Jury rules Similac maker failed to warn of risks, shares fall

  • Abbott ordered to pay $495 million in baby-formula verdict
  • Shares of Abbott Laboratories fell about 5% in extended-hours trading
  • Jury determined company failed to warn of increased risk for bowel disease
  • Abbott disagrees with the verdict and plans to appeal
  • Punitive damages may be reduced or reversed on appeal
  • Mead Johnson ordered to pay $60 million in similar case earlier this year
  • Nearly 1,000 lawsuits pending against both companies
  • Abbott CEO says preterm infant-formula products are safe and essential for public health

Abbott Laboratories has been ordered to pay $495 million in compensation and damages after a jury determined that the company failed to warn about the increased risk of bowel disease associated with its formula for premature infants. The verdict includes $400 million in punitive damages, which may be reduced by the trial judge or reversed on appeal. Shares of Abbott Laboratories fell about 5% in extended-hours trading following the decision. Nearly 1,000 similar lawsuits are pending against the company and its competitors. Despite the verdict, Abbott’s CEO maintains that their preterm infant formula products are safe and essential for public health.

Factuality Level: 8
Factuality Justification: The article provides accurate and objective information about a court verdict and its consequences for the company’s shares, including quotes from both the company and the plaintiff’s attorney. It also mentions related lawsuits and the CEO’s statement on the safety of the product.
Noise Level: 3
Noise Justification: The article provides relevant information about a legal verdict and its impact on the company’s stock price, but it could benefit from more in-depth analysis of the underlying issues and potential long-term consequences for the industry.
Public Companies: Abbott Laboratories (ABT), Reckitt Benckiser (null)
Private Companies: Mead Johnson
Key People: Robert Ford (Chief Executive), Jake Plattenberger (Attorney)

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Financial Relevance: Yes
Financial Markets Impacted: Abbott Laboratories’ shares
Financial Rating Justification: The article discusses a verdict that ordered Abbott Laboratories to pay $495 million in compensation and damages, causing the company’s shares to fall about 5% in extended-hours trading. This directly impacts the financial markets by affecting the stock price of the company.
Presence Of Extreme Event: Yes
Nature Of Extreme Event: Financial Crisis
Impact Rating Of The Extreme Event: Moderate
Extreme Rating Justification: Abbott Laboratories faced a $495 million compensation and damages verdict, which led to a 5% decrease in shares. This financial crisis has implications for the company’s reputation and future sales of their infant formula products.
Move Size: No market move size mentioned.
Sector: All
Direction: Down
Magnitude: Large
Affected Instruments: Stocks, Bonds, Commodities

Reported publicly: www.wsj.com