Abbvie Companys Business Model, Its Focus, and Its Performance in 2005-2014 - Research Paper Example

Management The Abbvie Company was founded in the year 2013 in the United States of America. Its Chief executive officer and chairman is a 30 year old Richard A.Consalez. Its headquarters are in North Chicago, Illinois and it has 25000 employees. The journey of forming this company began on October 19, 2011, when Abbott Laboratories bore the idea of separating it into two public companies, therefore, Abbvie was founded and delved into the field of biopharmaceutical research and development, while the other, remained with the name Abbott and ventured in the field of dealing in different medical products. Before the separation, it dealt with medical products without the research division. Finally, the separation was effected on January 1, 2013 and subsequently, Abbvie was listed on the New York Stock Exchange (Abbott Press Release). Its mission is; to work favorably with health care officials with the aim of maximizing the importance of specialized in pharmaceutical products in order to improve the health care of patients who require this kind of medication that is specialized. The vision is; is to work on making drug prescription, offering and administering medication the best, cost effective to the patients, and make clinical practices superb and observe the ethical rules. It is a new company because; it began its operations in 2013, after its separation from Abbot Laboratories. The company has gone beyond the norm net profit of 7 percent by registering 22 in the year 2014. The industry average payout is 20 percent, but the company registered 60 percent, which is impressive bearing in mind it is new in the market. This has created confidence in investors that the company is growing. It deals in human medicine, and its sales reached 10 billion dollars globally in the year 2014.In the year 2013, its sales were under 6 billion dollars. It has also grown significantly in the stock market. In the stock market, it grew by 21.55 percent in 2014. Its rival companies like Johnson and Johnson grew by 19 percent, Pfizer by 5 percent and Novartis by 13 percent. This is an impressive show because it has been in the public for a very short time when compared with its competitors (Abbott Press Release). The projections are even higher as the year 2014 progresses. It had total revenue of 4.926 billion dollars in 2014.Its net income was 1.1 billion dollars the same year. The company’s facilities are majorly in America and Europe, though it is making a triumphant entry to Asia by investing a whooping 320 million dollars to put up a facility in Singapore.57 percent of its sales revenue come from the United States of America and the remaining 43 percent come from the rest of the world. This shows that it depends on its domestic market for its revenue, though the situation may change in future. Most of the revenue comes from the sale of Humira (60 percent) this is more than half the income generated by the company. It deals with a number of brands though Humira is the leading in terms of sales. By 2014, Humira had grown by 18 percent. It is expanding its operations in different parts of the world. For instance, apart from the facilities in America and Europe, it is putting up a plant in Singapore that will be in operation in 2019 and serve Asia. This is projected to boost its revenue in a bigger way. It focuses on research and development of drugs that treat diseases like HIV/Aids, Hepatitis C, Alzheimer’s disease, breast cancer, Parkinson’s disease, Multiple sclerosis, multiple myeloma, rheumatoid and many more (Abbot Press Release). All these plans and innovations have the potential to catapult the earnings of the company, by increasing sales from the companies that are being developed. It has one business segment that is the pharmaceutical products of varied top notch brands. It relies on AndroGel, Humira, Lupron, Creon, Kaletra, Norvir and Synthroid. The brands and the others that are being developed. The company does not rely on a single drug for its revenue. Its long term programs are anchored on the innovations, acquisitions and expansions. It faces competition from other drug manufacturing companies. This has made it to be very innovative so that it is not overtaken, consequently, lowering the sales revenue. These companies are like Gilead and many which is popular for the drug Sovaldi. The drug Humira, which generates more than half of the revenue (11.2 million dollars), is facing competition from Sovaldi which is manufactured by Gilead Pharmaceutical Company. This drug generated 2.27 million dollars in 2013 and it is feared that it might overtake Humira in terms of sales. The other challenge is the process of approval. It is not mandatory that a certain drug will be approved. The The company is working for the approval of some of its drugs, both in America by FDA and in Europe. The company has 21000 suppliers that are distributed all over the world. They offer the services like banking, advertisement, biological products, capital equipment and many more. Some suppliers are small and others big. All suppliers sign agreements with the company on how to keep a healthy environment and other safety measures. The company has the strategy of driving its growth organically, at the same time through acquisitions and joint ventures. On July 2014, the process of acquiring Shire, which began in June, came to a close. It acquired Shire at the cost of 54.8 billion dollars. This deal gave will thrive it because its got the right to acquire drugs like: Elaprase and Replagal which treat Hunter Syndrome and Fabry diseases respectively. By August 27, 2014, it had 15 manufacturing and R &D locations all over the world. All the 15 facilities like the mother company, give the best to its clients. The Chief Executive Officer has introduced a number of changes to the company. He initiated the acquisition of the Shire and has initiated impressive expansion plans like the facility being put up in Singapore. The company products are available in 170 countries (Abbott Press Release). It gets its raw materials from Germany. France, United states, Mexico, Malaysia, United Kingdom, New Zealand, Australia, South Korea and Singapore. The raw materials include Caspofungin, Candicin, Lysozymes, Hinokitiol, Lamivade, Pyrolase, Iron sacrose and many more. In conclusion, it is a young company, but due to its Chief Executive Officer who is highly experienced, and its big brands, it is making great strides. The acquisition of the Shire, and the expansion programs it has, like in Singapore, its sales and revenue is going to increase. Its stock has surpassed the benchmark of S &P 500 in 2014, which is impressive for a new company. Works Cited Abbott Press Released. ``Abbott To Separate Into Two Leading Companies In Diversified Medical Products And Research Based Pharmaceuticals.’’19 Oct. 2011.Web. 27 Oct. 2011. Abbott Press Release. ``Abbott Selects Abbvie As The New Name for Future Research Based Pharmaceutical Company.’’21 Mar.2013. Web. 30 Mar. 2012. Abbbot Press Release. ``Abbott Complete Separation of Research-Based Pharmaceutical Business.’’Abbott Laboratories.2 Jan 2013. Web. 20 Jan. 2013. Abbvie Press Release. ``Abbvie Celebrate Launch As The New Pharmaceutical Company with Employees, patients.’’ Abbvie pharmaceuticals.2 Jan.2013.Web.2 Jan. 2013. Read More