Abbott's nutrition arm sees healthy growth

Thomas F. Chen takes part in the opening ceremony of Abbott's Shanghai office. File photo

Comments on Thomas F. Chen of Abbott made by his colleagues usually point to two aspects: he is a far-sighted person and always makes the right decision at the right time; he is much modest and easy of approach.

In the past two decades, US-based Abbott, a Fortune 500 company and also the leading healthcare provider where Chen has been working for the same long period, has experienced a strategy shift from mainly focusing on the business of pharmaceuticals into attaching the same importance to that of medical products including nutrition, diagnostic, diabetes care and other devices.

The Taiwanese is recognized as the driver of Abbott Nutrition International’s development. Chen is the man that insisted in introducing Abbott’s nutrition business into Taiwan, the first overseas market outside the United States that Abbott developed about two decades ago, at a time when Abbott’s focus had long been on pharmaceuticals and Taiwan’s economy was not prospering. But Abbott made a great hit in the region, and its sales revenue grew He then successfully copied the Taiwan story into the other markets including the Chinese mainland, Latin America, and Africa.

The growing number of profits that nutrition business generates drives the Abbott headquarter to make a bold decision, separate the international nutrition business from its pharmaceutical sector in 2005 with dedicated team and resource. Now, sales from the nutrition business accounted for nearly 20 percent of Abbott’s total, compared with few 20 years ago.

There is no wonder that in 2006 Chen was granted the post of president of Nutrition International (in charge of markets outside the United States) under Abbott, becoming the first Asian that entered into Abbott’s corporate decision team in its 118-year long history.

His colleagues said they enjoy working with him. “He shows full respect to everyone; he likes to provoke discussion and seek out different points of view; he is always patient enough to listen to disagreements or complaints,”

“A right corporate strategy is important, but how to communicate with your staffs and make sure they could grasp your idea and implement the detailed plans in a right way is the same important. It is a great art to be an excellent navigator but I really enjoys being on the go,” said Chen.

Discerning eyes

“Business leader I admired are no doubt Mile White, CEO of Abbott and Steven Paul Jobs (co-founder and chief executive officer of Apple). Mile’s now transformed Abbott to a broadbased health care company that today is doing extremely well during the economic downturn. Jobs’ greatness lies in his passion about product innovation, his capability in keeping igniting consumer interest in something that is actually dull, through innovative ideas,” Chen said.

Chen has been trying to follow their suit.

In 1988, Thomas joined Abbott Taiwan office. Chen was confident in the market from the first beginning. He believed the region’s economy would be growing and there was great potential to tap in especially the nutrition business.

The idea was then widely retorted, as for long, the nutrition business had been overshadowed by pharmaceutical sector which contributed over 80 percent of Abbott’s sales. More importantly, Abbott Nutrition had never expanded business into markets outside the US although the nutrition products sold quite well in American market.

Chen steadily believed that Abbott’s diversified business module provided growth opportunities in Asia market.. “Abbott had sharp competitiveness in pharmaceuticals, so did its peers. It would save us much effort to lead the market if we developed the business which the counterparts ignored,” Chen recalled. Chen personally traveled around and marketed Abbott nutrition products in hospitals and supermarkets. Rapidly, Abbott grew up as a famous nutrition provider in Taiwan and its sales had been doubling every year.

From 1996 to 1998, Chen flew to the mainland twice a month, and spent a whole week researching the Greater China market. In two years, Abbott’s sales in the region jumped to $1 million from zero.Chen was then promoted to look after Abbott Asia and Africa (in charge of business in markets of Africa and Asia-Pacific except for Japan) in 1998.

In 2005, Chen also took up the nutrition business expansion in Latin America and copy the same successful expansion in the region. The diversified culture of Abbott provided Thomas a platform to embrace the differences and challenges of various market situation. “Fun and challenges are always twins,” Chen concluded.

China-oriented strategy

Since being promoted as the president of Abbott Nutrition International, Chen’s first priority in the past two years has been how to discover potential groups of consumers and to timely respond to each niche market.

“Abbott is not a nutrition provider for children only. We aim to be a leading player in a range of areas, for the old, for the women, for those in sub-health condition,” Chen said.

Asia-Pacific region is among the most important market for Abbott nutrition business.

“Asia contributed around 50 percent of Abbott nutrition sales, and the region outpaces the others in growth,” Chen said.

That is why Abbott injected investment worth $300 million to set up a manufacturing base in Singapore, the largest of its kind in Abbott and also Abbott’s 11th manufacturing base, which came into operation in late February. Products made in the Singapore factory whose annual output volume mainly sell around Asia, which helps Abbott Nutrition speed up product supply in the market, as Asian market imported Abbott nutrition products from the US and Europe. At the same time, Abbott also established a research and development (R&D) center in Singapore, the second R&D center Abbott has, which develops products tailored for especially Asian consumers. Great China, where Chen started its Abbott career, is the most promising market for Abbott Nutrition. China is now Abbott Nutrition one of largest international market to Asian consumers.

Compared with the other international players such as Mead Johnson which expanded into Chinese mainland in 1993, Abbott is a latecomer “We are confident to outperform the others. It’s a question of time,” Chen said. In 1993, Mead Johnson invested to set up a factory in Guangzhou when it entered China, at an annual output volume of 20,000 tons.

Insiders said Abbott’s distribution coverage is still limited compared with competitors. “The most important thing is to make Abbott nutrition products available at all possible regions and destinations,” agreed Chen.

Besides expanding sales network, Abbott is now planning introducing the mid-range milk powder, and making access available across the country.

Since 2005, Abbott Nutrition’s sale in China grew at high double digits every year. The melamine scandal tarnished reputation and business of dairy brands home and abroad. It may take time for Chinese consumers to regain their confidence in the industry. However, Thomas does not think this would cause reshuffle to the market competitive landscape. Instead, competition among infant formula brands in regards of innovation, strong R&D and high quality and safety standards will help the industry recover and bring benefits to consumer ultimately.

(China Daily 04/06/2009 page12)