Abbott receives FDA warning letter

Abbott receives FDA warning letter

As Diabetic Investor previously reported the Abbott (NYSE:ABT) failed an FDA inspection of their facility in Alameda, California. What we did not know, until today, is just how badly this inspection went. According to an FDA warning letter, which was posted on the FDA’s web site, the company has yet to take corrective action and could face some stiff penalties if action is not taken.

The letter states; “We have reviewed your response dated March 26, 2010, and have concluded that it is not adequate because the replacement Regulatory Affairs Manager does not have qualifications that meet the qualifications required in the job description. You stated that you are conducting a global review of personnel to compare qualifications and job descriptions of all individuals who have direct product impact to determine if their background and experience match the requirements of their current job description and are conducting a review of the Human Resources processes that support the development of job descriptions and the identification and selection of personnel. However, this process is ongoing and evidence of its completion and effectiveness was not provided.  

You should take prompt action to correct the violations addressed in this letter.  Failure to promptly correct these violations may result in regulatory action being initiated by the Food and Drug Administration without further notice.  These actions include, but are not limited to, seizure, injunction, and/or civil money penalties.  Federal agencies are advised of the issuance of all Warning Letters about devices so that they may take this information into account when considering the award of contracts.  Additionally, premarket approval applications for Class III devices to which the Quality System regulation deviations are reasonably related will not be approved until the violations have been corrected.  Requests for Certificates to Foreign Governments will not be granted until the violations related to the subject devices have been corrected.

The full letter is available at

For their part Abbott has issued the following statement in response to this letter; “Abbott Diabetes Care (ADC) has taken and continues to take the actions necessary to address the items outlined in the letter and is communicating those actions directly to the agency.”

Recently rumors have been swirling that the company has been shopping their diabetes unit, while the company denies the unit is for sale, Diabetic Investor believes if the right offer came along the company would unload the unit in a heartbeat. The fact is the unit has suffered a series of setbacks and this warning letter is just another example of how badly things have become.

Diabetic Investor can’t help but think the folks who sold Therasense to Abbott view all this news with some sadness. Diabetic Investor never believed the entrepreneurial spirit that thrived at Therasense would survive in the button down conservative Abbott culture. Unfortunately this belief has turned to fact.

Diabetic Investor also knew that when the new management team was put in place at Abbott they faced a difficult if not impossible task. Previous management left the unit in desperate need of new ideas and fresh approaches. Add in deteriorating market dynamics and you can’t blame the company for trying to sell the unit while they could still receive a decent multiple. A task made more difficult as they must now fix the problems addressed in the letter.

Looking forward Diabetic Investor suspects Abbott will solve their issues with the FDA and begin again looking for a buyer. Even in its wounded state the unit still has some value and as we have seen with the resurgence at Bayer, a company once given up for dead, a turnaround is possible.