Abbott Reports Double-Digit Sales and Earnings Growth in First Quarter and Reaffirms Full-Year Grow...(nch is off to a strong start. Q3) W...),Health

Q3) What drove SG&A and R&D spending in the quarter?

A3) The company is on track for a significant number of major new

product launches in 2008. In the quarter, Abbott received approval

for five new products or indications, including HUMIRA to treat

psoriasis and juvenile rheumatoid arthritis, Simcor to treat

cholesterol, and the FreeStyle Freedom Lite and the FreeStyle

Navigator glucose monitoring systems.

SG&A expense included new and ongoing promotional initiatives,

including spending to support the launch of two new indications for

HUMIRA, the launch of Simcor and the upcoming U.S. launch of Xience

V, which the company expects in the second quarter of 2008.

R&D expense in the quarter was 9.2 percent of sales, in line with

previous guidance. The comparison to the prior year is impacted by

the timing of R&D spending, with higher levels of R&D expense in the

prior year supporting significant late-stage pipeline activity.

Growth in R&D spending for the full year is expected to be in the

mid-to-high single digits.

Q4) How does the first-quarter gross margin profile compare to the prior

year?

A4) The gross margin ratio before and after specified items is shown

below (dollars in millions):

1Q08 1Q07

Cost of Gross Cost of Gross

Products Gross Margin Products Gross Margin

Sold Margin % Sold Margin %

As reported $2,961 $3,805 56.2% $2,592 $3,354 56.4%

Adjusted for specified items:

Cost reduction initiatives

and other ($31) $31 0.5%
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