UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-K

(MARK ONE)

Abbott Laboratories

Securities Registered Pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X     No       

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     [       ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act) Yes X     No       

The aggregate market value of the 1,464,722,7541,467,386,870 shares of voting stock held by nonaffiliates of the registrant, computed by reference to the closing price as reported on the New York Stock Exchange, as of the last business day of Abbott Laboratories' most recently completed second fiscal quarter (June 30, 2002)2003), was approximately $55,146,811,688.$64,212,849,400. Abbott has no non-voting common equity.

Number of common shares outstanding as of January 31, 2003: 1,563,417,573.2004: 1,563,582,747.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the 20032004 Abbott Laboratories Proxy Statement are incorporated by reference into Part III. The Proxy Statement will be filed on or about March 11, 2003.9, 2004.

PART I

ITEM 1.    BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

        Abbott Laboratories is an Illinois corporation, incorporated in 1900. Abbott's* principal business is the discovery, development, manufacture, and sale of a broad and diversified line of health care products.

FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS,
GEOGRAPHIC AREAS, AND CLASSES OF SIMILAR PRODUCTS

        Incorporated herein by reference is Note 7 entitled "Segment and Geographic Area Information" of the Notes to Consolidated Financial Statements included under Item 8, "Financial Statements and Supplementary Data."

NARRATIVE DESCRIPTION OF BUSINESS

        Abbott has five reportingreportable revenue segments: Pharmaceutical Products, Diagnostic Products, Hospital Products, Ross Products, and International. Abbott also has a 50 percent owned joint venture, TAP Pharmaceutical Products Inc.

        In August 2003, Abbott announced a plan to create a separate publicly traded company for its existing core hospital products business. The new company, Hospira, Inc., will own the worldwide core hospital products business historically conducted by Abbott including: medication delivery systems, such as electronic drug delivery systems and infusion therapy, and critical care devices; specialty injectable pharmaceuticals, including generic and proprietary products; and injectable pharmaceutical contract manufacturing. Hospira will include most of Abbott's Hospital Products segment and portions of Abbott's International segment. Abbott will retain all of its other pharmaceutical, diagnostic, and nutritionals businesses. In addition, Abbott is retaining the following businesses that have historically been part of Abbott's hospital products business: hospital operating room pharmaceuticals, proprietary hospital pharmaceuticals, pain management products, vascular devices and the orthopedic devices business. Hospira is expected to be spun off in the first half of 2004, pending final approval of the transaction by the Abbott Board of Directors. All of the shares of Hospira common stock will be distributed to Abbott shareholders on a pro rata basis.

Pharmaceutical Products

        ThisThe Pharmaceutical Products segment's products include a broad line of adult and pediatric pharmaceuticals which are sold primarily on the prescription or recommendation of physicians.

        The principal products included in thisthe Pharmaceutical Products segment are are:

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Depakote®, an agent for the treatment of epilepsy, migraine, and bipolar disorder;



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the anti-infectives clarithromycin, sold in the United States under the trademark Biaxin® and Omnicef®, an oral cephalosporin antibiotic;



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TriCor®, for the treatment of elevated triglycerides;



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Synthroid®, for the treatment of hypothyroidism;



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Mavik® and Tarka®, for the treatment of hypertension;

*

As used throughout the text of this report on Form 10-K, the term "Abbott" refers to Abbott Laboratories, an Illinois corporation, or Abbott Laboratories and its consolidated subsidiaries, as the context requires.

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Meridia®, for the treatment of obesity;



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the anti-virals Kaletra® and Norvir®, protease inhibitors for the treatment of HIV infection; and Humira™



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Humira® for the treatment of rheumatoid arthritis.

In addition, this segment co-promotes the proton pump inhibitor Prevacid® (lansoprazole) for short-term treatment of duodenal ulcers, gastric ulcers and erosive esophagitis under an agreement with TAP Pharmaceuticals Inc. and, through an agreement with Boehringer Ingelheim, the Pharmaceutical Products segment co-promotes and distributes Flomax® for the treatment of benign prostatic hyperplasia, Micardis® for the treatment of hypertension, and Mobic® for the treatment of arthritis.

        ThisThe Pharmaceutical Products segment markets its products in the United States. TheseStates and generally sells its products are generally sold directly to wholesalers, government agencies, health care facilities and independent retailers from Abbott-owned distribution centers and public warehouses. PrimaryThis segment directs its primary marketing efforts for pharmaceutical products are directed toward securing the prescription of Abbott's brand of products by physicians. Managed care purchasers (for example, health maintenance organizations and pharmacy benefit managers) and state and federal governments and agencies (for example, the Department of Veterans Affairs and the Department of Defense) are also important customers.

        Competition in the Pharmaceutical Products segment is generally from other health care and pharmaceutical companies. AThe search for technological innovations in pharmaceutical products is a significant aspect of competition is the search for technological innovations.in this segment. The introduction of new products by competitors and changes in medical practices and procedures can result in product obsolescence. Priceobsolescence in the Pharmaceutical Products segment, and price can also be a factor. In addition, the substitution of generic drugs for the brand prescribed has increased competitive pressures on pharmaceutical products which are off-patent.

*

As used throughout the text of this report on Form 10-K, the term "Abbott" refers to Abbott Laboratories, an Illinois corporation, or Abbott Laboratories and its consolidated subsidiaries, as the context requires.

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Diagnostic Products

        ThisThe Diagnostic Products segment's products include diagnostic systems and tests for blood banks, hospitals, commercial laboratories, alternate-care testing sites and consumers. In the secondfirst quarter of 2002,2004, Abbott acquired i-STAT Corporation, a leading manufacturer of point-of-care diagnostic systems for blood analysis. On January 13, 2004, Abbott and Celera Diagnostics,TheraSense, Inc. announced that the companies had entered into an agreement and plan of merger for Abbott to acquire all of the capital stock of TheraSense. TheraSense develops, manufactures and markets FreeStyle® blood glucose self-monitoring systems, and is a joint venture between the Applied Biosystems Groupleader in developing systems that feature a very small sample size, rapid test results and the Celera Genomics Groupless painful testing. The acquisition is subject to approval by regulatory agencies, satisfaction of Applera Corporation, enteredcustomary closing conditions and approval by holders of a long-term strategic alliance to develop, manufacture and market a broad rangemajority of in vitro molecular diagnostic products for disease detection, disease progression monitoring and therapy selection.TheraSense common stock.

