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Abbott: Cracking the Cardiology Cartel

Executive Summary

Abbott Laboratories, a major player in the traditional hospital products business, is starting from scratch in the interventional cardiology device market, which offers large opportunities, but involves selling to new customer groups and competing with four entrenched major players: Boston Scientific, Guidant, Johnson & Johnson and Medtronic. Rather than attacking this market at its base and attempting to develop a full-line of cardiology devices, Abbott's strategy is to target certain unmet clinical needs and address those primarily with innovative technologies obtained through acquisitions, a pattern it started with the deal to buy femoral artery closure company, Perclose.Abbott is also looking to leverage its pharmaceutical core competency to develop synergies with devices in areas like drug-coated stents, an approach the company believes provides a competitive advantage.The challenge for Abbott will be whether it can develop enough innovative technologies to compete without having a broad basic product line in a market that has undergone significant consolidation. More importantly, in an area where J&J's recent successful stent patent prosecution has demonstrated the importance of intellectual property, it remains to be seen whether Abbott's strategy will make it more than just a niche player in cardiology devices, a position that would be unfamiliar to a company accustomed to major pharmaceutical and diagnostics franchises.

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