The following information contains the business analysis and opinion of the author. It is written with the intention of informing the job seeker about practices and conditions at the company as of June, 2010. It should not, nor is it intended to be used as a financial investment tool, nor to predict future performance.

Abbott Laboratories (NYSE: ABT) is a worldwide pharmaceutical company engaged in discovery, development, manufacture, and sale of diversified lines of healthcare products. Abbott Laboratories (Abbott) is the largest company in the nutritional products market and the second largest company in the worldwide market for diagnostic products. The company manufactures a number of nutritional and pharmaceutical products, including the rheumatoid arthritis medication Humira; laboratory diagnostics; pharmaceutical therapies; and medical devices, such as the highly successful coronary stent Xience. Consistent company success in nutritional products, such as Similac, Ensure, Glucerna, AdvantEdge, Body-for-LIFE and ZonePerfect, helps the company retain a strong competitive position.

In recent years, Abbott has shifted its focus from nutritional products to the pharmaceutical industry. In 2009, analysts predicted Abbott’s continued focus on the pharmaceutical market would be a success with a specific formula in mind. Ease back on expensive R & D. Point it at making existing investments (i.e., products), gain a second life. Otherwise, let the smaller companies engage in expensive R & D, buy them to help walk new drugs and developments through FDA and other approval processes. Once you own the patent and the drug is ready to market, ship manufacturing wherever it is affordable, and where distribution can serve emerging new markets. As we watch Abbott’s expansion of Humira’s use for treating Crohn’s Disease, psoriasis and other autoimmune diseases, and Tricor’s expansion from cholesterol related treatments to a heart attack remedy for diabetics, the strategy play becomes relatively clear.

There are other signs. Abbott Labs’ recent acquisitions of Kos Pharmaceuticals and Guidant Corporation have contributed to Abbott’s competitiveness in the highly profitable vascular stent market. The company’s Xience stent and the pipeline of evolutions from that product give Abbott a firm foothold in the medical devices hall of fame. In 2010, Abbott was approved to purchase Facet Biotech Corp., for $450 million. The Facet Biotech acquisition will strengthen Abbott’s position in the drug market for multiple sclerosis.

Overall Corporate Strategy

The overall company strategy at this time is supported by a quick look at the company financials and the track record at Abbott. Since Miles White became CEO the company has continued with a steady helm aimed mostly at rewarding top level managers, directors, scientists, executives and stockholders with consistent profits and payouts. Of course that is pretty much the case at Abbott for about 100 years. How the company is acquiring and maintaining this steady course is something to consider if you’re looking into employment with Abbott.

Since Mr. White has been leading Abbott, the company has maintained a strategic plan that includes acquisitions, sometimes over innovation with in-house products. The company spends about 9% of gross revenue on R&D or about 16% of gross profits, so watching where R&D efforts are headed by watching the acquisitions is a good key as to where talent may be needed. Other parts of the company financial activity indicate a continuation and expansion of the “buy what you need” approach.

The company has a conservative (but clearly effective) financial, corporate executive and management structure in place. There are the ever-circulating new comers, and then there are the old guys – the one’s who have been around a very long time and who generally know where all the corporate bodies (not to mention future victims!) are buried. It’s pretty much the same at any large corporate environment, and especially true in companies that have been around as long as Abbott.

It’s important for the job seeker to have a head’s up warning on which products and initiatives are not only on the fast path, but on the path with “legs.” One of the ways to discern the best point of entry at Abbott is to study the compensation packages of the executives over the previous year. Since their compensation is intimately tied to performance on financial and strategic initiatives, those rewarded with “incentives” are likely to be heading up areas well funded and gearing up for more. Likewise, follow the paths of the scientists and engineers on these teams for more insight on places good to land. Ultimately, you can use Abbott as a training environment for future Pharma/Bio-Tech Career moves, or you can plot out a viable career that will provide a very good retirement investment.

The culture stems from the compensation and benefits structure. Executives (Directors and above), earn some of the top salaries in the world, and although the CEO payout was a bit lower than in 2008, in 2009 Miles White enjoyed another top CEO compensation award. Although his total package declined by 7 percent in 2009, he still brought in $26.2 million worth of salary, bonus, stock awards, and the like. The overall decline between 2007 to 2009: About 18 percent. In 2009, White’s base salary grew by about 3 percent to $1.85 million, and his stock awards jumped up 66 percent to almost $12.5 million. The value of his pension and deferred comp grew to $4.29 million. But the amount of stock options Abbott awarded him dropped by more than $7 million, to a bit over $3 million. That’s a decline of 71 percent. His incentive plan cash also dropped slightly, to $3.9 million from $4.2 million. Some of this loss was incorporated into the 3% merit structure in 2009, derived from a Board decision to reduce payouts below the maximum for the 2009 earning period. What does this matter to the job seeker? By providing ‘steady rewards’ for past performance with slight adjustments for the economy, it’s probable that the company is moving into new areas. Mr. White’s pension is increased, which likely means he’ll be around awhile longer. Incentive cash dropped, as did stock options, but in a broader perspective, this could mean the focus, for awhile, will be on settling into the current purchased and acquired properties and assets, making them produce, and also freeing up stock for investments in those new ventures.