        The principal products included in thisthe Diagnostic Products segment are are:

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systems and reagents used to perform immunoassay tests, including Architect®, AxSYM®, IMx®, Abbott Quantum®;Quantum™, Commander®, and Abbott PRISM®, TDx®, and TDxFlx®;



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screening and diagnostic tests for hepatitis B, HTLV-I/II, hepatitis B core, and hepatitis C;



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tests for detection of HIV antibodies and antigens, and other infectious disease detection systems; systems, including Determine®;



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tests for determining levels of abused drugs;



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physiological diagnostic tests;



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cancer monitoring tests, including tests for prostate specific antigen (PSA);



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therapeutic drug monitoring tests;



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fertility and pregnancy tests and systems such as TDx® and TDxFlx®; tests;



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the Murex® line of microtiter-based immunoassay test kits;

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the Vysis® product line of genomic-based tests, including the PathVysion™PathVysion® HER-2 DNA probe kit and the UroVysion™ bladder cancer recurrence kit; the LCx® amplified probe system and reagents; the Abbott TestPack® and Determine™ systems for rapid diagnostic testing;



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clinical chemistry systems such as Architect® c8000®, Abbott Spectrum®, Aeroset®, and Alcyon®Aeroset®;



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a full line of hematology systems and reagents known as the Cell-Dyn® series; and



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the MediSense® product line of blood glucose monitoring meters, test strips, data management software and accessories for people with diabetes, including Precision Xtra™, MediSense Optium®Optium™, Sof-Tact™Sof-Tact® (marketed in Europe as Soft-Sense™Soft-Sense®), Precision Q.I.D.®, MediSense II™, ExacTech® and ExacTech RSG®, TrueMeasure™ strip technology,True Measure® strips, Precision Link™Link® Direct, and Precision™Precision® Sure-Dose insulin syringes.

In addition, under its strategic alliance with Celera Diagnostics, a joint venture between the MediSense Precision PCx®Applied Biosystems Group and Precision G® are usedthe Celera Genomics Group of Applera Corporation, the Diagnostic Products segment develops, manufactures and markets a broad range of in hospital settings along with the i-STAT® point-of-care testing systems, which this segment distributes throughvitro molecular diagnostic products for disease detection, disease progression monitoring and therapy selection. Through a worldwide sales and marketing allianceagreement with i-STAT Corporation. ThisEnfer Scientific Ltd., the Diagnostic Products segment also distributes diagnostic tests in Europe and Japan that are used to detect bovine spongiform encephalopathy (BSE) in cattle through a sales and marketing agreement with Enfer Scientific Ltd.cattle.

        ThisThe Diagnostic Products segment markets its products worldwide. These products are generally marketed and sold directly to hospitals, laboratories, clinics, and physicians' offices from Abbott-owned distribution centers and public warehouses. Outside the United States, sales are made either directly to customers or through distributors, depending on the market served. Blood glucose monitoring meters and test strips for people with diabetes are also sold over the counter to consumers.

        ThisThe Diagnostic Products segment's products are subject to competition in technological innovation, price, convenience of use, service, instrument warranty provisions, product performance, long-term supply contracts, and product potential for overall cost-effectiveness and productivity gains. Some products in this segment can be subject to rapid product obsolescence. Although Abbott has benefitted from technological advantages of certain of its current products; however,products, these advantages may be reduced or eliminated as competitors introduce new products. Certain of this segment's products are subject to restrictions on their sale in the United States. These restrictions are discussed in the section captioned "Regulation" on pages 68, 9 and 7.10.

Hospital Products

        ThisThe Hospital Products segment's products include acute care injectable drugs and drug delivery systems, perioperative and intensive care products, cardiovascular products, products for treating pain, renal products, oncology products, intravenous and irrigation solutions and related manualelectronic drug delivery systems, anesthesia, pain management, renal care, cardiovascular drugs and electronic administration equipment for hospitalsdevices, and alternate-care sites.spinal fixation products. In the third quarter of 2003, Abbott acquired Integrated Vascular Systems, Inc., a developer of a novel vessel closure technology. In the second quarter of 2002,2003, Abbott acquired Spinal Concepts, Inc., a marketer of spinal fixation products used in the cardiovascular stenttreatment of spinal disorders. In the second quarter of 2003, Abbott also acquired the assets of JOMED N.V.'s coronary and peripheral interventional business of Biocompatibles International plc and certain cardiovascular stent technology rights from Medtronic, Inc.line.

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        The principal products included in thisthe Hospital Products segment areare:

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acute care injectable drugs and systems, including: (i) hospital injectables, includingsuch as Carpuject®, Corlopam®, and FirstChoice® generics;generics, (ii) premixed intravenous drugs in various containers;containers, and (iii) the ADD-Vantage® system;



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intravenous and Nutrimix®irrigation solutions and electronic drug anddelivery systems, including: (i) the Nutrimix® nutritional delivery systems;system, (ii) intravenous solutions and related administration equipment sold as the LifeCare® line of products, (iii) irrigation solutions, (iv) LifeShield™ needleless products, (v) Venoset® products, (vi) parenteral nutritionals such as Aminosyn® and Liposyn®, (vii) Plum®, Omni-Flow®, GemStar®, and Abbott AIM® electronic drug delivery systems,

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(viii) patient-controlled analgesia systems, and (ix) Transpac® monitors and Opticath® and OptiQ™ advanced sensor catheters for hemodynamic monitoring;

