1. 1 Date: 12 November 2013 Jing Chen Hisham Haider Dewan Harout Sahakian

2. 2 Agenda  Company overview  Holding information  Macro-economic overview  Industry analysis  Equity market expectations  Financial analysis  Financial projections  Valuation tools  Recommendation

3. Introduction to Abbott Laboratories Founded in 1888 Headquartered in Abbott Park, IL 91,000 employees worldwide Increased dividend payouts for 41 consecutive years Independent directors make up 91% of the company’s board Source: Abbott Investor Relation, Annual Report 2012 3

4. Business Segments Established Pharmaceuticals Manufactures branded generic pharmaceuticals worldwide and sells these products outside the US Diagnostics Manufactures, markets, and sells diagnostic systems and tests Nutritionals Produces and sells a broad line of pediatric and adult nutritional items Vascular Includes coronary, endovascular, vessel closure, and structural heart devices sold worldwide 4 Source: Abbott Laboratories 10K filing page 1-5, 10Q Q3 FY2013 page 11

5. Revenue Breakdown by Segment 2013 5 Source: Abbott Laboratories 10Q FY2013 Q3 page 11

6. Where Does Abbott Sell? Source: Abbott Laboratories 10K FY2012 page 33 6

7. Revenue by Segment 7 Source: Bloomberg Revenue by segment for ABT US Equity Figures in $mil.

8. Spin Off  In 2012, Abbott spun off its pharmaceutical segment into a publicly traded company, AbbVie, Inc.  Each shareholder of Abbott received one share of AbbVie, Inc. (NYSE: ABBV) 8 Source: Abbott Laboratories 10K FY2012 page 1, AbbVie, Inc. 10K FY2012 page 1

9. 400 shares  4/27/11 - Bought 200 shares @ 52.05  11/08/11 - Bought 100 shares @ 52.91  12/11/12 - bought 100 shares @ 65.77 Total Purchase Price (adjusted for split) = $10,687 Current Market Value = $15,160 Holding period return = 41.85% Current Holdings 9

10. Macro-economic Overview  Slowing growth in BRICS countries  Increasing number of physician visits 1  Adults aged 65 and over 13.7% of US population & rising  High birth rates in emerging markets  Increasing socio-economic status in emerging markets  Increasing emphasis on disease prevention  Changing regulatory environment 10 Source: 1. IBISWorld Industry Report 33451b Medical Device Manufacturing in the US October 2013, page 4 2. US Census Bureau http://quickfacts.census.gov/qfd/states/00000.htmlhttp://quickfacts.census.gov/qfd/states/00000.html

11. Health Care Industry Total Expenditures $5 trillion globally United States spending = $2 trillion As a Percentage of GDP United States = 17.7% Second highest is Netherlands at 11.9% Per Capita (adjusted for US PPP) United States = $8,507 Second highest is Norway at $5,669 Source: OECD. Health Data 2013. Frequently Requested Data. http://www.oecd.org/els/health-systems/oecdhealthdata2013-frequentlyrequesteddata.htmhttp://www.oecd.org/els/health-systems/oecdhealthdata2013-frequentlyrequesteddata.htm 11

12. Industry Growth in the US Medical Device Manufacturing in 2013 Glucose Meter Manufacturing in 2011 Obesity Medication Manufacturing in the US in 2013 Laboratory Information Management Systems in 2013 Meal Replacement Product Manufacturing in 2011 Sources: IBISWorld Industry Reports: a) Medical Device Manufacturing in 2013, b) Glucose Meter Manufacturing in 2011, c) Obesity Medication Manufacturing in the US in 2013, d) Laboratory Information Management Systems in 2013, e) Meal Replacement Product Manufacturing in 2011 12

