Abbott Discloses Failed InspectionMay 15, 2002 | AP Abbott Laboratories Inc. said Wednesday that its Lake County manufacturing operations had failed an inspection by the U.S. Food and Drug Administration, an announcement that sent its stock plummeting.
The pharmaceutical and medical products manufacturer said it wasn't immediately able to estimate any financial impact from the decision. It said it had been informed by the FDA and was awaiting a formal report.
The FDA made no immediate announcement, and a spokesman did not return a phone call seeking comment.
Abbott shares plunged as much as 10 percent and were down $3.89, or 7.5 percent, at $47.85 in midmorning trading on the New York Stock Exchange.
According to the company, the FDA said its diagnostic manufacturing operations in suburban Lake County — where Abbott's corporate headquarters also is based — were found not to conform to the quality manufacturing standards as the result of an inspection which concluded in January.
Abbott said the inspection was related to a consent decree between it and the FDA.
The 1999 consent decree resulted from violations of federal quality rules that the government agency said dated to 1993 at two Abbott facilities adjacent to its corporate headquarters in suburban North Chicago. The FDA said violations existed in process validation, production and process control.
Abbott, the nation's largest maker of medical diagnostic tests, agreed in 1999 to pay a $100 million fine and stop selling more than 100 of its products until it corrected repeated violations. The FDA at the time said Abbott had not corrected the problems despite six years of government inspections and warnings
In addition to the $100 million fine, the consent decree included a schedule for Abbott to correct each manufacturing process that is in violation of federal rules. If Abbott missed any of the deadlines, it would have to pay $15,000 per day per manufacturing process, up to a $10 million total.
"We are obviously deeply disappointed with the decision," said Richard Gonzalez, president and chief operating officer of Abbott's medical products group. "We remain committed to ensuring that the quality system meets the agency's expectation, and that the diagnostic products impacted by the consent decree are made available to patients, laboratories, and hospitals as soon as possible."
Abbott, which markets its products in more than 130 countries, had sales of $16.3 billion last year.