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anesthesia, including: (i) anesthetics, includingsuch as Pentothal®, Amidate®, Ultane®, isoflurane, enflurane and neuromuscular blockers, and enflurane;(ii) Precedex® for sedation;



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pain management, including products for pain, anxiety, nausea and painnausea associated with surgery; Precedex® for sedation; Abbokinase®, a thrombolytic drug; coronary stents; cardiovascular products



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renal care, including Corlopam®; Prostar® and The Closer™ vessel closure products; Opticath® and OptiQ™ advanced sensor catheters; Transpac® for hemodynamic monitoring; peripheral wires, catheters, and other specialty cardiac products; Calcijex® and Zemplar®, injectable agents for treatment of bone disease in hemodialysis patients; intravenous solutions



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cardiovascular drugs and related administration equipment sold as the LifeCare® line of products, LifeShield® needlelessdevices, including: (i) Abbokinase®, a thrombolytic drug, (ii) coronary stents, (iii) Perclose A-T™ and Chito-Seal™ vessel closure products, and Venoset®(iv) peripheral wires, catheters, and other specialty cardiac products; irrigating fluids; parenteral nutritionals such as Aminosyn®and



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spinal fixation products including, Spinal Concepts Infix®, BacFix®, Pathfinder™, and Liposyn®; Plum®, Omni-Flow®, GemStar® and Abbott AIM® electronic drug delivery systems; patient-controlled analgesia systems;Insight™ spinal orthopedic products.

        The Hospital Products segment's principal products also include venipuncture products;products and Faultless® rubber sundry products.

        ThisThe Hospital Products segment markets its products primarily in the United States. TheyThis segment's products are generally distributed from Abbott-owned distribution centers and public warehouses to wholesalers and directly to hospitals, integrated delivery networks, and other alternate site locations where patient care is delivered from Abbott-owned distribution centers and public warehouses. Thisdelivered. The Hospital Products segment also develops and manufactures productsinjectable pharmaceuticals for other companies.

        This segment's productsProducts in the Hospital Products segment are subject to competition in long-term supply contracts, technological innovation, price, convenience of use, instrument warranty provisions, service, product performance, long-term supply contracts, and product potential for overall cost effectiveness and productivity gains.gains, and product warranty provisions. Some products in this segment can be subject to rapid product obsolescence. Although Abbott has benefitted from technological advantages of certain of its current products; however,products, these advantages may be reduced or eliminated as competitors introduce new products.

Ross Products

        ThisThe Ross Products segment's products include a broad line of pediatric and adult nutritionals. These products are sold primarily on the recommendation of physicians or other health care professionals. The Ross Products segment also includes specialty pharmaceuticals. In the third quarter of 2003, Abbott acquired ZonePerfect Nutrition Company, a marketer of healthy and nutritious products for active people.

        Principal nutritional products include in the Ross Products segment include:

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various forms of prepared infant formula, including Similac®Advance®, Similac®, Similac®2, Isomil®Advance®, Isomil®, Isomil®2, Alimentum®, and Similac® NeoSure®; and



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other adult and pediatric products, including Ensure®, Ensure Plus®, Ensure® Plus, Ensure® High Protein, Ensure® Light, Jevity®, Glucerna®, Pulmocare®, ProSure™ProSure®, PediaSure®, and Pedialyte®. The principal;



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the pharmaceutical product, is Survanta®. ; and



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ZonePerfect® bars.

In addition, thisthe Ross Products segment co-promotes Synagis®, for prevention of respiratory syncytial virus, under an agreement with MedImmune Inc., Xopenex®, for the treatment of respiratory disorders, under an agreement with Sepracor Inc., and Oxandrin®, for the promotion of anabolic activity (weight gain), under an agreement with Bio-Technology General Corp.Savient Pharmaceuticals, Inc.

        This         The Ross Products segment markets its products in the United States. NutritionalStates and generally sells nutritional products are generally sold directly to retailers, wholesalers, health care facilities, and government agencies. In most cases, theythese products are distributed from Abbott-owned distribution centers or public warehouses. PrimaryCurrently, primary marketing efforts for nutritional products are directed toward securing the recommendation of Abbott's brand of products by physicians or other health care professionals. Competition is generally from other health care manufacturers. NutritionalIn addition, nutritional products are subjectalso promoted through direct to competition in price, formulation, packaging, scientific innovation, and promotional initiatives.consumer marketing efforts. Similac®Advance®, PediaSure®, Pedialyte®, Ensure®, and Glucerna® retail products are promoted directly to the public by consumer advertising. These products are generally sold directly to retailers and wholesalers. Competitive products are sold by other diversified consumer and health care manufacturers. Competitive factors include consumer advertising, formulation, packaging, scientific innovation, price, and availability of generic product forms.

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        This        The Ross Products segment's pharmaceutical products are generally marketed and sold directly to physicians, retailers, wholesalers, health care facilities, and government agencies.agencies and sold through wholesalers. In most cases, they are distributed from Abbott-owned distribution centers or public warehouses. Primary marketing efforts for this segment's pharmaceutical products are directed at securing the prescription of these products by physicians.

        Competition for nutritional products in the Ross Products segment is generally other diversified consumer and health care manufacturers. Competitive factors include consumer advertising, formulation, packaging, scientific innovation, price, and availability of private label product forms. Competition for pharmaceutical products in the Ross Products segment is generally from other health care and pharmaceutical companies. A significant aspect of competition is the search for technological innovations. The introduction of new products by competitors and changes in medical practices and procedures can result in product obsolescence. Price can also be a factor. In addition, the substitution of generic drugs for the brand prescribed has increased competitive pressures on pharmaceutical products which are off-patent.

International

        ThisThe International segment's products include a broad line of hospital, pharmaceutical, and adult and pediatric nutritional products marketed and primarily manufactured outside the United States. These products are sold primarily on the prescription or recommendation of physicians and other health care professionals. This segment also includes consumer products.

