Despite huge challenges, Abbott Laboratories (ABT) Chairman and CEO Miles White said Wednesday he remains upbeat on the outlook for two big deals the company has embarked upon in the last year, the just-closed $33 billion acquisition of St. Jude Medical Inc. and the recently restructured agreement to acquire Alere (ALR) for $500 million less than the companies' original plan.
White addressed the mergers' pitfalls in a call with analysts to discuss Abbott's first quarter results.
Shares of the medical device, nutritional products and pharmaceutical maker rose 0.37% Wednesday to $43.59, up 16 cents.
Concerns hovering over the mergers were among the factors pushing the shares down. The biggest concern about the St. Jude deal is a warning letter from regulators last week about quality control at a California manufacturing plant.
A Food and Drug Administration inspection of the Sylmar, Calif. acquired from St. Jude began soon after Abbott closed the deal in January. The FDA made 483 observations requiring corrective actions at the plant. The FDA raised concerns about whether Good Manufacturing Practices were followed at the plant, where the Merlin home monitor and the Fortify, Unify and Assura implantable cardiac defibrillators are produced.
White said the warning letter "is clearly a disappointment but not unanticipated." The company had been working with St. Jude and FDA officials about the plant's issues for some time.
White could not estimate when the problems would be cleared up but said there already has been "a fair amount of dialogue with FDA officials about the matter."
He also said that Abbott itself has a good reputation at the FDA regarding manufacturing controls and that should give regulators confidence that the company can address the plant's problems adequately.
Ultimately, "the impact will depend on our response and how effective it is," he said. "We've got excellent people on that."
White added that Abbott is not limiting its internal review of plant manufacturing process to the Sylmar facility but also wants to make sure other plants are following GMP processes too.