Abbott Stock Slips After Company Ordered to Pay $495 Million in Baby Formula Case
3
Key Takeaways
A jury in St. Louis ruled on Friday that Abbott Laboratories must pay $495 million in compensation and damages in a lawsuit involving the company’s premature infant formula.
Abbott was sued by an Illinois woman whose daughter contracted necrotizing enterocolitis after being given the formula in the hospital.
The company has denied its product is unsafe.
Abbott shares fell as much as 5% in early trading Monday.
Shares of Abbott Laboratories (
ABT
) came under pressure Monday after a jury in St. Louis late Friday ordered the company to pay $495 million in compensation and damages in a lawsuit over the company’s specialized formula for premature babies.
Illinois resident Margo Gill brought the case against Abbott, claiming that the firm failed to warn that the Similac Special Care 24 High Protein brand given to her daughter in the hospital could cause necrotizing enterocolitis, a potentially deadly disease of the bowels. The girl contracted the illness, and while she survived, she suffers from neurological damage that requires long-term care. The verdict calls for Abbott to pay $95 million in compensatory damages, and $400 million in punitive damages.
Abbott has denied its formula is dangerous, with CEO Robert Ford saying in the company’s first quarter earnings call that “there are clinical studies that have repeatedly established that these products are safe.”
Investopedia reached out to both Abbott and the law firm of TorHoerman Law, which represented Gill, but neither responded.
The company and Britain’s Reckitt Benckiser, maker of Enfamil, are facing hundreds of lawsuits relating to their infant formula.
Abbott shares were down 1.3% in recent trading, after falling as much as 5% in early trading.