        ThisThe International segment's principal products include include:

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the anti-infectives clarithromycin, sold under the trademarks Biaxin®, Klacid® and Klaricid®, tosufloxacin, sold in Japan under the trademark Tosuxacin®, and various forms of the antibiotic erythromycin, sold primarily as PCE® or polymer-coated erythromycin, Erythrocin®, and E.E.S.®;



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the anti-virals Kaletra® and Norvir®, protease inhibitors for the treatment of HIV infection;



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Lupron®, also marketed as Lucrin®, and Lupron Depot® used for the palliative treatment of advanced prostate cancer, treatment of endometriosis and central precocious puberty, and for the preoperative treatment of patients with anemia caused by uterine fibroids;



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Synthroid® for the treatment of hypothyroidism;



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Humira® for the treatment of rheumatoid arthritis;



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Ogastro®, also marketed as Prevacid® (lansoprazole), a proton pump inhibitor for the short-term treatment of duodenal ulcers, gastric ulcers, and erosive esophagitis;



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various cardiovascular products, including Loftyl®, a vasoactive agent, Mavik® (also marketed as Goptin®), Isoptin® and Tarka® for the treatment of hypertension, Hytrin® (also marketed as Hitrin® and Flotrin®) used for the treatment of hypertension and benign prostatic hyperplasia and candesartan (sold under the trademarks Blopress® and Tiadyl®), an angiotension 2 antagonist;



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Reductil® (also marketed as Reductyl®Reductyl™ and Reductal®Reductal™) for the treatment of obesity; Uprima® for the treatment of erectile dysfunction;

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various forms of infant formulas and follow-on formulas, including Similac®Advance®, Gain®, and Abbott Grow™Grow®;



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various adult medical nutritionals, including Ensure®, Glucerna®, and Jevity®; and



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a broad line of hospital products, including the anesthesia products sevoflurane (sold outside of the United States primarily under the trademark Sevorane® and in a few other markets as Ultane®), isoflurane and enflurane;



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specialty injectables such as Calcijex® and Survanta®; and



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electronic drug delivery systems sold in select international markets.

        ThisThe International segment's pharmaceutical and nutritional products are generally sold directly to government agencies, retailers, wholesalers, and health care facilities. In most cases, they are distributed from Abbott-owned distribution centers. Certain products are co-marketed or co-promoted with other companies. Some of these products are marketed and distributed through distributors. Primary marketing efforts for pharmaceutical products are directed toward securing the prescription of Abbott's brand of products by physicians. Primary marketing efforts for nutritional products are directed toward securing the recommendation of Abbott's brand of products by physicians or other health care professionals. The International segment's hospital products are generally distributed to wholesalers and directly to hospitals from distribution centers maintained by Abbott.

Competition for the International segment's pharmaceutical products is generally from other health care and pharmaceutical companies. A significant aspect of competition is the search for technological innovations. The introduction of new products by competitors and changes in medical practices and procedures can result in product obsolescence. Price can also be a factor. In addition, the substitution of generic drugs for the brand prescribed has increased competitive pressures on pharmaceutical products. Primary marketing effortsCompetition for the segment's nutritional products are directed toward securing the recommendation of Abbott's brand of products by physicians or other health care professionals. Competition is generally from other health care manufacturers and food companies. Nutritional products are subject to competition in price, scientific innovation, formulation, and promotional initiatives.

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        This The International segment's hospital products are generally distributed to wholesalers and directly to hospitals from distribution centers maintained by Abbott. This segment is subject to competition in technological innovation, price, convenience of use, instrumentproduct warranty provisions, service, product performance, long-term supply contracts, and product potential for overall cost effectiveness and productivity gains. Products in this segment can be subject to rapid product obsolescence. Although Abbott has benefitted from technological advantages of certain of its current products; however,products, these advantages may be reduced or eliminated as competitors introduce new products.

TAP Pharmaceutical Products Inc.

        Under an agreement between Abbott and Takeda Chemical Industries, Ltd. of Japan (Takeda), TAP Pharmaceutical Products Inc. (owned 50 percent by Abbott and 50 percent by an affiliate of Takeda), together with its subsidiary, TAP Pharmaceuticals Inc. (TAP), develops and markets pharmaceutical products primarily for the United States and Canada. TAP markets Lupron®, an LH-RH analog, and Lupron Depot®, a sustained release form of Lupron®, in the United States. Lupron® and Lupron Depot® are used principally for the palliative treatment of advanced prostate cancer and for the treatment of endometriosis and central precocious puberty and for the preoperative treatment of patients with anemia caused by uterine fibroids. TAP also markets Prevacid® (lansoprazole), a proton pump inhibitor, and has a co-promotion arrangement with Abbott for Prevacid®.inhibitor. Its principal indications are for short-term treatment of duodenal ulcers, gastric ulcers, and erosive esophagitis. The patents related to lansoprazole are material to the operation of TAP's business. The original United States compound patent covering lansoprazole is licensed by TAP from Takeda and will expire in 2009.

        TAP's products are generally sold directly to physicians, retailers, wholesalers, health care facilities, and government agencies. In most cases, they are distributed for TAP from Abbott-owned distribution centers. Primary marketing efforts for pharmaceutical products are directed toward securing the prescription of TAP's brand of products by physicians. Managed care purchasers (for example, health maintenance organizations and pharmacy benefit managers) are increasingly important customers.

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Competition is generally from other pharmaceutical companies. A significant aspect of competition is the search for technological innovations. The introduction of new products by competitors and changes in medical practices and procedures can result in product obsolescence. Price can also be a factor. In addition, the availability of over-the-counter drugs or the substitution of generic drugs for the brand prescribed has increased competitive pressures on pharmaceutical products that are off-patent.pressures.

