An analysis of the financial situation of Abbott Laboratories (Pakistan) Limited

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Table of ContentsPage No.Introduction   2 Information Gathering         5Analysis 14Conclusion 16 Bibliography 18 Contents of Appendix 19IntroductionTopic chosen and its contextThe topic I have chosen for my Research and Analysis Project is “An analysis of the financial situation of Abbott Laboratories (Pakistan) Limited”.For more than a century, Abbott Laboratories has been working to advance health care for people around the world. Founded by a young Chicago physician, Dr. Wallace Calvin Abbott, in 1888, Abbott Laboratories has evolved into a diversified health care company that discovers, develops, manufactures and markets innovative products and services that span the continuum of care – from prevention and diagnosis to treatment and cure. Headquartered in north suburban Chicago, Abbott helps people around the world in the more than 130 countries. (http://abbott.com/corporate/corporate_overview.html)Abbott Pakistan is part of the global healthcare corporation of Abbott Laboratories, Chicago, USA. Abbott Laboratories is a highly diversified global health care company devoted to the discovery, development, manufacture and marketing of pharmaceutical, nutritional and medical products, including devices and diagnostics. With over 70,000 employees worldwide and a global presence in more than 130 countries, Abbott is committed to improving people's lives by providing cost effective health care products and services that consistently meet the needs of our customers. Abbott started operations in Pakistan as a marketing affiliate in 1948; the company has steadily expanded to comprise a work force of over 1500 employees. Currently two manufacturing facilities located at Landhi and Korangi in Karachi continue to use innovative technology to produce top quality pharmaceutical products. Abbott Pakistan has leadership in the field of Pain Management, Anesthesia, Medical Nutrition, Anti-Infectives and Diagnostics. Our wide range of products is managed and marketed through four marketing arms. (http://www.abbott.com.pk/aboutus.html)Main Business Areas in Pakistan:Following are the main business areas of ALPL.> Pharmaceuticals> Nutritional> DiagnosticsMain Business AreasPKR in '000Net Sales Pharmaceuticals % Age as of Total Revenue Others % Age as of Total Revenue Total2002         3,532,006                                     88 472,204                                     12 4,004,210 2001         3,078,756                                     88 409,647                                     12 3,488,403 2000         3,003,263                                     90   350,264                                     10   3,353,527 The above table highlights the percentage of revenue generated from each area of business. Others include Sales from Nutritional and Diagnostics Products. It is evident from the table that around 88-90% of Sales generated from Pharmaceuticals in the last three years. Sales from Nutritional and Diagnostics products can be increase by increasing the product portfolio. Nutritional products are prescribed as a supportive medicine and can be used in normal routine too.Merger of ALPL with KPL:“The scheme of Arrangement for the amalgamation of Knoll Pharmaceuticals Ltd. with Abbott Laboratories (Pakistan) Limited has been sanctioned by the Honorable High Court of Sindh, and has in accordance with its terms become effective on 25 April 2002.” (http://www.abbott.com.pk/news.html)Reasons for choosing the topicI have joined ACCA Technician Stage in Dec 1999, and since than Ratio Analysis have always attracted me because of its uniqueness. As the time passes and I reached Level C of Technician Stage the attraction towards analysis of financial statements increases. This was the main idea on choosing this topic.Secondly, our family business is linked with Pharmaceutical Industry; this motivates me to choose the organization, which is in Pharmaceutical Industry.Lastly, I thought doing a financial analysis of the large Pharmaceutical Company like Abbott Laboratories (Pakistan) Limited will help me in my family business and will also help me to do in depth analysis.Aims and objectives of the reportThe study aims to achieve the following:1. To conduct SLEPT Analysis of the company.2. To analyze the trend of financial performance of Abbott Laboratories (Pakistan) limited over three years 2000 – 2002 in respect of Revenue & Expenditure.3. Financial evaluation of the year 2002 with respect to previous years and comparing it with its competitors.Information GatheringPrimary sources used Reasons for their use Description of methods used to gather informationFeedback from Director Finance of the company. I thought its best to get feedback from Director Finance of the company to explore some key information. In meeting with Director Finance I came to know about current strategy and major investments that will be made in the near future by the company.Annual Report for the Years ending 30th November 2000, 2001 & 2002. Annual reports are the best source of information about the company. I gather Annual Reports from company’s registered office and have explained them about my research project.     Secondary sources used Reasons for their use Description of methods used to gather information.Abbott Laboratories (Pakistan) Limited Website. (http://www.abbott.com.pk)Abbott Laboratories, Chicago, USA. (http://www.abbott.com)Available online information about the company guides me to get the initial understanding about ALPL. I browsed the website of the ALPL and Abbott Laboratories, Chicago, USA. I came to know about the history of the company and the main business areas of the company.Designed questionnaires to get the information from International Medical Statistics data. IMS Data is not for public use as it is a restricted data and cannot be copied. IMS contains fact about every market share of Pharmaceutical Market in the world. As IMS Data was not for public use I decided to use questionnaire because this was the only way to get the basic financial information about Pharmaceutical sector in the world and in Pakistan market especially. This questionnaire was filled by the local pharmaceutical company officials, and from that I came to know the total market share of Pakistan Pharmaceutical Market, and the share Multi-National Companies are having.Newspapers having Business and Economics information. As I was doing SLEPT analysis to scan the external environment of the company, it was necessary for me to keep myself up to date on the external environment, which is affecting the Pharmaceutical business. Most of the news papers like Business Recorder (http://www.brecorder.com) and Daily Dawn (http://www.dawn.com)were available on internet, so it was easy for me to get access of that information which was relevant to me.Karachi Stock Exchange Website.(http://www.kse.net.pk)To get the information about the share price of the company and its competitors. I browsed the website and found the average share price, useful analysis and
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detailed information of every pharmaceutical company listed on Karachi Stock Exchange. Analysis of InformationShort introduction of Pharmaceutical MarketFrom the questionnaire that I designed, I analyze the following information of year 2002.Total World Pharmaceutical Market: USD 364 billionTotal market share of Pakistan: USD 900 millionShare of Multi-National Companies: 60%Share of Local Companies: 40%ALPL share in Total Pakistan’s market is: 7.73%ALPL share in total Multi-National Companies: 12.89% SLEPT AnalysisSocial: As the trend of health awareness and hygiene conciousness are increasing in Pakistan, the Revenues of Pharmaceutical company is also increasing.Legal: Pakistani Pharmaceutical market is regulated by the Ministry of Health, Pakistan. Ministry ...

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