Fitch Downgrades Abbott Laboratories' IDR to 'A+'; Outlook to Stable

CHICAGO--(Business Wire)--
Fitch Ratings has downgraded Abbott Laboratories' (Abbott) ratings
as follows:

--Issuer Default Rating (IDR) to 'A+' from 'AA-';

--Bank loan to 'A+' from 'AA-';

--Senior unsecured debt to 'A+' from 'AA-';

--Short-term debt to 'F1' from 'F1+'.

The Rating Outlook has been revised to Stable from Negative. The
rating applies to approximately $13.9 billion of unsecured securities
and commercial paper.

The rating action results from sustained high leverage due to
additional debt needed to complete the acquisitions of Guidant
Corporation's (Guidant) vascular intervention and endovascular
solutions business and Kos Pharmaceuticals (Kos) during 2006, which
drove total leverage to 2.2 times (x) at the end of 2006.
Historically, the company increased leverage with sizable acquisitions
every 2-3 years, stretching the rating category, but had rapidly
reduced the debt load within 1-2 years. However, leverage remained
above expectations at 1.8x for the latest 12-month (LTM) period at the
end of the second quarter. Fitch anticipates that leverage will stay
in the 1.4x to 1.6x range in the intermediate term. Considering the
current and anticipated leverage, Abbott's credit profile is more
reflective of the 'A+' rating category.

The company has refrained from pursuing its acquisition strategy
in 2007 and so far in 2008, after the 2006 activities. Fitch
anticipates that the company will seek smaller strategic opportunities
as well as licensing agreements given the recent commercialization of
the Xience drug-eluting stent and new indications for Humira. As such,
Fitch expects more cash flow may be directed to shareholder-friendly
actions, including the continuation of double-digit increases to the
dividends.

Fitch recognizes Abbott's sustained strong operational
performance, supported by its diversified product portfolio and
research pipeline. While the company will be challenged by upcoming
patent losses on key pharmaceuticals, the ensuing losses of revenues
and earnings are expected to be offset by newly commercialized medical
devices and medicines, and from the stable nutritionals and medical
diagnostics businesses. Favorable product mix, including strong sales
of Humira and rapid market uptake of the Xience drug-eluting stent,
will bolster margins. Fitch foresees operating margins in the range of
19% to 22% in the long-term.

Abbott's credit profile is supported by strong liquidity provided
by solid cash flow generation and $4 billion of bank lines. Free cash
flow was $2.1 billion of the LTM period ending June 30, 2008
(operating cash flow of $5.7 billion less capital spending of $1.5
billion and dividends of $2.1 billion). Fitch forecasts free cash flow
to improve annually, including annual dividend increases and the
additional capital spending associated with the 2006 acquired assets.
The company also had $5.2 billion of cash and marketable securities at
the end of the second quarter. Abbott's debt maturity schedule
includes approximately $450 million due in the remainder of 2008 and
$1.0 billion due in 2009.

Fitch's rating definitions and the terms of use of such ratings
are available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from this
site, at all times. Fitch's code of conduct, confidentiality,
conflicts of interest, affiliate firewall, compliance and other
relevant policies and procedures are also available from the 'Code of
Conduct' section of this site. The issuer did not participate in the
rating process other than through the medium of its public disclosure.

Fitch Ratings, Chicago
Michael Zbinovec, 312-368-3164
Bob Kirby, 312-368-3147
or
Media Relations:
Brian Bertsch, 212-908-0549, New York

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