COVID tests
that we all had sitting on our kitchen counters
just a couple of years ago. Exactly. It really
is just a spectacular exercise in corporate lung.
longevity, in survival, and this kind of relentless
strategic diversification. And I think that's
the key word, diversification. It is. Abbott
Laboratories is one of those companies that kind
of flies just under the radar for most people.
Their name is everywhere. You probably have one
of their products in your house right now, but
you rarely grasp the full scope of what they
actually do. Right. People might know them for
one thing, like Similac or Ensure, maybe. Precisely.
They associate them with a single brand and completely
miss the fact that fundamentally they... are
a medical technology giant. Well, that complexity
is exactly what we are going to try and cut through
today. Our mission in this deep dive is to take
all this extensive corporate and financial source
material and distill the core insights. We're
going to detail the history, the current structure.
and the really significant impact of Abbott Laboratories.
And the goal, really, for you, the listener,
is to walk away with a quick grasp of the sheer
and often surprising scale of this multinational.
And when we talk about scale, let's put some
numbers on it. We have to. Based on the 2024
financial data we looked at, we were talking
about a company that brought in a staggering
$41 .9 billion in revenue. $41 .9 billion. Yeah.
And just for context, that is roughly the GDP
of a medium -sized nation. They employ about
114 ,000 people and operate actively in over
160 countries. It is a true global powerhouse.
That is just immense. And it immediately makes
you wonder. How do you even manage that? How
do you manage $40 -plus billion across such a
diverse portfolio? Well, what we found so fascinating
is how clearly they've organized the modern company.
It's built on four core pillars, and that gives
us a fantastic roadmap for understanding their
whole business model. Okay, so what are these
four pillars? They define the modern Abbott.
You have nutrition, diagnostics, medical devices,
and then established pharmaceuticals. And if
you look at that 2024 revenue breakdown, it gives
you a crucial insight into where the company
is really focusing its capital and its future
growth. And medical devices is the big one. It
is the undisputed king. It brings in 45 % of
the total revenue. So nearly half of all the
revenue is from essentially hardware for the
human body. Precisely. Nutrition follows at 22%.
Diagnostics is right behind that at 20%. And
then finally, established pharmaceuticals makes
up the remaining 13%. That 45 % figure for medical
devices, that feels like the defining statistic
for modern Abbott. I think it is. Okay, so let's
unpack this whole journey. Let's start from that
really simple, original invention back in Chicago.
Where did this all begin? Well, it begins with
a dedicated medical practitioner. The genesis
story of Abbott Laboratories starts with Dr.
Wallace C. Abbott. Now, he wasn't just a physician.
He was also a drugstore owner, and he saw a fundamental
flaw in the way medicine was being delivered
in the late 19th century. This was back in 1888,
right? 1888. He founded the Abbott Alkaloidal
Company right there in Ravenswood, Chicago. So
wait. His big innovation wasn't some complex
new machine or a new chemical compound. It was
just making the dose consistent. That's it. That
feels like such a fundamental concept today that
we just take for granted. But back in the 1880s,
that was revolutionary. It was absolutely revolutionary.
You have to think about what medicine looked
like back then. Dr. Abbott saw that the liquid
preparations of the era, you know, the tinctures
and tonics, they were highly inconsistent. And
they deteriorated really rapidly over time. So
you never really knew what you were getting.
Never. Imagine trying to dose out a really critical,
powerful drug like morphine from a solution that
might be, say, 10 % effective one day and 50
% effective the next. Dosing was erratic. Efficacy
was unreliable. It made patient recovery a real
guessing game. Okay, so here's where it gets
really interesting. He tackled this by isolating
the active parts of medicinal plants, the alkaloids,
things like quinine, codeine. even strychnine
and morphine right and he formulated them into
what he called dosimetric granules and that consistency
was the secret sauce that was everything these
tiny granules were manufactured in a standardized
way which ensured that every single patient received
a highly consistent and effective dosage Every
single time. It was a simple idea, but just a
vital advance in pharmaceutical precision and
stability. It really was. It moved medicine away
from the guesswork of old potions and tinctures
and toward the industrial standardized dosing
that we all expect today. That foundational focus
on precision is what carried the company forward
for decades. But the company we know today. This
medical device and diagnostics powerhouse that
didn't really solidify until they performed what
you could almost call a massive act of corporate
surgery in the 2010s. That's exactly right. The
next truly pivotal phase, the one that reshaped
the entire identity of Abbott Laboratories, happened
between 2004 and 2013. You can see the strategic
shift happening early on as they started sort
of. pruning these mature divisions that didn't
quite fit the high growth, high tech trajectory
they were aiming for. Like in 2004, for example,
they spun off Hospira, which was their entire
hospital products division. And that division
focused on specialty injectable pharmaceuticals
and medication management. A huge business. So
that pruning was strategic. Very strategic. And
it's interesting, Hospira was later acquired
by Pfizer in 2015, which just confirms that Abbott
was willing to shed these large, profitable but
less specialized parts of the business to focus
its capital elsewhere. But the real defining
moment, what you call the Great Divide, that
happened on January 1st, 2013. Yes, with the
corporate spinoff that created AbbVie. And this
was monumental. This wasn't just a renaming.