INFORMATION WITH RESPECT TO ABBOTT'S BUSINESS IN GENERAL

Sources and Availability of Raw Materials

        Abbott purchases, in the ordinary course of business, raw materials and supplies essential to Abbott's operations from numerous suppliers in the United States and abroad. There have been no recent significant availability problems or supply shortages.

Patents, Trademarks, and Licenses

        Abbott is aware of the desirability for patent and trademark protection for its products. Accordingly, where possible, patents and trademarks are sought and obtained for Abbott's products in the United States and all countries of major marketing interest to Abbott. Abbott owns and is licensed under a substantial number of patents and patent applications. Principal trademarks and the products they cover are discussed in the Narrative Description of Business on pages 1 through 5.7. These, and various patents which expire during the period 20032004 to 2022,2023, in the aggregate are believed to be of material importance in the operation of Abbott's business. Abbott believes that no single patent, license, trademark (or related group of patents, licenses, or trademarks), except for those related to clarithromycin (which is sold under the trademarks Biaxin®, Klacid® and Klaricid®) and, those related to divalproex sodium (which is sold under the trademark Depakote®), those related to lansoprazole (which is sold under the trademarks Prevacid® and Ogastro®), and those related to lopinavir/ritonavir (which is sold under the trademark Kaletra®), are material in relation to Abbott's business as a whole. In addition, the patents, licenses, and

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trademarks related to adalimumab (which is sold under the trademark Humira™Humira®) may become material. The original United States compound patent covering clarithromycin is licensed from Taisho Pharmaceutical Co., Ltd. of Tokyo, Japan, and will expire in 2005. The original United States compound patents covering divalproex sodium will expire in 2008. The original United States compound patent covering lansoprazole is licensed by TAP from Takeda and will expire in 2009. The original United States compound patents covering adalimumab will expire in 2016. The original United States compound patent covering lopinavir will expire in 2015. The original United States compound patents covering ritonavir will expire in 2013 and 2014. The original United States composition patent covering lopinavir/ritonavir will expire in 2016. Litigation involving Abbott's patents covering divalproex sodium is discussed in Legal Proceedings on pages 1012 and 11. See also13.

        Although the discussion on page 5 regardingexpiration of a compound patent may lead to increased competition, in most cases Abbott owns or has a license to other patents that expire after the patentsoriginal compound patent related to lansoprazole, which is sold by TAPparticular formulations, uses, or processes for manufacturing the pharmaceutical. These other patents and Abbott's other intellectual property, along with such other factors as Prevacid® under a license from Takeda.competitor's need to obtain regulatory approvals prior to marketing a competitive product and the nature of the market, may allow Abbott to continue to maintain exclusivity or have other commercial advantages after the expiration of the original compound patent.

Seasonal Aspects, Customers, Backlog, and Renegotiation

        There are no significant seasonal aspects to Abbott's business. The incidence of certain infectious diseases which occur at various times in different areas of the world does, however, affect the demand for Abbott's anti-infective products. Orders for Abbott's products are generally filled on a current basis, and order backlog is not material to Abbott's business. No single customer accounted for sales equaling

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10 percent or more of Abbott's consolidated net sales. No material portion of Abbott's business is subject to renegotiation of profits or termination of contracts at the election of the government.

Research and Development

        Abbott spent $1,733,472,000 in 2003, $1,561,792,000 in 2002, and $1,577,552,000 in 2001 and $1,351,024,000 in 2000 on research to discover and develop new products and processes and to improve existing products and processes. Abbott continues to concentrateThe majority of research and development expenditures is concentrated on pharmaceutical and diagnostic products.

Environmental Matters

        Abbott believes that its operations comply in all material respects with applicable laws and regulations concerning environmental protection. Regulations under federal and state environmental laws impose stringent limitations on emissions and discharges to the environment from various manufacturing operations. Abbott's capital and operating expenditures for pollution control in 20022003 were approximately $29$17 million and $66$65 million, respectively. Capital and operating expenditures for pollution control are estimated to approximate $20$5 million and $71$70.7 million, respectively, in 2003.2004.

        Abbott has been identified as one of many potentially responsible parties in investigations and/or remediations at 1813 locations in the United States including Puerto Rico under the Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as Superfund. The aggregate costs of remediation at these sites by all identified parties are uncertain but have been subject to widely ranging estimates totaling as much as several hundred million dollars. In many cases, Abbott believes that the actual costs will be lower than these estimates, and the fraction for which Abbott may be responsible is anticipated to be considerably less and will be paid out over a number of years. Abbott may participate in the investigation or cleanup at these sites. Abbott is also voluntarily investigating potential contamination at 4two Abbott-owned sites, and is engaged in remediation at 3six other Abbott-owned sites, in cooperation with the Environmental Protection Agency (EPA) or similar agencies.

        While it is not feasible to predict with certainty the costs related to the previously described investigations and cleanup activities, Abbott believes that such costs, together with other expenditures to maintain compliance with applicable laws and regulations concerning environmental protection, should not have a material adverse effect on Abbott's financial position, cash flows, or results of operations.

Employees

        Abbott employed 71,819approximately 72,200 persons as of December 31, 2002.2003.

