LPETT
Update at 8:10 PM: Damage update, adds Abbott’s comment.
Abbott Laboratories (New York:ABT) decreased by 5% In after-hours trading after a St. Louis jury awarded a plaintiff $495 million in damages and penalties over allegations that the company’s infant formula caused A potentially fatal bowel disease.
Margo Gill, an Illinois resident, sued Abbott alleging that her premature baby developed necrotizing enterocolitis, or NEC, and suffered brain damage after being fed Abbott’s Similac formula. A court observer told Seeking Alpha that the jury awarded the company $400 million in punitive damages and $95 million in compensatory damages.
“We strongly disagree with the non-unanimous ruling and continue to believe that Robin’s case is a tragedy for which no one is to blame,” Abbott said in an emailed statement to Seeking Alpha. “We will pursue every possible means to overturn this wrongful decision.”
Abbott Labs (ABT) and rival Reckitt Benckiser (OTCPK:RBGPF) subsidiary Mead Johnson are facing more than 1,000 lawsuits alleging the companies failed to warn parents about the risks of NEC with cow’s milk-based products.
In the first case to go to trial, in March, Reckitt Benckiser was ordered to pay $60 million to a mother whose premature baby died after drinking its Enfamil infant formula. The ruling sent Reckitt Benckiser shares tumbling. 15% drop On March 15, Abbott shares fell 2.8%. Abbott shares had fallen about 12% through Friday since the first jury verdict in mid-March.
“There is no scientific evidence that Abbott’s products for premature infants cause or contribute to the development of NEC,” Abbott said in a statement. “Specialized formulas and fortifications, such as those used in this case, are part of the standard care provided by the medical community and, along with breast milk and donor breast milk, are the only options available for feeding premature infants.”
It is important that this ruling, issued by this special judicial court, has no impact on any future case.”
Both Abbott and Mead Johnson are headquartered in the Chicago area. Mead Johnson’s parent company, Reckitt Benckiser, is headquartered in the United Kingdom.