It was a deep structural cleaving of the company
into two separate entities. So why did they choose
to separate the pharmaceutical division, which
was, frankly, producing enormous cash flow from
the rest of the business? Well, the motivation
was really twofold. De -risking and focusing.
AbbVie took control of the research -based, patent
-driven pharmaceutical business. This included
the commercial rights to blockbuster drugs like
the anti -inflammatory Humira and the antiepileptic
Depakote. Okay, so huge revenue generators, but
what was the risk? Well, while those drugs generated
incredible revenue, they were also inherently
tied up in what's called a heavy patent cliff,
meaning their patent protection was set to expire
soon. And they were also linked to massive litigation
risks, which we'll definitely discuss later.
Okay. So the key insight here is that Abbott
Laboratories was essentially shedding the most
volatile, high -risk part of its business. They
were offloading the risk of patents expiring
and the potential for these multibillion -dollar
lawsuits attached to some older pharmaceutical
practices. Precisely. Abbott Laboratories kept
the global medical devices, the diagnostic tools,
the highly stable nutritional products, your
Similac and Ensure, and the branded generic drug
portfolios that are marketed exclusively overseas.
So it was a massive reorganization. Immense.
It required them to cut hundreds of staff members
in preparation, but it set the stage for the
highly diversified, cash flow stable, tech -focused
company we see today defined more by hardware
and diagnostics than by drug patents. So if that
split defined the modern Abbott, let's dive into
those four core divisions that survived that.
great corporate surgery and now account for that
$41 .9 billion in annual revenue. Let's do it.
And just as a quick reminder, medical devices
is the biggest slice of the pie at 45 % of 2024
revenue. Absolutely. The model is now set. 45
% medical devices, 22 % nutritional products,
20 % diagnostic products, and 13 % established
pharmaceuticals. So let's start with Pillar A
Nutrition. This is the division most people recognize,
yet it's also one that has brought the company
some really intense public scrutiny recently.
Right. The nutrition division is home to some
of the most recognizable brands in the world,
playing a critical role in everything from feeding
infants to providing supplemental nutrition for
the elderly. And a key strategic moment here
was the 1964 merger with Ross Laboratories. This
didn't just add a few products. It immediately
brought the iconic baby formula Similac under
the Abbott umbrella. So Similac wasn't An original
Abbott product. No, that acquisition secured
their position in the highly regulated and immensely
profitable infant nutrition market. It's really
foundational to consumer trust. And Similac is
just one entry in a surprisingly broad pediatric
portfolio. They offer variations like Similac
Neosure, Essentia, Tumacare. Often designed for
specific infant needs like premature babies.
Then, of course, you have Pedialyte for rehydration,
which is a staple in households for children
and, you know, increasingly for adults dealing.
with illness or post -exercise recovery. And
PediaSure for supplemental children's nutrition.
Right. But the nutritional story doesn't end
with kids. The adult and special needs category
is enormous, and it's driven by demographic trends
in developed markets. This is where you find
the powerhouse brands like Ensure. A huge market
leader. The market leader in providing complete
balanced nutrition, including high protein versions
like Ensure Gold. They successfully tapped into
this vast market of aging populations and hospitalized
patients. And they also cater to highly specialized
dietary needs, too, particularly for. growing
global diabetes population. Exactly. They have
Glucerna, which is a brand marketed specifically
for managing blood sugar levels in people with
diabetes. And what's fascinating is the regional
variation in branding. For example, in India,
Glucerna is often branded as Ensure Diabetes
Care. Why do they do that? It just shows how
Abbott tailors its marketing and distribution
strategy to local brand familiarity. The Ensure
name is just more trusted in that market. And
of course, they maintain a presence in convenience
nutrition with products like Zone Perfect Bar.
