Dear Shareholders,
During a routine physical, Jay King's doctor discovered that Jay was suffering from atrial fibrillation. A series of ablations using Abbott's TactiCath Ablation Catheter in conjunction with the EnSite X mapping system and HD Grid Mapping Catheter helped his heart restore a steady beat. Later, after suffering an episode of ventricular tachycardia, Jay had our Gallant cardioverter defibrillator implanted, which let him get back to the active life and outdoor activities he loves.
At Abbott, we've been relentlessly focused on improving people's health for 135 years. Today, we're tackling some of the world's most pressing healthcare challenges to help people at all ages and stages of life. Because we believe the best medical product is the one that helps the most people, we design breakthrough solutions in each of our businesses β nutrition, branded-generic pharmaceuticals, medical devices, and diagnostics β to help ensure maximum access and affordability.
Our balanced leadership across diverse markets and geographies gives us more ways to win and helps insulate us from the impact of global economic swings, helping us deliver consistent growth and strong shareholder returns.
DEAR FELLOW SHAREHOLDER:
The three years of the Covid pandemic called on all of the strengths that have made Abbott such an enduringly successful company and demonstrated how we'll remain one in the years to come. Our response and performance have been true to both our legacy of achievement and our commitment to the future. As we emerge from the pandemic, we are ready to lead in the dynamic new era of healthcare that lies ahead.
ROBERT FORD
Chairman of the Board and Chief Executive Officer
CHALLENGE AND OPPORTUNITY
With its breadth and impact on all aspects of society, Covid has been the most significant global health crisis in a century. When the world needed help as this new virus ground it to a halt, Abbott answered the call. We quickly formed a battery of R&D and operational teams to attack the new virus from multiple angles.
The result: more than a dozen different tests for use at all stages of the disease process and in a wide range of testing styles and environments, from hospital laboratories to self-testing.
The availability of fast, accurate, and accessible testing was a major factor in the world's response to the pandemic. It gave people confidence that they could conduct their lives safely and allowed them to regain normalcy after the disruptions of the virus.
The success of our actions also built major new businesses for Abbott at unprecedented speed and, importantly for the long term, demonstrated the power and potential of rapid diagnostics. We showed the world the many benefits of testing β and of health technology broadly β that is decentralized, digitized, and democratized. This greatly accelerated the adoption of the technology and built strong new channels to pharmacies, to doctors' offices, and to people's homes.
So, while Covid testing will become a smaller part of our business as we move from a pandemic to an endemic level, Abbott has built a leading position for the promising future of rapid testing.
And this is not the only long-term opportunity that the success of our pandemic response made possible for us. Over this period, our Covid-testing revenues allowed us to invest an additional $2 billion to fund or accelerate R&D programs and marketing efforts in our priority growth areas. We also invested approximately $6 billion in capital projects that will expand our manufacturing capacity and improve our capabilities.
As a result of these strategic moves and investments, Abbott is an even stronger company coming out of Covid than we were going into it.
The pandemic has, of course, had many other impacts on our operating environment and our business. It's affected our institutional customers by reducing their ability to perform hospital procedures and routine testing. And it's disrupted global supply chains and work patterns, both of which have contributed to inflation.
Abbott has dealt with challenges like these time and again over its long history. While Covid whipped them together into a unique storm, we've weathered many. Abbott is a long-term company; we know how to plan, how to adapt, how to find the ways we need to deliver for both our customers and our shareholders.
That's how, over the three years of the pandemic, we not only returned a total of nearly $15 billion to shareholders through dividends and share repurchases, but, at the same time, continued to invest for our durable, long-term growth.
Significant as today's challenges are, you can rely on Abbott to persevere, to perform, and to live up to our values as we always have.
An example was our voluntary recall of infant formula and temporary suspension of manufacturing at one of our U.S. plants. We addressed this situation and resumed production in July. With adjustments to our global manufacturing network β running our U.S. facilities at increased capacity and importing additional formula from Europe β we were able to deliver roughly the same volume of formula in the U.S. in the second half of 2022 as we did prior to the stoppage. As a result, availability on store shelves is improving and we will continue working to get families the consistent and dependable supply of high-quality infant formula they've relied on for almost a century.
