29th Jul 2024 09:40
(Alliance News) - Shares in Abbott Laboratories fell after a US jury on Friday ordered the healthcare company to pay USD495 million in damages.
The ruling in St Louis, Missouri state court found that Abbott Laboratories' specialized formula for premature infants caused an Illinois girl to develop a dangerous bowel disease.
Illinois resident Margo Gill, who brought the case against Abbott, alleged that the company failed to warn that its formula could cause a potentially deadly disease called necrotizing enterocolitis in premature babies.
The jury awarded her USD95 million in compensatory damages and USD400 million in punitive damages.
Abbott said it strongly disagrees with the verdict and will try to have it overturned.
Abbott spokesman Scott Stoffel told Reuters that specialized formulas and fortifiers, like the one in this case, are among the only available options to feed premature infants.
Shares in Abbott Laboratories fell 5.0% in after hours trading to USD105.24 in New York on Friday. They were down another 4.9% to USD100.05 in pre-market activity early Monday.
The ruling knocked shares in London-listed Reckitt Benckiser Group PLC, which faces its own litigation challenges.
Shares in the Slough-based consumer goods company dropped 8.6% to 4,101.54 pence in London on Monday morning.
Last week, Reckitt announced a wide-ranging shake-up, including plans to offload Mead Johnson Nutrition, the business behind Enfamil infant nutrition, currently the subject of ongoing US litigation.
The USD17 billion acquisition of Mead Johnson in 2017 has been an unhappy one for Reckitt. Back in 2020, it took a GBP5.04 billion impairment on goodwill in the business. In 2021, it sold its infant nutrition business in China for USD2.2 billion. This year, in March, a jury in the US awarded USD60 million in damages to a mother who said her baby died after consuming Mead Johnson's Enfamil baby formula.
Analysts at Citi said that, while it is premature to draw any conclusions, the verdict could delay Reckitt's plans to exit Mead, now potentially beyond the first half of 2025.
By Jeremy Cutler, Alliance News reporter
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