So it's their most publicly visible division,
but often the most important work, particularly
financially and technologically, is happening
in the next two pillars. Let's move to Pillar
B, Diagnostics. Yes. This is the division that
truly showcases Abbott's ability to innovate
rapidly and deploy technology on a massive scale.
Diagnostics is all about understanding what is
happening inside the human body, and it covers
everything from routine blood work to complex
disease surveillance. The division is highly
diversified, so it covers core lab testing, molecular
testing, rapid diagnostics, and point -of -care
instruments. And that diversification allows
them to serve massive hospital systems and individual
consumers at the same time. Exactly. When you
talk about rapid decentralized testing, the first
product that comes to mind is iSTAT. What exactly
is that and why is point of care testing so crucial?
ISTAT is essentially a portable handheld lab
analyzer. So instead of sending a blood sample
off to a central lab where results might take
hours, ISTAT allows medical professionals to
get critical diagnostic information right at
the patient's bedside in just a few minutes.
And that speed is vital in an emergency room
or a critical care setting. Everything. And our
sources even note its utility in veterinary medicine,
which just highlights its reliability and widespread
application outside of traditional human healthcare.
And then you have the other end of the spectrum.
The massive, high -throughput lab platforms.
Correct. For the massive volume required by hospitals
and public health agencies, they have platforms
like Alinity and Architect. These machines are
just workhorse systems designed for high -throughput
testing. They're capable of running thousands
of samples quickly and accurately for everything
from infectious disease screening to blood chemistry.
And finally, the ultimate example of miniaturization
and decentralization. The rapid tests. That's
IDNOW, a small toaster -sized molecular platform
that gives rapid PCR -like results. And of course,
the globally famous Binaxino rapid antigen test.
The Diagnostics Division has proven its capacity
to innovate, to miniaturize, and crucially to
scale, which became the single most important
factor during the COVID -19 pandemic, a topic
we will definitely get into later. OK, now we
get to Pillar C medical devices. We said this
is the largest revenue driver, accounting for
45 percent of the company's total sales. This
is where the complex, high margin, lifesaving
hardware lives. And it requires immense R &D
and really specialized manufacturing. This segment
is Abbott's primary focus and is deeply involved
in managing two of the most significant health
challenges globally, cardiovascular disease and
chronic pain. The scope is enormous. It is. It
includes rhythm management, electrophysiology,
heart failure solutions, structural heart repair,
and neuromodulation. They are literally putting
sophisticated hardware inside people to manage
critical health issues. Let's break down some
of these specific cardiovascular devices because
the names alone, nitroclip, HeartMate. They sound
like something out of science fiction. Can you
give us an analogy for what some of these devices
actually do? Sure. Let's start with the structural
heart segment. The MitraClip, for example, is
for mitral valve repair. The mitral valve controls
blood flow between the two left chambers of the
heart. If it leaks, which is called regurgitation,
it can lead to heart failure. And that used to
mean open heart surgery. Highly invasive open
heart surgery. The MitraClip is a small device
delivered minimally invasively via a catheter,
which essentially clips the valve leaflets together
to reduce the leakage. The innovation is moving
from a six -hour surgery to a much less traumatic
procedure with a much faster recovery. That's
a huge quality of life improvement. What about
other devices? Well, you also have the Amplatzer
Piccolo Occluder, which is a tiny wire mesh device
used to close holes in the hearts of newborns
and infants, especially for a condition called
patent ductus arteriosus. And for severe heart
failure, they produce the HeartMate system, which
often refers to their left ventricular assist
devices, or LVADs. An LVAD is a mechanical pump
implanted in the chest that helps the weak left
ventricle pump blood throughout the body. So
for some patients, it's a bridge to a heart transplant.
others is a permanent solution. Exactly. Destination
therapy. So they're making tiny repair tools
for babies and powerful mechanical pumps for
adults. It covers an enormous spectrum. It really
does. And we can't forget basic vascular access,
like the Sien's drug -eluting stent, which helps
keep coronary arteries open after a blockage,
and the CardioMems system, which is a miniaturized
sensor implanted in the pulmonary artery that
allows doctors to remotely monitor pressure changes
in heart failure patients. So that lets physicians
intervene before a patient is hospitalized. It's
turning reactive care into proactive management.
