Abbott's new businesses, low-cost oppurtunism

Pharmaceuticals producer Abbott Laboratories India Ltd, a subsidiary of Abbott Inc. of the US, is considering diversifying into nutritional products and hospital goods. The nutritional foods will include Glucerma for diabetes patients and other global brands like Glucerna, Ensure, Ensure Light, Jevity, and paediatric nutrition products.
     Hospital products being considered for launch are enteral feeding pumps, and feeding tubes. Also in the list are neuro-muscular blockers for surgical procedures, and cardiac intensive care equipment.
     The group wants to get half its turnover from these product lines in about seven years.
     Abbott Laboratories will also introduce new pharmaceuticals into the market. These will include medicines for AIDS (Ritonavir) and prostate cancer (Lupron, which is leuprolide acetate).
     Abbott has marketing agreements with Cadila Healthcare and with Glaxo India for clarithromycin, an anti-infective.
     Meanwhile, Abbott has got its Ankleshwar, Gujarat plant classified as a small scale unit. This is the company's only owned plant in India.
     The company could get government permission for such classification because the plant has a capital assets of less than Rs 3 crore and employs less than 50 people -- the conditions for the grant of small scale status.
     The benefits of being considered small scale are clear -- freedom from price control for the products that are not subject to a price ceiling. The unit produces pentothal sodium, an anaesthetic, a bulk drug and an intermediate used to make clarithromycin, and terazocin, used for the treatment of prostate enlargement. It also makes formulations of erythromysin and clarithromycin.
     The Rs 3 crore condition for classification as small scale was effected in February 1998. The earlier limit was Rs 1 crore. Abbott was quick off the mark to use this concession.
     The company will continue to get products manufcatured by 'third-party' producers. It may shift some new products to its Ankleshwar plant to leverage its small scale status. However, it will have to do so without letting investment in plant and equipment rise beyond the Rs 3 crore mark.
     In 1997, Abbott Laboratories of the US increased its stake in the Indian venture to 51 per cent through an open offer of Rs 325 per share. Its holding in the Indian company was 40 per cent until then.