Chris Zakhem | Mengxi (Vivian) Wang | Le Huong Hoang | Ziqi (Kay) Mai NYSE:ABT Chris Zakhem | Mengxi (Vivian) Wang | Le Huong Hoang | Ziqi (Kay) Mai October 29, 2015

Agenda Macroeconomic Overview 4-8 Company Overview 9-18 Stock Market Overview 19 Financial Analysis 20-21 Comparable Companies 22-24 Financial Projections 25 Valuation 26-27 Recommendation 28

Macroeconomic Overview Population The decreasing birthrate will potential decrease the pediatric segments but the increase in the aging population will bolster sales http://www.un.org/esa/population/publications/longrange2/WorldPop2300final.pdf

Macroeconomic Overview Gross Domestic Product Key indicator 2014 2015 2016 2017 2018 2019 GDP growth rate 2.4 2.5 2.6 1.4 Consumer price inflation 1.6 0.3 1.7 2.3 2 Federal Government Budget Balance (% of GDP) -2.8 -2.7 -2.4 -2.3 -2.2 Exchange rate ¥:US 105.9 122.1 124.4 124 122 World GDP growth 2.8 2.9 World Trade Growth 3 3.7 5 5.5 5.6 The GDP growth rate in the U.S. and the world will increase until 2018 then decrease slightly in 2019 http://www.eiu.com/home.aspx

Macroeconomic Overview U.S. Health Spending The U.S. health spending is expected to increase with a growth rate of 5.8% http://www.iahc.com; https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads/proj2014.pdf

Macroeconomic Overview Pharmaceutical Industry There is an increase in pharmaceutical sales worldwide

Macroeconomic Overview Demand for medicine in the emerging market There is a rising demand for medicine in the emerging markets, but the strong dollar negatively affects the international sales http://www.pwc.com/gx/en/pharma-life-sciences/pharma2020/assets/pwc-pharma-success-strategies.pdf

Company Overview Segments Products Established Pharmaceutical Products Key Emerging Markets Other Emerging Market Diagnostic Products Immunochemistry Nutritional Products International Pediatric Nutritionals U.S. Pediatric Nutritionals International Adult Nutritionals U.S. Adult Nutritionals Vascular Products /Medical Devices Endovascular Coronary Deices Abbott has four main segments with multiple sub-segments within them Abbott 2014 10-K, pgs. 1-4

Company Overview Revenue Outlook (In Millions) 2013 2014 9M 2015 NET SALES 21,848 20,247 15,217 NET INCOME 2,383 2,284 3,656* 9 month income in 2015 includes $1,752M gain on the sale of the developed markets branded generics pharmaceuticals and animal health businesses to Mylan and Zoetis in February 2015. Abbott 2014 10-K pg. 47; 2015 Q3 8-K pgs. 2-6

Company Overview Revenue Breakdown Abbott 2014 10-K pg. 29; 2015 Q3 8-K pgs. 2-6

Company Overview Revenue Breakdown 50% of total sales from Emerging Market Abbott 2014 10-K pg. 23

Company Overview Established Pharmaceutical Segment Product Gastroenterology products, women's health products, cardiovascular and metabolic products, pain and central nervous system products, respiratory drugs and vaccines Market Outside United State Consumer Wholesalers, distributors, government agencies, health care facilities, pharmacies, and independent retailers from Abbott-owned distribution centers and public warehouses Challenge Increasing competitive pressure Strategy Build a strong brand and expand business in the emerging market Event Sold its developed markets branded generics pharmaceuticals business to Mylan Inc. in February 2015. Completed its acquisition of a controlling interest in CFR Pharmaceuticals S.A. (CFR) in September 2014. Acquired control of Veropharm in December 2014. Abbott 2014 10-K pgs. 1-4

Company Overview Diagnostics Segment Product Immunoassay and clinical chemistry systems (main product) Market Worldwide Consumer Blood banks, hospitals, commercial laboratories, clinics, physicians' offices, government agencies, alternate-care testing sites, and plasma protein therapeutic companies Challenge Subject to competition in technological innovation, some products in this segment can be subject to rapid product obsolescence or regulatory changes Strategy Improve operating margin Event Completed the acquisition of Topera in December 2014. Abbott 2014 10-K pgs. 1-4

Company Overview Nutritionals Segment Product Various forms of prepared infant formula and follow-on formula, adult and other pediatric nutritional products, nutritional products used in enteral feeding in health care institutions Market Worldwide Consumer Institutions, wholesalers, retailers, health care facilities, government agencies, and third-party distributors from Abbott-owned distribution centers or third-party distributors. Challenge Subject to product obsolescence caused by regulatory change, new product introduction by competitors, Strategy Take advantage of an aging population and an increasing rate of chronic disease, introduce new products and improve operating margin Event 1. A product recall initiated in August 2013 in China and two other markets for certain pediatric nutritional products supplied to Abbott by a third-party manufacturer. Abbott 2014 10-K pgs. 1-4

Company Overview Vascular & Medical Device Segment Product A broad line of coronary, endovascular, vessel closure, and structural heart devices for the treatment of vascular disease Market Worldwide Consumer Hospitals & public warehouses Challenge Pricing pressures primarily related to drug-eluting stent (DES) franchise. Strategy Improve operating margin and continue to develop its worldwide market-leading DES Event 1. Acquired 100 percent of IDEV Technologies in August 2013. 2. Acquired 100 percent of OptiMedica in August 2013. Abbott 2014 10-K pgs. 1-4