That's the goal. And innovation continues rapidly
in their rhythm management portfolio. We saw
the July 2023 FDA approval for the AveraDR leadless
pacemaker system. Why is leadless such a big
deal for pacemakers? It's a huge deal. Traditional
pacemakers rely on these thin wires or leads
that run from the device, which is implanted
under the collarbone down to the heart. And these
leads can fracture, they can become infected,
or cause blockages over time. Which would require
another surgery to fix. A complex and high -risk
surgical removal, often. The AveraDR is about
the size of a vitamin. implanted directly into
the heart, and crucially, it eliminates the need
for those leads entirely. This significantly
reduces complications and simplifies the procedure.
It is truly the next generation of cardiac rhythm
management. Okay, let's turn to the other major
subsegment in devices, neuromodulation. This
focuses on using electrical stimulation to manage
neurological issues and chronic pain. Right.
This division develops these sophisticated systems
to manage chronic pain and neurological disorders.
They produce devices like the Infinity Deep Brain
Stimulation System, which is used to treat movement
disorders like Parkinson's and spinal cord stimulators
for chronic back and limb pain, like the Proclaim
XR Recharge Free Spinal Cord Stimulator. The
technical names for the technologies they use
are pretty dense. Burst DR technology, Flex Burst
360 technology. What is the listener supposed
to understand about the innovation behind those
names? Well, the insight is that this is not
just a steady electrical current. BurstDR technology,
for example, delivers pulses that mimic the body's
natural nerve -firing patterns, which studies
suggest is much more effective at disrupting
pain signals than older, constant stimulation
methods. And the key consumer benefit for the
Proclaim XR is right in the name, recharge -free.
Exactly. Because of their low power design, these
systems can often last up to 10 years without
needing to be recharged. And that is a massive
quality of life improvement for the patient compared
to having to plug in a charging vest every night.
Finally, Pillar D, the established pharmaceuticals
division. It's the smallest component at 13%.
After spinning off the primary R &D pharma to
AbbVie, why did AbbVie even keep this smaller
pharmaceutical arm? Well, this division fulfills
a very specific, low -risk, high -volume strategic
role. It focuses specifically on branded generic
drugs, and crucially, these are sold exclusively
in developing and emerging markets. So these
are medicines that have long since gone off patent
globally. Right. But Abbott manufactures and
markets them under local trusted brand names
in countries where access to affordable quality
medicine is absolutely paramount. So it provides
reliable cash flow and a vital international
foothold without the massive R &D spending and
patent litigation risks that come with new drug
development. Exactly. It leverages drugs developed
and proven years ago, maintaining Abbott's brand
presence in markets like Latin America, India
and parts of Asia. It serves a public health
need while generating stable, predictable revenues.
It's a very different, lower -risk business model
than the specialty drug focus that went with
AbbVie. Okay, so now we understand the structure.
Let's trace how Abbott got from those little
Chicago granules in 1888 to becoming this truly
global force with four massive pillars. It's
really a century -plus story of strategic and
often aggressive acquisition that constantly
redefined the company. The road to becoming a
$40 billion multinational was paved with calculated
risk and strategic mergers. And they started
taking international steps very early, establishing
their first international affiliate in London
in 1907 and later expanding to Montreal, Canada.
This early global vision was critical. And we
saw them strategically planting flags in developing
markets well before it was common for U .S. companies.
By 1948, they'd established operations in Pakistan
as a marketing affiliate. Which now has a workforce
of over 1 ,500 employees and two manufacturing
facilities there. That commitment to maintaining
local manufacturing capacity gives them really
deep roots in global supply chains. And as we
noted, the acquisition history is the clearest
roadmap of their diversification. The key early
move that defined their consumer presence was
that merger with Ross Laboratories in 1964. That
was monumental. It instrumentalized their shift
into nutrition, bringing in their foundational
products like Similac, Pedialate, and Ensure.
That secured their major presence in consumer
health, which balanced the more volatile pharma
and emerging device markets. And they continued
to beef up the pharmaceutical side, the part
that would eventually become AbbVie before the
split. That's right. In the early 2000s, they
acquired Null, the pharmaceutical division of
BASF, for a substantial $6 .9 billion in 2001.
Then, in 2010, they acquired Solvay Essay's pharma
unit. for $6 .2 billion. And there was a specific
target there. Yes. Note the targeting here. The
Solvay acquisition was specifically aimed at
increasing their emerging market presence, directly
strengthening the very established pharmaceuticals
division that they kept after the AbbVie split.
