In a significant blow, Abbott Laboratories ABT saw its shares nosedive following a U.S. jury’s ruling that found Abbott’s formula was responsible for a girl developing a severe bowel disease, leading to a hefty $495 million penalty.
What Happened: As per Benzinga Pro, shares of Abbott Laboratories fell by 7.82%, trading at $97.01 during Monday’s pre-market session. This verdict is part of nearly 1,000 lawsuits filed against Abbott Labs, its British rival Reckitt Benckiser RBGLY, or both, in U.S. federal or state courts.
Enfamil formula maker Reckitt Benckiser’s shares also experienced a significant drop, falling as much as 9.2% to 40.75 pounds per share, their lowest level since January 2013. By 0724 GMT, shares were down 8.1% at 41.20 pounds per share, marking their biggest daily drop since March, Reuters reported on Monday.
According to Jefferies equity analysts, “This is likely to depress sentiment on the risk for both cited defendants.”
Why It Matters: Illinois resident Margo Gill sued Abbott and claimed that her premature baby developed necrotizing enterocolitis (NEC) after being fed Abbott's products for premature babies. NEC causes the death of bowel tissue, primarily affecting newborns, with a fatality rate of 15% to 40%. Although Gill’s child survived, she now suffers from long-term health problems.
In June, another class action lawsuit was allowed to proceed against the company regarding its Glucerna shakes and nutritional powders, which were alleged to contain harmful ingredients.
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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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