While managing the demands of the present, we've kept our eyes on the future and its opportunities, which we believe have never been greater.
Medical science is advancing at high speed, with significant progress in miniaturization, and greater understanding of gene expression and the microbiome. Data technology is doing the same, with new capabilities from artificial intelligence to machine learning to advanced manufacturing. And the two fields are combining to create remarkable new possibilities.
New connected technologies allow patients to receive care from their physicians whenever and wherever they need it. Wearable digital sensing technologies give people the information about their bodies that they need to manage medical conditions or monitor and improve their health. New diagnostic platforms are transforming the ways testing is conducted from the lab to the home. We're in the midst of a new healthcare revolution, and Abbott is among its foremost leaders.
In 2022 alone, we delivered a host of innovative new product approvals and launches, including:
- FreeStyle Libre 3, the world's smallest, most accurate continuous glucose monitoring sensor
- The EnSite X EP System, our new cardiac mapping platform, which helps physicians better treat abnormal heart rhythms
- Aveir, our single-chamber leadless pacemaker for the treatment of patients with slow heart rhythms
- An upgraded version of our NeuroSphere myPath digital health app with enhanced functionality
- Our Proclaim Plus spinal cord stimulation system featuring the next generation of Abbott's proprietary BurstDR therapy
- And two new Amplatzer cardiac devices: Amulet, which helps reduce the risk of stroke in people with atrial fibrillation; and Talisman, to treat people with a small opening between the upper chambers of the heart that puts them at risk of recurrent ischemic stroke
And our pipeline for the future remains very rich. We have the technologies and opportunities we need to fuel both therapeutic advancement and robust growth for years to come. These technologies and their life-changing impact for patients and consumers can be seen throughout this report.
FINANCIAL PERFORMANCE
Despite the headwinds in our operating environment, Abbott delivered sales of $43.7 billion in 2022 β an increase of around 6.4 percent on an organic basis β and earnings-per-share of $5.34, exceeding our initial forecast for the year.
In December, we announced a dividend increase of 8.5 percent for 2023; this makes for an average annual dividend increase of more than 12 percent since the beginning of the pandemic. Abbott has now paid dividends for 99 consecutive years and is in the exclusive ranks of Dividend Kings, the small group of companies that have increased dividends for more than 50 years in a row.
Over the past three years, Abbott has provided shareholders a total return of approximately 32.5 percent, versus a market return of 23.6 percent.
The key to that success in an environment like today's is our diversified business strategy, which gives us defensive strength by protecting us from market downturns in particular businesses, and offensive strength by providing us more ways to compete and win.
THE FUTURE
The challenges of the last three years demonstrate precisely why and how Abbott will continue to lead far into the future. Our company has thrived for 135 years because of its resilience and adaptability, its diversified portfolio of leading businesses, its financial strength and acumen, and a deep-rooted culture of service, execution, and success.
Because of our extensive history and experience, Abbott takes the long view. While our experience helps us navigate the waters of the present, it also ensures that we always steer toward the horizon. We're inspired by the immense potential of the future of healthcare and believe that we are very well positioned to capture it.
Our objective, laid out in our 2030 Sustainability Plan, is to help three billion people every year with Abbott products β a fifty percent increase over the course of the plan. To achieve that ambitious goal, we're working to transform the future of healthcare. We've adopted a set of guiding innovation principles with the explicit intention of making our technologies more accessible to more people. That means easier to use. It means deliverable in new ways. And it means reducing the total cost of care to help patients, providers, and payers.
We're energized by that vision and believe there's never been a better time to be in healthcare. We're here at Abbott to help people live fuller lives through better health. That's a high purpose and a responsibility that we take very seriously. To us, it means the motivation to create the life-changing products and technologies of the future, the vigilance to ensure they're of the highest quality, and the commitment to meet the needs of the people we're here to serve.
Abbott Proud,
ROBERT B. FORD
Chairman of the Board and Chief Executive Officer
February 28, 2023
Read the original letter here.
