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Abbott Labs Recalls Glucose Meter

Zacks Equity Research

Abbott Laboratories (ABT) recently announced that the company is initiating a voluntary recall of its FreeStyle InsuLinx Blood Glucose Meters in the US.

Abbott Labs decided to recall the its FreeStyle InsuLinx Blood Glucose Meters as it found that the device displayed and stored wrong test results in patients with extremely high blood glucose levels.

Abbott Labs estimates that there are approximately 50,000 active FreeStyle InsuLinx Meter users in the US and asked them to take appropriate measures.

Following the identification of the deficiency, the company has started the process of informing the concerned persons about the same.

Abbott Labs has also notified the US Food and Drug Administration (:FDA) and all relevant healthcare authorities in the other countries about the defect.

We note that Abbott Labs obtained U.S. regulatory approval for its FreeStyle InsuLinx Meter in the first quarter of 2013. Earlier in 2011, the company obtained CE mark and Health Canada approval for ts FreeStyle InsuLinx Blood Glucose Meters. The CE mark is a mandatory confirmation for products placed in the European markets.

We remind investors that in Jan 2013, Abbott Labs separated its research-based pharmaceuticals business by creating a new company – AbbVie (ABBV). The decision to spin off the business was taken in Oct 2011 when Abbott decided to separate its business into two publicly traded companies – one in diversified medical products and the other in research-based pharmaceuticals.

Following the move, Abbott Labs became a diversified medical products company including branded generic pharmaceutical, devices, diagnostic and nutritional businesses.

Abbott intends to increase its presence in emerging markets, which provide a substantial opportunity for growth, given the rise in middle-class income and aging population. The diversification should enable Abbott to penetrate these markets and capture market share.

In particular, the nutrition and diagnostics business should maintain momentum and boost the bottom line due to an improvement in operating margins.

Abbott Labs currently carries a Zacks Rank #3 (Hold). As of now, Nuvasive (NUVA) looks attractive with a Zacks Rank #1 (Strong Buy). Exactech (EXAC) also looks well placed with a Zacks Rank #2 (Buy).

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