Regulation

        On November 4, 1999,In December 2003, after an inspection, FDA concluded that Abbott's Lake County, Illinois manufacturing operations for diagnostic products currently marketed in the United States were in substantial conformity with the FDA's Quality System Regulation. Abbott has started the process of reintroducing products that were removed from the market in 2000 as a result of a consent decree and of introducing new diagnostics products manufactured in Lake County, Illinois. Upon the FDA's review, product introductions will resume on a rolling basis. The consent decree was entered on November 4, 1999, in the United States District Court for the Northern District of Illinois, whichand settled issues with the United States government involving alleged

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noncompliance with the FDA's Quality System Regulation at Abbott's diagnostics manufacturing operations in Lake County, Illinois. The decree, which was amended in December 2000, requires Abbott to ensure its diagnostics manufacturing processes in Lake County, Illinois conform with the FDA's Quality System Regulation. The consent decree does not represent an admission by Abbott of any violation of the Federal Food, Drug and Cosmetic Act or its regulations. The decree, which has been amended from time to time, requires Abbott to ensure its diagnostics manufacturing processes in Lake County, Illinois conform with the FDA's Quality System Regulation. It allows for the continued manufacture and distribution of medically necessary diagnostic products made in Lake County, Illinois, such as certain assays for hepatitis, retrovirus, cardiovascular disease, cancer, thyroid

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disorders, fertility, drug monitoring, and congenital and respiratory conditions. However, Abbott is prohibited from manufacturing or distributing certain other diagnostic products until Abbott ensures the processes in its Lake County, Illinois diagnostics manufacturing operations conform with the Quality System Regulation. Under the terms of the amended consent decree, Abbott was to ensure its diagnostics manufacturing operations are in conformance with the FDA's Quality System Regulation by January 15, 2001. The FDA performed an inspection of Abbott's Lake County, Illinois diagnostics manufacturing operations during the fourth quarter of 2001 and first quarter of 2002 to determine whether those operations are in conformity with the FDA's Quality System Regulation. In May, 2002, these operations were found not to be in conformity. Accordingly, Abbott was required to make additional payments to the government and continue its efforts to achieve full compliance. The consent decree does not affect Abbott's MediSense, i-STAT, hematology, Murex or Vysis products; the clinical chemistry products Abbott Spectrum®, Aeroset®, and Alcyon®; or any other Abbott divisions or their products. The consent decree allows Abbott to export diagnostic products and components for sale and distribution outside the United States if they meet the export requirements of the Federal Food, Drug and Cosmetic Act. The consent decree does not affect Abbott's MediSense, i-STAT, hematology, Murex or Vysis products; the clinical chemistry products Abbott Spectrum® and Aeroset®; or any other Abbott divisions or their products.

        The development, manufacture, sale, and distribution of Abbott's products are subject to comprehensive government regulation. Government regulation by various federal, state, and local agencies, which includes detailed inspection of, and controls over, research and laboratory procedures, clinical investigations, product approvals and manufacturing, marketing and promotion, sampling, distribution, record keeping, storage, and disposal practices, substantially increases the time, difficulty, and costs incurred in obtaining and maintaining the approval to market newly developed and existing products. Government regulatory actions can result in delay in the release of products, seizure or recall of products, suspension or revocation of the authority necessary for their production and sale, and other civil or criminal sanctions.

        Continuing studies of the utilization, safety, and efficacy of health care products and their components are being conducted by industry, government agencies, and others. Such studies, which employ increasingly sophisticated methods and techniques, can call into question the utilization, safety, and efficacy of previously marketed products and in some cases have resulted, and may in the future result, in the discontinuance of marketing of such products and may give rise to claims for damages from persons who believe they have been injured as a result of their use.

        TheAccess to and the cost of human health care products continues to be a subject of investigation and action by governmental agencies, legislative bodies, and private organizations in the United States and other countries. In the United States, most states have enacted generic substitution legislation requiring or permitting a dispensing pharmacist to substitute a different manufacturer's version of a pharmaceutical product for the one prescribed. In 2004, a prescription drug benefit was added to the Medicare program providing eligible individuals with greater access to prescription drugs. While the overall impact on Abbott of this added benefit is unclear at this time, it is expected to be neutral, with any increase in volume likely to be offset by Federal and state governments continue to pressgovernments' efforts to reducemanage the costs of Medicare and Medicaid programs, including restrictions on amounts agencies will reimburse for the use of products.programs. In addition, the federal government follows a diagnosis-related group (DRG) payment system for certain institutional services provided under Medicare or Medicaid and has implemented a prospective payment system (PPS) for services delivered in hospital outpatient, nursing home, and home health settings. DRG and PPS entitle a health care facility to a fixed reimbursement based on diagnosis rather than actual costs incurred in patient treatment, thereby increasing the incentive for the facility to limit or control expenditures for many health care products. Manufacturers must pay certain statutorily-prescribed rebates on Medicaid purchases for reimbursement on prescription drugs under state Medicaid plans and some states are seeking additional rebates. The Veterans Health Care Act of 1992 requires manufacturers to extend additional discounts on pharmaceutical products to various federal agencies, including the

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Department of Veterans Affairs, Department of Defense, and Public Health Service entities and institutions.

        In the United States, governmental cost-containment efforts have extended to the federally funded Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). All states participate in WIC and have sought and obtained rebates from manufacturers of infant formula whose products are used in the program. All states have conducted competitive bidding for infant formula contracts which require the use of specific infant formula products by the state WIC program, unless a physician requests a non-contract formula for a WIC customer.client. States participating in WIC are required to engage in competitive bidding or to use anotherany other cost containment measure that yields savings equal to or greater than the savings generated by a competitive bidding system.

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        Governmental regulatory agencies require prescription drug and medical device manufacturers to pay fees. The FDA imposes substantial fees on various aspectsprescription drug manufacturers, including fees related to the submission of marketing applications. In addition, the approval, manufacture, and sale of proprietary prescription drugs. Similarly, recent legislation will imposeFDA requires application fees for certain medical device products following authorization by Congress.products.

        Abbott expects debate to continue during 20032004 at both the federal and the state level over the availability, method of delivery, and payment for health care products and services. Abbott believes that if legislation is enacted, it could have the effect of reducing prices, or reducing the rate of price increases, for medical products and services.

        International operations are also subject to a significant degree of government regulation, including for example, international standards (such as those set by the International Organization for Standards), European Union directives,Directives, and other country-specific rules and regulations. Many countries, directly or indirectly, through reimbursement limitations, control the selling price of most health care products. Furthermore, many developing countries limit the importation of raw materials and finished products. International regulations also are havinghave an impact on United States regulations.

