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Abbott’s Laboratories R&D Capabilities Questioned

by Medindia Content Team on  September 14, 2005 at 5:48 PM Drug News   - G J E 4
Abbott’s Laboratories R&D Capabilities Questioned
Abbott Laboratories shares fell by 1.3% to close at $43.80 following U.S. Food and Drug Administration (FDA) rejection of its new drug Xinlay. Increased number of scientists and analysts question the efficiency of Abbott's R&D , after the rejection of its drug.
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The drug that is to be used for the treatment of Prostate cancer failed in its Phase III trial leading to disapproval of the drug by the FDA Panel. Though Abbott is confident of its R&D capabilities and is sure of its other products like Humira, which is used in the treatment of Rheumatoid arthritis and its new drug eluting stent to be approved by the FDA, critics point out that Abbott is not winning in its R&D division as it is doing in Marketing. As FDA as put stringent and tough rules against approval of new drugs following the awful effects of the painkiller drug, Vioxx produced by Merck.

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Mike Barr of Victory Capital Management said that, "What's a little disturbing is that Abbott's R&D productivity hasn't been all that great the last few years and looking at the history, they do a very good job at marketing, and it doesn't seem like R&D is up to the same caliber as their marketing." Victory Capital Management owns the shares of Abbott. Another Shareholder of Abbott is The Fifth Third Asset Management, this company is also not happy with Abbott and Mr. Jon Fisher of the company reported that, "It's evident as far as the absolute growth and profitability out of that business and I don't judge by the number of failures, but by the number of successes and how successful they are compared to their pharma peers. They're definitely on the lower end.

Glenn Novarro analyst in Banc of America Securities is optimistic about R&D of Abbott and said that though Xinlay may be a failure its other products in the pipeline like drugs Humira, Simdax, Febuxostat, drug eluting stent and Glucose monitor may succeed. "What is disappointing is that Abbott took a very aggressive approach with this drug," by filing without a successful Phase III trial, Novarro said. "They clearly made a poor decision." He added, however, that in Abbott's defense, the company isn't a cancer specialist. "They're trying to break into the field, so it's not surprising there would be a stumble along the way."

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