Abbot and Solvay Case

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1. Why did Abbott acquire Solvay Pharmaceuticals? Abbott Laboratories is a worldwide, broad-based health care company dedicated to the development, manufacturing and marketing of new technologies for the treatment of wide range diseases including cardiovascular, diabetes, oncology, neurology, kidney, hepatitis C, and immunology. Abbott engages in the discovery and development of pharmaceuticals and medical products, including nutritional products, devices, and diagnostics. The company employs 90,000 people and operates in more than 130 countries. Company's sales and ongoing earnings come in many different forms; from their existing products, from new product launches, from geographic expansions, and from acquisitions. In 2010 Abbott acquired Belgium-based Solvay Pharmaceuticals, which supported Abbott's long- term growth strategy. The acquisition of Solvay provided Abbott with; • complimentary product portfolio in cardiology, neuroscience, and gastroenterology, men's and women's health, and Pancreatic Enzymes; which will further diversify Abbott's pharmaceutical business and provide significant growth opportunities. • the acquisition added an increasing global vaccines business and modest molecular diagnostics business. • significant presence in emerging markets, such as Eastern Europe and Asia. • Solvay brought approximately $500 million to Abbot's annual pharmaceutical R&D investment, which will accelerate R&D spending to support long-term growth. • Abbott added approximately $3 billion to 2010 total reported sales, the majority outside the US. • 75% of OUS proceeds; 70% recognized generics. . 2. What policies did Abbott follow in accounting for the acquisition? Abbott every so often acquires a business or merchandise rights in which Abbott agrees to pay conditional consideration based on attaining certain thresholds or based on the

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