So, employees, for now, are in for some shifting sands when it comes to, “where the Abbott action is.” Remember that Abbott likes to promote from within. There are some barriers to jumping into an existing project area. With that, comes a highly competitive entrenched environment that is and has been for some time, immersed in culture shock between seasoned Abbott employees and on-boarding merged talents. New employees in this scenario need to be extremely aware of the team goals and the cultural road signs to adapt well. Those making the new Abbott grade will likely be those who have a track record of supporting and accommodating organizational change, global marketing, and new products that will continue to face standard legal and approval process hurdles.

On the Stock Market

Abbott enjoys a relatively good and stable stock market position; dividends are getting paid along with those bonuses, and shareholders are apparently happy with the company’s steady and reliable progress. How this is being accomplished, even through the 2008-2010 economic conditions, has to do with an intricate strategy that includes moving around employees and/or operational facilities, buying new “technology,” to both look for new markets and either enhance or prolong existing ones, while working through the product cycles of expiring patents. U.S. Operations were cut back in 2007-2009. After cutting 1,200 jobs in December 2007, Abbott Labs chopped another 1.5 percent off its workforce when it eliminated 1,000 jobs in August, 2008. These can be tied to predictable cycles that happen when acquisitions become part of the “mother ship.” The changes were reflected in the stock market.

Manufacturing plants in California and Illinois were closed, and some production was transferred to Europe. Abbot describes these activities as “streamlining global manufacturing operations, reducing overall costs, and improving efficiencies” in its diagnostics business – targeted for various goals by 2011. The strategy is classic and conservative. It’s effective in producing the goals of the executives and the stockholders. More information on these acquisitions and associated activities can be found below.

5- Year Performance Basic Chart

Overall, as part of the overall compensation and investment package, Abbott stock is reliable and steady. Lows for 2010 are still considerably higher than 4 and 5 year historic prices. There’s a $52.24 moving average over the last 200 days, and currently, moving into the $50 range again, Abbott is above its $43 low and well within reach of regaining the $56.79 high. This puts the company well below the median target price of $62, but with some time to cover the ground. With a high target of $80, the company and its executives have a lot to aim for. Where will the push be?

Employees report satisfaction ratings at Abbott that fall into line with the corporate structure. Comments like, “it’s a good old boys club,” hint at the culture that rewards driving products to market to meet profit goals. The company tends to bring people up through a promotion process. Many employees report feeling excluded from and do not have much confidence in the decision making process involved in these promotions. Still, if you join a team as an engineer, scientist or through the Internship programs, employees express extreme satisfaction in their positions with Abbott. This hierarchy and culture hasn’t changed in a very long time.

The company has an excellent Internship program that offers mentoring and ample opportunity to join the company fast-track. To outsiders coming in, the employment advancement landscape can be a little more daunting and the tendency is to spend about 3 years with Abbott before looking for professional administration advancement elsewhere. That basically means that executive authority is consistent, entrenched, and firmly in control.

Abbott wants to retain its knowledge capital with top business professionals, scientists, biologists and engineers. The company is looking for people who can manage the assets and add to the science; so long as the science is a spin-off from something already in play. Even though some interpret this as a lack of innovation, others view it as eeking out the most money from the original investment. Again, historically, it’s a solid move.

Abbott entices that talent to stay put with the perks that are seldom seen outside major global corporate headquarters, right down to the parking space premium for executives. If you’re not part of this group of targeted talent, you may be in for a short career with Abbott, either as a result of the company’s or your own choice. If this sounds a bit ruthless, it is; remember, the keyword is compensation. Among non-executive employees and staff the atmosphere is one of making sure your work stands out in the right ways to the right people. Reasons your work and efforts will be recognized vary greatly between teams, managers, and geographic borders. Product teams are only as strong as their weakest link, and weak links are apparently treated both within the team, and within the overall company, accordingly. Being team oriented means you’re expected to be driven by both quality and time to market and product life-cycle awareness and you’re supposed to heed and be directed by management. Employees who break into the club need to respect this other-decade style of management and the culture, because it is overall, successful in generating work and profits.

Interviewing at Abbott

Abbott today is looking for executives who can shepherd acquisitions projects into the Abbott fold. The company needs managers that can quickly identify the blend of employee talent with current goals and make neat decisions about how to structure merged projects and people into the organization. Abbott will need some professional talent to work through consolidation and administrative issues in the process. At the lab and engineer level, it’s important to pay attention to the incoming technologies being acquired through the mergers and purchases, and to know quickly how you’ll fit into the correct slot. Notice, the focus is not on innovating from your entry position, but in first fitting into the overall corporate picture.

From an infrastructure level, Abbott no doubt has issues with merging technologies as both products and information come on board. The company recently outsourced part of its information systems management and reporting. IT employee hiring may be limited although IT project managers, systems and data analysts, database and employee management systems specialists, and other IT positions may be available. There are hints that major IT overhaul may be in the mix in the near future, although outsourcing may be the more likely method of managing former in-house IT. People who understand those changes and balances, and who can respect diversity while still accomplishing the needed work will likely be highly desirable employees at Abbott.