They were building robust market access. So if
the 1960s secured nutrition, The late 2000s and
2010s were all about aggressive consolidation
in medtech and diagnostics, which, as we know,
are now their two largest, highest growth segments.
Absolutely. Just look at diabetes care. The acquisition
of Theracense in 2004 laid the foundational technological
groundwork for continuous glucose monitoring.
They merged Theracense with their existing medicines
division. And that marriage of technology and
infrastructure ultimately led to the launch of
the breakthrough Freestyle Libre line. Which
gained that pivotal FDA approval in 2017. And
this line shifted diabetes management from painful,
episodic finger pricks to continuous, ongoing
monitoring. The cardiology consolidation, though,
is where the price tags truly became massive.
It started with acquiring the vascular device
division of Guidant in 2006. But the real game
changer came in 2017. The monumental $25 billion
acquisition of St. Jude Medical. $25 billion.
It wasn't just a merger. It was a declaration.
$25 billion instantly vaulted Abbott into a leadership
position across structural heart, rhythm management,
and neuromodulation. Jude was a massive player
in complex, high -margin cardiovascular devices.
So Abbott didn't just buy a company. They bought
cop -tier R &D, manufacturing capacity, and a
massive portfolio of intellectual property. Making
them an immediate, formidable competitor to companies
like Medtronic. And when you look at an acquisition
of that scale, it doesn't just change Abbott.
It fundamentally changes the entire global medtech
landscape. They bet their future on devices and
hardware. And they haven't slowed down. Just
recently, in 2023, they acquired Cardiovascular
Systems, Inc., keeping that 45 % medical devices
segment growing aggressively. And they matched
that aggressive scaling in diagnostics, too.
The $5 .8 billion acquisition of Allure in 2017
was strategically significant, particularly for
their point -of -care testing capabilities, which
later became instrumental during the pandemic.
That Allure deal also included the subsidiary
Arriva Medical. which was at one point the largest
mail -order diabetic supplier in the U .S. It
was, although those facilities later closed in
late 2017 due to operational challenges and compliance
issues, which we'll touch on later. But the acquisition
still brought Abbott critical rapid diagnostics
technology. And the trajectory shows continued
aggressive movement into deep diagnostics. Our
source materials point to a major future acquisition.
The agreement announced in November 2025 to acquire
Exact Sciences Core for roughly $21 billion.
That is a staggering number and a crystal clear
signal. Exact Sciences is known for Coligard,
its non -invasive cancer screening technology.
Acquiring them for over $20 billion means Abbott
sees complex, deep diagnostics beyond just acute
infections as absolutely central to their future.
They're integrating their core lab testing capabilities
with advanced molecular screening. They're clearly
looking to dominate the next generation of preventative
and diagnostic medicine. No question. This incredible
scale and diversification, of course, has not
come without intense scrutiny. When you operate
in over 160 countries and your products are literally
keeping people alive, you inevitably face significant
regulatory and legal challenges. This next section
is a necessary look at some of those controversies
and liabilities. It's crucial context, and we
have to start with tax strategies, which have
drawn significant fire globally. Abbott, like
many large US multinationals, has been referenced
in numerous reports for utilizing these intricate,
sophisticated corporate structures designed specifically
to reduce taxation on non -US profits. And this
often involves Ireland, which historically offered
highly favorable tax regimes for companies moving
intellectual property and profits through the
country. Specifically, the company allegedly
utilized tax avoidance schemes like the infamous
Double Irish Arrangement and the later Single
Malt Tax Structure. Yeah. And if we unpack that
complex terminology for the listener, the mechanism
generally involves licensing intellectual property.
So patents for medical devices or drug formulas
to a subsidiary established in a low tax jurisdiction
like Ireland, which is then resident for tax
purposes in a zero tax haven like Bermuda. And
this shifting of intellectual property allows
the U .S. company to pay substantial royalties
to the offshore entity. Effectively moving billions
in profit out of higher tax jurisdictions. And
the specific details of Abbott's structure are
really striking. Our sources detail a Bermuda
resident Irish holding company called Abbott
Laboratories Vascular Enterprises, or ALVE. This
entity was structured as an unlimited liability
company, meaning it historically didn't have
to file public accounts in Ireland. But some
documents did emerge. They did. And they showed
ALVE had pre -tax profits of 2 billion euros
on 5 .2 billion euros in revenues between 2016
and 2017. And the crucial controversial sale
element, it allegedly paid no taxation on those
profits. And the supporting detail makes the
function of this structure pretty clear. ALVE,
the holding company responsible for distributing
products and licensing technology worldwide,
reportedly employed no staff in 2017. Zero staff.
