FDA Raises Second Non-Compliance Concern with Abbott Laboratories

The US Food and Drug Administration (FDA) has cast a shadow over Abbott Laboratories by raising its second non-compliance concern in a year, this time regarding quality control at the company's Chicago plant that manufactures kits for medical diagnostic tests. The kits are used in testing fluids for diseases such as AIDS, hepatitis, and cancer of the colon. Abbott, a leading manufacturer of pharmaceuticals, hospital products, and medical diagnostics, dominates the lab-testing market. The FDA has threatened to stop the production and sale of certain kits due to concerns about the methods of documenting quality assurance at the plant.

Key Takeaways:

• The FDA has raised its second non-compliance concern with Abbott Laboratories in a year, this time regarding quality control at Abbott's Chicago plant.
• The plant manufactures kits for medical diagnostic tests, which are used to test fluids for diseases such as AIDS, hepatitis, and cancer of the colon.
• Abbott holds a substantial share of the lab-testing market, with the diagnostic tests generating upward of $1 billion in annual sales, about one-third of that unit's sales.
• Abbott's total sales last year were $12.5 billion, making it one of the leading pharmaceutical companies in the industry.
• The stand-off between Abbott and the FDA is unusual, as companies usually act quickly to address letters of non-compliance.
• Analysts believe Abbott may not have reacted fast enough to the FDA's concerns, which were first raised in March.
• The FDA's case could potentially damage Abbott's pending $680 million acquisition of Perclose, an artery-suture maker.

Statistics:

• The diagnostic tests generate upward of $1 billion in annual sales for Abbott.
• Abbott's total sales last year were $12.5 billion.
• The FDA has stopped production of Abbott's blood-thinning drug Abbokinase because of manufacturing concerns at another plant.
• Abbott rejects the FDA's concerns and plans to fight the government's case.
• Abbott's shares have fallen by $25/16, or $50, at the deal's upper ratio limit of 1.35 in afternoon trading in New York.

Sources:

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