13. U.S. Forecast Sales Growth Category2012 – 2017 CAGR OTC.7% Sports Nutrition6.9% Vitamins & Dietary Supplements4.1% Weight Management1.2% Herbal/Traditional Products1.6% Allergy Care1.8% Pediatric Consumer Health1.8% Consumer Health2.8% Source: Passport. Consumer health in the U.S. April 2013. Pg 20. 13

14. Patient Protection & Affordable Care Act  Healthcare coverage available to all Americans  An attempt to keep costs lows  Changes how care is paid for  Annual Fee on “branded prescription pharmaceutical manufacturers and importers”  ABT no longer subject to such fees 14 Source: http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions

15. Risks to Abbott Increased regulation Loss of patents, trademarks, or intellectual property Delays in regulatory approval of new products Increased delay in receipt of payments from government entities Product liability claims 15

16. Industry Porter's Five Forces Analysis Threat of new entrant (Low) High barriers to entry “Big pharma” companies are dominant Prolonged drug and medical device approval process Patent expirations Suppliers (Low) Suppliers generally have little room for negotiation because of the number of suppliers, supplying generic items Component suppliers for medical devices often are stronger Buyer bargaining power (Medium) Most of the medication is prescribed by the doctors Managed care providers are consolidating Drug retailers have little bargaining power Government agencies have high bargaining power Pricing pressure Substitute products (Medium) Threat from generic competition Generic companies are increasing focused on establishing global operations Rivalry among existing firms (High) 16

17. Life Cycle 17 Source: http://marygardiner.wordpress.com/2013/05/28/product-cycles/

18. SWOT Analysis of Abbott Strengths Consistent growth in revenue Geographical diversity Diversified business operations Brand recognitions Weaknesses Operating and gross margin lower than competitors Company is overly dependent upon mature products whose patents may expire in near future Opportunities Emerging market growth Changing demographics New developments in technology Threats Stringent Government regulations Competitive landscape Uncertain R&D outcomes Legal proceedings Product recalls 18

19. Recent Financial Performance  2013 Q3 EPS $0.55 above consensus estimate of $0.51  Decline in Nutritionals business because of Fonterra recall  MitraClip approved In U.S.  Diagnostics 3Q 2013, total diagnostic sales of $1,125M (+10.5%cc)  Established products third quarter sales grew 0.6% ex- currency (+0.7% YTD)  Medical Devices sales was up 3.9% reported 19 Source: 1. http://www.nasdaq.com/earnings/report/abt ; Source 2: ABBV 8K filing http://www.nasdaq.com/earnings/report/abt

20. Equity Performance 20 Source: Google Finance Feb 06, 2013 to Nov 11, 2013

21. Technical Analysis 21 Source: Google Finance Feb 06, 2013 to Nov 11, 2013

22. Quarterly Ratio Analysis 22 ProfitabilityQ1 FY 2013Q2 FY 2013Q3 FY 2013 Return on Assets % 2.8% 3.7% 3.8% Return on Capital % 4.0% 5.2% Return on Equity % 8.8% 8.4% 13.4% Liquidity Q1 FY 2013Q2 FY 2013Q3 FY 2013 Current Ratio1.8x 1.7x Quick Ratio1.2x 1.1x Avg. Days Sales Out.95.466.467.0 Avg. Days Inventory Out.119.098.3104.8 Avg. Days Payable Out.95.138.337.6 Avg. Cash Conversion Cycle119.3126.3134.1 Source: Capital IQ Ratios based on quarterly data

23. Quarterly Ratio Analysis 23 Solvency Q1 FY 2013Q2 FY 2013Q3 FY 2013 Total Debt/Equity 31.3% 35.4% 34.7% LT Debt/Equity 15.3% 15.2% 14.3% Total Liabilities/Total Assets 46.9% 47.7% 46.1% Asset TurnoverQ1 FY 2013Q2 FY 2013Q3 FY 2013 Total Asset Turnover0.4x0.5x Fixed Asset Turnover3.1x3.8x3.7x Accounts Receivable Turnover3.7x5.5x Inventory Turnover3.0x3.7x3.5x Source: Capital IQ Ratios based on quarterly data