It operates as a pure financial mechanism for
profit repatriation, and it highlights that thin
line between aggressive tax planning and perceived
corporate responsibility. OK, moving away from
financial practices, the company has a significant
history of high profile federal fraud and kickback
settlements stemming from its pharmaceutical
division before the Abbey split. These cases
reveal some of the cultural challenges that existed
within that drug marketing arm. They do. The
earliest major incident we have details on is
the Luper -Rellen case. It involved TTAP Pharmaceutical
Products, which was a 50 -50 joint venture between
Abbott Laboratories and Takeda Chemical Industries.
In October 2001, TAP settled criminal and civil
charges for federal and state Medicare fraud
and illegal marketing. And that settlement was
enormous for the time. $875 million in total.
It was. It included $290 million for violating
the Prescription Drug Marketing Act and another
$559 .5 million for overcharging Medicare by
inflating the price of the drug Lupron. At the
time, it was a record -high pharmaceutical settlement.
And it was largely driven by whistleblower lawsuits.
Yes, filed under the False Claims Act. It sent
shockwaves through the entire pharmaceutical
industry, indicating that the U .S. government
was prepared to prosecute systematic fraud aggressively.
And legal troubles were not isolated. Just two
years later, in 2003, came Operation Headwaters.
Right, where Abbott and two of its units agreed
to pay a combined civil settlement and criminal
conviction of $600 million for offering illegal
kickbacks to physicians to encourage them to
prescribe the company's product. The fact that
they were caught offering kickbacks, even to
FBI undercover agents, speaks volumes. It does.
It suggests the pervasive, systemic nature of
the marketing practices they were employing.
And this culture continued right up until the
point of the AbbVie split. In 2012, they faced
another major fine, this time concerning the
drug Dipakote. The Dipakote case resulted in
a $500 million fine and a $198 .5 million forfeiture
for illegal marketing. This was specifically
for off -label promotion. Meaning they marketed
the drug for uses that had not been approved
as safe and effective by the FDA. Why is off
-label promotion such a severe legal transgression?
Because the FDA is tasked with ensuring patient
safety and efficacy. When a company markets a
drug for an unapproved, use -like marketing depakote
for elderly dementia patients, which the FDA
never approved, they are circumventing the fundamental
safety checks designed to protect the public.
viewed this as placing corporate profit above
patient well -being. Hence the half billion dollar
penalty. More recently, the focus shifted to
their diagnostics acquisitions post -split. In
2021, two subsidiaries that were part of that
2017 Allaire acquisition, Arriva Medical and
Allaire Inc., paid a $160 million settlement
to resolve claims that they fraudulently billed
Medicare for glucose monitors. The Department
of Justice alleged that Arriva used free glucose
monitors to essentially induce patients to order
more consumable supplies, which constituted kickbacks
on the increased sales. But what's even more
egregious is that they were accused of charging
Medicare for devices given to patients who are
ineligible. or even deceased. Wow. That just
paints a picture of systemic, profit -driven
fraud within those subsidiary operations. It
does, and it underscores the risk of acquiring
large companies with potentially complex compliance
issues. Beyond financial impropriety, product
safety issues have brought the company under
intense public pressure, particularly concerning
its nutritional products. The most high -profile
incident in recent memory was, of course, the
infant formula crisis. The infant formula recall
of 2022 was a significant public health crisis.
Abbott recalled baby formulas from the market
and had to shut down its Michigan manufacturing
plant following complaints of illness and death
in infants caused by serious bacterial infections,
specifically Chronobacter sakazaki. And the subsequent
national formula shortage created immense pressure
on the company and regulators. The public trust
damage was substantial. It was, even though the
facility was allowed to reopen in June 2022 after
meeting FDA requirements. But the legal fallout
is still ongoing and severe, specifically regarding
premature infants. This is where we touch upon
the necrotizing enterocolitis or NEC lawsuit.
In July 2024, a jury ordered Abbott to pay a
staggering $495 million jury verdict in the case
of Margot Gill versus Abbott Laboratories. Right.
To understand the gravity of that half billion
dollar number, you need to understand what NEC
is. Please explain. Necrotizing enterocolitis
is a devastating, life -threatening gastrointestinal
disease that primarily affects premature infants,
where tissue in the intestines dies. The lawsuit
alleged that Abbott's cow's milk -based infant
formula, when given to premature babies, significantly
increased the risk of developing NEC compared
to human breast milk or donor milk. And the severity
of the disease and the vulnerability of the patients
made this case particularly high stakes. Extremely.
