The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the Northern District of Illinois on behalf of those who acquired Abbott Laboratories (“Abbott”) (NYSE: ABT) securities between February 19, 2021 through June 8, 2022, inclusive (the “Class Period”). Investors have until October 31, 2022 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
Abbott discovers, develops, manufactures, and sells a broad and diversified line of health care products and services. The Company's products include pharmaceuticals, nutritional, diagnostics, and vascular products.
On February 17, 2022, the Federal Drug Administration (“FDA”) announced that it was investigating four consumer complaints of infant illness related to powdered infant formula produced by Abbott in Sturgis. The FDA stated that it had initiated an onsite inspection at the facility, and to date had found several positive contamination results from environmental samples for a bacteria, Cronobacter sakazakii (“Cronobacter”), which is linked to infant illnesses and death.
On the same day, Abbott issued a recall of certain infant formula products, including the popular brands Similac, Alimentum and EleCare, all manufactured in Sturgis. Abbott made no mention of the open FDA investigation. On this news, the price of Abbott shares declined by $3.79 per share, or approximately 3.14%, from $120.58 per share to close at $116.79 on February 18, 2022.
On March 22, 2022, after the markets closed, the FDA released reports from its three inspections of the Sturgis facility conducted in September 2019, September 2021 and, most recently, between January 31, 2022 and March 18, 2022. The FDA stated that these reports “do not constitute final FDA determinations” of specific violations, but highlighted that during its most recent inspection (a) Abbott failed to establish process controls “designed to ensure that infant formula does not become adulterated due to the presence of microorganisms in the formula or in the processing environment” and (b) Abbott failed to “ensure that all surfaces that contacted infant formula were maintained to protect infant formula from being contaminated by any source.” On the news of these damaging inspection reports, the price of Abbott shares declined by $4.97 per share, or approximately 4.08%, from $121.89 per share to close at $116.92 on March 23, 2022.
As the FDA investigation continued, a redacted copy of a whistleblower complaint sent to the FDA in October 2021 was made public on April 22, 2022. The whistleblower complaint revealed that the issues disclosed in February and March 2022 were actually known to Abbott’s management far earlier. The whistleblower complaint identified numerous serious examples of misconduct by Abbott management at Sturgis, including the falsification of testing records, the release of untested infant formula to the market, efforts to mislead the FDA during its 2019 inspection audit, the continuation of known deficient testing procedures, and an inability to trace products to properly implement recalls of affected pallets of formula. Upon release of the whistleblower complaint, the price of Abbott shares declined by $4.51 per share, or approximately 3.82%, from $118.01 per share to close at $113.50 on April 29, 2022.
On June 8, 2022, investors learned that Abbott was aware of the whistleblower’s formal allegations in February 2021. On this news, the price of Abbott shares declined by $4.17 per share, or approximately 3.5%, from $116.88 per share to close at $112.71 on June 9, 2022.
The lawsuit alleges that, throughout the Class Period, Defendants: (1) failed to establish process controls “designed to ensure that infant formula does not become adulterated due to the presence of microorganisms in the formula or in the processing environment” and (2) failed to “ensure that all surfaces that contacted infant formula were maintained to protect infant formula from being contaminated by any source.”