24. Valuation DCF, Comparable, Ben Graham’s formula 24

25. 25 Cost of Capital Cost of equity using CAPM Beta0.84 Market risk premium (Rm-Rf)6.00% 10 year treasury yeild2.66% Cost of equity using CAPM7.70% Weighted average cost of capital calculation Weighted average cost of debt3.43%Weights Cost of equity using CAPM7.70%60% ROE13.16%40% Cost of equity using goal post method9.89% Market value of debt8,262.9512.37% Market value of equity58,522.9087.63% Tax rate20.00% Number of shares outstanding1574.466 WACC9.00%

26. Projection Period 201320142015201620172018 EBIT$3,038.10$3,191.44$3,393.86$3,817.71$4,002.24$4,194.14 Less: Taxes($110.42)$0.00$652.37$738.65$779.59$771.04 Plus: Depreciation & Amortization$1,729.16 Less: Capital Expenditures($779.61)($810.79)($843.23)($876.95)($912.03)($948.51) Less: Change in Net Working Capital$902.76($131.21)$205.48$204.81$238.28$247.81 Free Cash Flow to Firm$3,195.30$4,241.01$3,421.94$3,726.45$3,801.49$3,955.93 26 Free Cash Flow to Firm

27. Discounted Cash Flow Value WACC9.0020% Implied Enterprise Value $66,468.57 Less: Debt($8,262.95) Value of equity$58,205.62 Shares Outstanding1,574.47 Estimated price per share$36.97 27

28. 28 DCF – Sensitivity to WACC and Perpetuity Growth Rate Growth rate Discount rate 2.50%3.00%3.50%4.00%4.50% 8.50%$34.91$37.65$40.95$44.97$50.00 9.00%$31.99$34.27$36.97$40.20$44.15 9.50%$29.49$31.41$33.65$36.30$39.47

29. 29 Comparable Companies Company NameMarket Cap $Mil.Total Revenue $Mil. Amgen Inc. (NasdaqGS:AMGN)83,73118,086 Baxter International Inc. (NYSE:BAX)35,39514,644 Boston Scientific Corporation (NYSE:BSX)15,5427,126 Bristol-Myers Squibb Company (NYSE:BMY)84,46816,135 Johnson & Johnson (NYSE:JNJ)261,51970,515 Medtronic, Inc. (NYSE:MDT)57,15516,665 Merck & Co. Inc. (NYSE:MRK)134,08744,450 Pfizer Inc. (NYSE:PFE)204,63456,246 St. Jude Medical Inc. (NYSE:STJ)16,4065,451 Stryker Corporation (NYSE:SYK)27,5878,891 Zimmer Holdings, Inc. (NYSE:ZMH)14,9814,563.2

30. MultipleMultiple value (X)Estimated price per shareWeight P/E23.01$41.9412.5% Fair P/E estimate20.27$38.1112.5% Forward P/E (Capital IQ)15.59$31.7012.5% P/B3.46$52.3312.5% P/S3.41$49.3312.5% TEV/EBITDA11.64$28.3312.5% TEV/EBIT14.51$27.9912.5% TEV/Total Revenues3.23$46.7512.5% Estimated price per share using all of the comparable ratios $39.56 100% 30 Comparable Analysis

31. 31 Benjamin Graham's formula Current (normal EPS 2013)$1.99 Expected annual growth rate (%)5.00 Estimated price per share$36.79

32. Upside  Diversified portfolio of established products  Strong and growing international presence  Consistent growth in revenue and earnings Downside  Potential risk of litigation and product recalls  Prolonged regulatory approval process  Failure to deliver new products 32 Key Decision Driver

33. Recommendation Current stock price $37.90 as of Nov 11, 2013 DCF $36.97 Comparable $39.56 Ben Graham $36.79 33 HOLD