And the verdict itself was divided. And when
a jury awards punitive damages of that scale,
it signals strong disapproval of the defendant's
conduct. It makes you wonder, does the source
material suggest Abbott has a long -term plan
to mitigate this specific product liability risk?
Or is the sheer revenue from their other devices
simply enough to absorb these kinds of costs?
That dynamic tension is exactly what defines
modern Abbott. The revenues from devices and
diagnostics are immense, but the liability attached
to infant nutrition is catastrophic. The long
-term plan involves rigorous recertification
of their facilities and massive investment in
quality control. But the public relations and
legal battles will continue for years. It really
highlights that no matter how sophisticated your
high -tech division is, Basic consumer product
safety remains a core vulnerability. Absolutely.
And it's not just nutritional products facing
recalls, though. Their cutting -edge medical
devices, the source of 45 % of their revenue,
are also subject to safety concerns. Certainly.
In July 2023, Abbott had to recall certain Proclaim
and Infinity IPGs. Those are the implanted pulse
generators used in deep brain stimulation and
spinal cord stimulation. The issue was that patients
were sometimes unable to exit MRI mode. And what
happened? if the patient can't exit mri mode
the device is subject to electromagnetic interference
that can cause permanent damage potentially requiring
surgery to remove or replace the implanted device
this is a severe complication how many incidents
were there our sources confirm 186 reported incidents
and 73 reported injuries though thankfully no
deaths it just demonstrates the high risk high
reward nature of pioneering medical hardware
These technologies change lives, but even minor
software or component failures can have major
life -altering consequences for the patient.
Okay, let's pivot now from the history of controversies
to the most powerful demonstration of Abbott's
current strength. Diagnostics, particularly during
the height of the global crisis. The COVID -19
pandemic response showcased their agility and
their rapid innovation capability. It was without
a doubt an inflection point for the entire diagnostics
division. Abbott proved they were not just big,
but fast. They were incredibly agile in securing
emergency use authorizations, or EUAs, starting
with molecular tests very early in the pandemic.
They rolled out tests for both the IDNow system,
that small toaster -sized machine that gave highly
accurate molecular results in as little as 13
minutes, and their high -throughput lab platforms
like M2000 and Alinity by March and May of 2020.
Which meant they were immediately covering both
centralized hospital testing and decentralized
urgent care testing. A two -pronged approach.
Exactly. They also moved quickly into serology,
the antibody testing necessary for public health
surveillance. They received EUA for IgG antibody
tests on the Architect and Alinity eye systems
in April and May 2020, helping establish who
had previously been exposed to the virus. Their
strategy was comprehensive, test for active infection
and test for past exposure. But the true game
changer. The product that made them a household
name in the diagnostics space globally was the
BinaxNiveW Rapid Antigen Test. This product crystallized
the concept of decentralized health monitoring.
Absolutely. Approved in August 2020, it was groundbreaking
because it was credit card sized, delivered results
in 15 minutes, and critically cost only about
$5. It was cheap, fast, and portable. It was
also compatible with the Navica mobile app to
track results, providing a crucial, if short
-lived, digital infrastructure. The scale of
deployment was truly unprecedented, especially
after the immense effort required to scale up.
Forbes reported that the firm delivered over
400 million COVID -19 tests in total. With 300
million of those being shipped in the fourth
quarter of 2020 alone. Just incredible. That
showed they could not only innovate rapidly,
but scale production to meet immense global emergency
demand. And this capacity to scale diagnostics,
even while simultaneously struggling with major
quality control issues in their nutrition segment,
shows the dichotomy of the modern Abbott. They
are pioneers in one area and dangerously exposed
in another. Looking ahead, Abbott is clearly
leveraging that success and infrastructure in
diagnostics and sensor technology into the consumer
space. While their continuous glucose monitoring,
or CGM, has been foundational, with the Freestyle
Libre 3 receiving FDA clearance in May 2022,
they've significantly broadened the application
of that sensor technology. The Freestyle Libre
line itself is a massive success story. The technology
received the prestigious Galien Foundation Award
for Best Medical Technology in the last 50 years.
It acknowledges its transformative impact on
diabetes care by allowing patients to check glucose
levels just by scanning a small sensor on their
arm with a phone or a reader. This brings us
to the introduction of lingo in January 2022.