        Efforts to reduce health care costs are also being made in the private sector. Health care providers have responded by instituting various cost reduction and containment measures.

        It is not possible to predict the extent to which Abbott or the health care industry in general might be affected by the matters discussed above.

INTERNATIONAL OPERATIONS

        Abbott markets products in approximately 130 countries through affiliates and distributors. Most of the products discussed in the preceding sections of this report are also sold outside the United States. In addition, certain products of a local nature and variations of product lines to meet local regulatory requirements and marketing preferences are manufactured and marketed to customers outside the United States. International operations are subject to certain additional risks inherent in conducting business outside the United States, including price and currency exchange controls, changes in currency exchange rates, limitations on foreign participation in local enterprises, expropriation, nationalization, and other governmental action.

INTERNET INFORMATION

        Copies of Abbott's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through Abbott's investor relations website (www.Abbott.com)(www.abbottinvestor.com) as soon as reasonably practicable after Abbott electronically files the material with, or furnishes it to, the Securities and Exchange Commission.

8        Abbott's corporate governance guidelines, outline of directorship qualifications, code of business conduct and the charters of Abbott's audit committee, compensation committee, and nominations and governance committee are all available on Abbott's investor relations website (www.abbottinvestor.com) or by sending a request for a paper copy to: Abbott Laboratories, 100 Abbott Park Road, Dept. 383, AP6D2, Abbott Park, Illinois 60064-6400, attn. Investor Relations.

ITEM 2.    PROPERTIES

        Abbott's corporate offices are located at 100 Abbott Park Road, Abbott Park, Illinois 60064-6400. The locations of Abbott's principal plants, as of December 31, 2003, are listed below.

*

Leased property

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        In addition to the above, Abbott has manufacturing facilities in 56 other locations in the United States, including Puerto Rico. Outside the United States manufacturing facilities are located in 119 other countries. Abbott's facilities are deemed suitable, provide adequate productive capacity, and generally are utilized at normal and acceptable levels.

        In the United States, including Puerto Rico, Abbott owns 1215 distribution centers. Abbott also has 1618 United States research and development facilities located at: Abbott Park, Illinois; Ashland, Ohio; Austin, Texas; Bedford, Massachusetts; Columbus, Ohio (two locations); Downers Grove, Illinois; Irving, Texas; Long Grove, Illinois; McPherson, Kansas; Morgan Hill, California; North Chicago, Illinois; Parsippany, New Jersey; Redwood City, California; San Diego, California; Santa Clara, California; San Diego,Sunnyvale, California; and Worcester, Massachusetts. Outside the United States, Abbott has research and development facilities in Argentina, Australia, Germany, Ireland, Japan, The Netherlands, South Africa, Spain, Switzerland, and the United Kingdom.

        TheExcept as noted, the corporate offices, and those principal plants in the United States that are listed above, are owned by Abbott or subsidiaries of Abbott. The remaining manufacturing plants and all other facilities are owned or leased by Abbott or subsidiaries of Abbott. There are no material encumbrances on the properties.

ITEM 3.    LEGAL PROCEEDINGS

        Abbott is involved in various claims, legal proceedings and investigations, including (as of January 31, 2003)2004) those described below.

        In 2001, the United States District Court for the Northern District of Illinois dismissed the shareholder derivative suits filed in 1999 against Abbott's directors as of November 1999 and certain other former directors in connection with Abbott's consent decree with the FDA regarding Abbott's diagnostic manufacturing operations in Lake County, Illinois. The suits had been consolidated asIn rere: Abbott Laboratories Derivative Shareholder Litigation. The plaintiffs alleged that the directors breached their duty of care by failing to prevent Abbott's alleged regulatory noncompliance and sought unspecified damages from the directors. Plaintiffs appealed to the United States Court of Appeals for the Seventh Circuit. In June 2002,March 2003, the Seventh Circuit reversed the District Court's dismissal of the claims, but, in August 2002, withdrew its opinion. No new opiniondismissal. The case has issued.been remanded and discovery is proceeding.

        In the mid-1990s, a number of prescription pharmaceutical pricing antitrust suits were brought on behalf of retail pharmacies in federal and state courts as purported class actions allegingactions. The retail pharmacies allege that Abbott, other pharmaceutical manufacturers, and pharmaceutical wholesalersincluding Abbott, conspired to fix prices for prescription pharmaceuticals and/or to discriminate in pricing to retail pharmacies in violation of state and federal antitrust laws. The cases seek treble damages, civil penalties, and injunctive and other relief. The case pending in Clarke County, Alabama has been dismissed. The other cases are in federal court. TheAll of the federal cases were pending in the United States District Court for the Northern District of Illinois under the Multidistrict Litigation Rules asIn re: Brand Name Prescription Drug Antitrust Litigation, MDL 997. The court previously remanded the Sherman Act claims in those cases were remanded to their courts of original jurisdiction. The cases have now beenjurisdiction, and those claims were consolidated in the Eastern District of New York. The non-Sherman Act claims, includingOne of the Robinson-Patman Act claims, remaincases,Fullerton Drugs, is pending in the Northern District of Illinois. InThe remaining claims, including the federal cases still pending against Abbott, the wholesalers' motion to be dismissed from these cases was granted. In May 2002, the Seventh Circuit affirmed the district court's ruling granting summary judgmentRobinson-Patman Act claims, have been transferred to the wholesalers, andEastern District of New York. Abbott has filed a response to each of the case againstcomplaints denying all substantive allegations. Abbott has settled withRite Aid, one of the wholesalers is now over.two remaining plaintiff groups in the Eastern District of New York. An investigation is also being conducted into the same allegations by the Illinois Attorney General.