Porter’s Five Forces Analysis Threat of New Entrants *Low Threat of Substitutes *High Supplier Bargaining Power *Moderate Buyer Bargaining Power Rivalry Investment Team

SWOT Analysis >Strengths - Well-established brands - Stable Net Sales - High operating margin - New footprint into new markets - Patents protected > Weakness - No assurance of new products from R&D outcomes - High competition - Strong regulation by government >Opportunities - Increasing global medical spending - Aging problems in emerging market - Products exposed to new market >Threats - Potential lawsuits and regulation costs on pollution - Rapid product obsolescence - Downward pressure of revenue or product pricing due to government regulation - Foreign currency exchange rate risk - Expiration or loss of patent protection - Competition SWOT Analysis Abbott 2014 10-K pgs. 4-7; Investment Team

Stock Market Overview There was a potential sell signal around the end of September but the stock seems to be recovering Yahoo! Finance

Financial Analysis Ratios Analysis Gross Margin Return on Assets Interest Coverage Ratio 2012 2013 2014 6/30/2015 2012 2013 2014 6/30/2015 2012 2013 2014 6/30/2015 Net Income Margin Total Asset Turnover Current Ratio 2012 6/30/2015 2013 2014 6/30/2015 2012 2013 2014 2012 2013 2014 6/30/2015 Most of Abbott’s ratios have been generally improving over time with the exception of the total asset turnover ratio Abbott 2014 10-K pgs. 47-50; 2015 Q2 10-Q pgs. 3-6

Financial Analysis DuPont Analysis Tax Burden Interest Burden Operating Margin 2012 2013 2014 6/30/2015 2012 2013 2014 6/30/2015 2012 2013 2014 6/30/2015 Asset Turnover Leverage Return on Equity 6/30/2015 2012 2013 2014 2013 2014 6/30/2015 2012 2012 2013 2014 6/30/2015 Abbott’s return on equity has been improving since its spin-off of Abbvie at the beginning of 2013 Abbott 2014 10-K pgs. 47-50; 2015 Q2 10-Q pgs. 3-6

Comparable Companies Descriptions Thermo Fisher Scientific, Inc. Provides analytics instruments, equipment, reagents and consumables, software, and services for research, manufacturing, analysis, discovery, and diagnostics worldwide Groups include Life Sciences, Analytical Instruments, and Specialty Diagnostics Medtronic plc Sells device based medical therapies worldwide Groups involve Vascular, Minimal Invasive Therapy, and Restorative Therapy St. Jude Medical Inc. Manufactures and distributes cardiovascular medical devices for cardiac rhythm management, cardiovascular, and atrial fibrillation therapy areas worldwide Groups include Implantable Electronic Systems and Cardiovascular and Ablation Technologies. Stryker Corporation Operates as a medical technology company Groups include Orthopaedics, Medical Surgery, and Neurotechnology and Spine Boston Scientific Corporation Develops, manufactures, and markets medical devices for use in various interventional medical specialties worldwide Groups include Cardiovascular, Rhythm Management, and Medical Surgery These comparable companies were narrowed down by business description and industry and are competitors with Abbott Capital IQ

Comparable Companies Analysis Median multiples were chosen and were equally weighted to come a valuation of $46.20 per share Capital IQ

Weighted Average Cost of Capital Cost of Debt Cost of Equity WACC The weighted average cost of capital was calculated to be 8.86% but a risk premium was added to round the WACC to 9.00% Abbott 2014 10-K pg. 68; 2015 Q2 10-Q pg. 24; Federal Reserve; Ibbotson's SBBI

Financial Projection 30%: On 12/12/14, ABT acquired Veropharm, a leading Russian pharm; huge growth in Russian market. 11%:Excluding foreign exchange effect, we expect the sales to growth by roughly 15% for future years; the forex impact will be -8% for 2015, but we assume ABT will hedge against it by half. 39.41%:On 9/26/14, ABT acquired CFR, more than doubles presence in Latin America; then grows steady at a lower rate than key emerging market. 4%: In 2013 and 2014, there was a product recall in China; consumer confidence has been restored by the end of 2014. We expected the long-term growth rate is 3% each year considering declining global GDP after 2019. Investment Team

Discounted Cash Flow In 2014 and 2015, ABT aims to streamline operation and increase margin, the margin growth is forecasted to be 3% mainly driven by nutrition and diagnostic business. In February 2015, ABT sold its developed market Established pharmaceutical business to Mylan, lowering tax rate. Investment Team

Valuation Using a 30% weight on comparable companies and a 70% weight on the DCF, our valuation came out to be $44.95 Investment Team

Final Recommendation We recommend to hold 400 shares of ABT Stock price is moving above the 20-day moving average The 2015 third quarter earnings beat analysts’ expectation We value ABT stock to be fairly priced at $44.76 (as of 10/28/15) Current Price # of Share Market Value Cost Gain & %Gain $44.76 100 Shares $4,476 $3,155 $1,321 +41.87% 200 Shares $8,952 $4,994 $3,985 +79.26% $2,538 $1,938 +76.36%