This feels like the critical link between medical
necessity and consumer optimization. What is
lingo, and why is it important for Abbott's future?
Lingo is a line of consumer bio -wearable sensors
that utilizes the core technology developed for
the Libra CGMs. It's designed to move beyond
traditional medical monitoring and allow everyday
individuals, not just diabetics, to collect continuous
biological readings to optimize their exercise
and nutrition regimens. So it's the Libra platform
repurposed for the general wellness market. Exactly.
Capitalizing on the increasing consumer demand
for personalized health data. So if I'm an elite
runner or just trying to manage my weight better,
I can use the same type of high -fidelity sensor
technology previously reserved for complex medical
conditions. It's about datifying wellness. And
creating a recurring revenue stream outside of
the traditional insurance and regulatory framework.
It's a huge strategic pivot that other companies
are racing to match. They're also continuously
improving their core medical devices. We mentioned
the advancements in neuromodulation. Yes, the
Proclaim Plus spinal cord stimulation system,
which received FDA approval in August 2022, is
another example of incremental patient -focused
innovation. It's notable because it can target
six independent pain sites within the patient's
body with a single device, offering much more
precise pain relief. And coupled with that 10
-year battery life we discussed, these advancements
offer real, tangible, quality -of -life benefits
for chronic pain sufferers. They do. And showing
their continued agility in diagnostics, in October
2022, they received the first FDA emergency authorization
for commercial monkeypox testing with their Alinity
MMPXV test. Once again proving their ability
to rapidly pivot their lab systems to address
new emerging health threats. And it's important
to maintain the corporate context around these
innovations, especially since we spent so much
time on controversies. Abbott has achieved high
-level corporate recognition for its stability
and operational excellence. They are consistently
ranked on the Fortune 500 and Global 2000 lists
and have been included on the Dow Jones Sustainability
Index for 18 consecutive years. And that speaks
to their scale and perceived stability in the
financial world. But that stability was tested
by global geopolitical events. We noted that
following the 2022 invasion of Ukraine, Abbott
continued business operations in Russia, though
they did suspend non -essential activities like
new investments and advertising. And research
evaluating corporate responses placed them in
the buying time category. With a grade D rating
from the Yale School of Management, this rating
reflects the decision to maintain a substantive
business presence, including operations that
impact pharmaceutical availability while postponing
future capital commitments. It's a difficult
position that balances global health needs with
geopolitical concerns, and they chose to maintain
their existing framework. And for a final context
point, they are a massive international brand
recognized far beyond medicine. They hold the
title sponsorship of the world marathon majors
since 2015. Ensuring their brand name is seen
by millions of consumers focused on health and
fitness every single year. So if we synthesize
all of this information, we see a clear and really
complex picture. Abbott Laboratories maintains
its status as a diversified global giant by balancing
the scale of necessity, the stable revenue from
nutrition and established pharmaceuticals with
the high tech, rapid innovation sectors of diagnostics
and medical devices. And what's truly remarkable
is the dynamic tension that exists within this
corporation. They can simultaneously be responsible
for essential childhood nutrition and face a
half billion dollar jury verdict for alleged
harm caused by their formula. All while pioneering.
the next generation of continuous glucose monitoring
and minimally invasive heart technology. It's
the complexity and the inherent contradictions
of a $40 billion healthcare company that you,
the learner, really need to grasp. This isn't
a single product company or even a single industry
player. It's an ecosystem of highly specialized
businesses unified under the Abbott name, constantly
shifting its strategic weight, moving away from
pharmaceutical patent risk and aggressively into
medical hardware and sensing technology. So what
does this all mean for the future of health?
We saw that Abbott's continuous glucose monitors
paved the way for consumer bio -wearables like
Lingo. That technology is about collecting personalized
high -frequency data outside the clinical setting.
transforming health from something that happens
at the doctor's office to something that is managed
minute by minute on your smartphone. Right. And
given this rapid advancement in personalized
diagnostic sensors and the company's clear $21
billion move into cancer screening with exact
sciences, the provocative thought we want to
leave you with is this. How will the proliferation
of these personalized diagnostic sensors, the
ability to continuously monitor your body's chemistry,
not just your steps, fundamentally change how
we define and manage our own health? in the next
five years. Will we move definitively from episodic
reactive medical care to a state of continuous
consumer -managed optimized health monitoring?
Something to chew on as you consider the future
of healthcare.