        Three cases wereare pending in which Abbott seeks to protect its patents for divalproex sodium (a drug that Abbott sells under the trademark Depakote®). In two of the cases, the United States District Court for the Northern District of Illinois granted Abbott's motions for summary judgment against both TorPharm, a division of Apotex, Inc., ("TorPharm") and Alra Laboratories, Inc. ("Alra"), finding that TorPharm's proposed productTorPharm and Alra's productproposed products infringed Abbott's patents. TorPharm and Alra appealed these decisions to the

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Federal Circuit Court of Appeals. In August 2002, the Federal Circuit Court of

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Appeals affirmed, in part, and reversed, in part, the lower court's decision in TorPharm, and remanded the issue of infringement to the lower court. The Federal CircuitIn March 2003, the Court of Appeals has stayed the litigationissued an order in Alra pendingproviding that the appeal would not be resolved on the merits and remanding the case to the lower court for a decision in TorPharm.determination as to whether the lower court's judgment should stand or be vacated. The third case was brought by Abbottin May 2003 against Andrx Corporation, Andrx Pharmaceutical,Pharmaceuticals, Inc., and Andrx Pharmaceutical,Pharmaceuticals, LLC was stayed by("Andrx") in the United States District Court for the Southern District of Florida atafter Andrx submitted a Section 505(b)(2) NDA for a product described as sodium valproate tablets. That case was consolidated with a case Abbott filed in April 2000 against the request ofsame parties. The parties have agreed to dismiss the parties.earlier case.

        A number of antitrust cases were pending in federal court (including a case filed by the Attorneys General of the States of Colorado, Florida and Kansas) and various state courts in connection with the settlement of patent litigation by Abbott involving terazosin hydrochloride, a drug sold by Abbott under the trademark Hytrin®. These cases (which were brought against Abbott, Geneva Pharmaceuticals, Inc. and Zenith Goldline Pharmaceuticals, Inc.) seek actual damages, treble damages, and other relief and allege Abbott violated state or federal antitrust laws and, in some cases, unfair competition laws. The federal court cases are pending in the United States District Court for the Southern District of Florida under the Multidistrict Litigation Rules asIn re: Terazosin Hydrochloride, MDL No. 1317. TheCases are also pending in six state courts. Two of the state court cases, include two casesAsher and New Utrecht Pharmacy andLisanti (both filed in 1999 that were consolidated and are pending in the Supreme Court of the State of New York, County of New York:York), were consolidated and are stayed pending the resolution ofAsher and New Utrecht Pharmacy andLisanti. In October 2002, the plaintiffs voluntarily dismissed a third case,Drug Mart CorporationMDL No. 1317. The other state cases are:State of West Virginia, filed in October 2001 in the Circuit Court in Wyoming County, West Virginia;Daniels, filed in May 2000 in Superior Court in Orange County, California; andSchroeder, filed in January 2002 in the First Judicial District Court in Santa Fe County, New Mexico. The Superior Court inDaniels stayed that caseCalifornia (stayed pending the resolution ofIn re: Terazosin Hydrochloride, MDL No. 1317. One of the previously reported state court cases,1317); Hopper, filed in October 2001 in the Superior Court in Pitt County, North Carolina, has been removed toCarolina; andBlue Cross/Blue Shield of Minnesota et al. v. Abbott Laboratories, et al., filed in August 2003 in the United States DistrictCircuit Court for the Southern District of Florida.Cook County, Illinois. Abbott has filed or intends to file a response to each complaint denying all substantive allegations. The state of New York, Office of the Attorney General, is conducting an investigation into this matter.

        A number of cases, brought as purported class actions or representative actions on behalf of individuals or entities, are pending that allege generally that Abbott and numerous other pharmaceutical companies reported false pricing information in connection with certain drugs that are reimbursable under Medicare and Medicaid. These cases brought by private plaintiffs and State Attorneys General generally seek damages, treble damages, disgorgement of profits, restitution and attorneys' fees. The federal court cases have been consolidated in the United States District Court in Massachusetts under the Multidistrict Litigation Rules asIn re: Pharmaceutical Industry Average Wholesale Price Litigation, MDL 1456. TransfersThe following two previously reported cases have now been transferred toMDL 1456:International Union of Operating Engineers Local No. 68 Welfare Fund andCounty of Rockland, New York. Cases are also pending for the following additional cases, which have all been removed to federal court:in five state courts:RiceSwanston, filed in JulyMarch 2002 in the Superior Court for the State of California, AlamedaArizona, Maricopa County;Thompson, filed in August 2002 in the Superior Court for the State of California, San Francisco County;Turner, filed in September 2002 in the Superior Court for the State of California, San Francisco County; andCongress of California Seniors, filed in September 2002 in the Superior Court for the State of California, Los Angeles County. One additional case is pending in federal court:County of Suffolk, et al., filed in January 2003 in the United States District Court for the Eastern District of New York. Cases are also pending in five state courts:State of West Virginia ex rel. Darrell v.V. McGraw, Jr., Attorney General, filed in October 2001 in the Circuit Court forof the State of West Virginia, Kanawha County;Peralta, a minor by and through his Guardian ad Litem, Filamena Iberia, filed in October 2001 in the Superior Court for the State of California, Los Angeles County;Swanston, individually and on behalfState of himself and all others similarly situated,Nevada, filed in DecemberJanuary 2002 in the SuperiorSecond Judicial District Court for the Statein Washoe County, Nevada; andCommonwealth of Arizona, Maricopa County;Digel,Kentucky ex rel. Albert B. Chandler III, Attorney General, filed in December 2002September 2003 in the Circuit Court for the State of Tennessee, Thirteenth Judicial District of Memphis; andState of California ex rel. Ven-A-Care of the Florida Keys, Inc., filed in January 2003 in the Superior Court for the State of California, Los Angeles.Franklin County, Kentucky. Abbott has filed or intends to file a response in each case denying all substantive allegations.

        In addition, various state and federal agencies, including the United States Department of Justice and the Florida, Illinois and Texas Attorneys General, are investigating Abbott's marketing and pricing practices with respect to certain Medicare and Medicaid reimbursable products. These civil investigations

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