When demand for rapid COVID-19 screening dropped in spring and early summer, Abbott didn't just plan layoffs and budget cuts to cope with shrinking revenue. It told factory workers to shred millions of paper testing cards that it thought would never sell, according to an investigation by The New York Times.
Now, with the delta variant surging—and as parents, teachers and students prepare to return to the classroom or workplace, some for the first time in more than a year—demand for those fast-acting diagnostics is on the rise again. And Abbott's brand is running scarce.
To rev its production back up to speed, Abbott now aims to rehire hundreds of workers—however, the company told the NYT that may take time, and test supplies will be constrained for the coming weeks. Currently, Abbott's career site lists production team openings on day and night shifts, with offers for $2,000 sign-on bonuses.
In the meantime, with inventory destroyed and manufacturing curtailed, some retail stores, pharmacies and online marketplaces have been selling out of the 15-minute, at-home BinaxNow coronavirus antigen test.
In an interview with the NYT, Abbott CEO Robert Ford said the trashed materials—including more than two dozen lots of paper testing strips, similar to a home pregnancy test—were destroyed because of their limited shelf life. They were not part of completed, fully packaged test kits, which also contain swabs and bottles of liquid reagents.
However, photos obtained by reporters showed at least two of the numbered lots of card components—enough for about 345,000 tests each—had seven months of shelf life remaining.
Still, these “were disposed of in accordance with our standard inventory management process,” Abbott said in a separate published response to the article.
“At that time, Abbott had significant amounts of finished test kits in inventory to supply expected demand,” the company added.
But—as has happened many different times during this pandemic—"expected demand" didn't match up to reality.
In early June, Abbott’s diagnostic sales data said the peak was past. With vaccination rates climbing, governments and health authorities rolled back testing requirements; the Centers for Disease Control and Prevention said people could skip the swabs even after confirmed exposure to the virus unless they began to show symptoms.
Meanwhile, testing providers such as Qiagen and Quest Diagnostics also saw COVID sales wane, with the former posting a 17% drop in the second quarter compared with the same period in 2020, while the latter saw a faster-than-expected return in its base business as people returned to routine medical care despite the virus.
On a call with investors June 1, Abbott’s Ford said the company would aim to maintain its ability to scale up manufacturing again if needed but that he wasn’t sure demand would ever again reach 2020’s sky-high levels.
With the bulk of its 2021 sales forecast tied to quickly evaporating routine screening and surveillance, the company slashed that guidance by as much as $2 billion, cut back its R&D investment plans and said it planned to shrink its diagnostic manufacturing base through staff cuts at U.S. production facilities. Shortly afterward, Abbott decommissioned a BinaxNow plant in Illinois that had provided millions of kits, laying off 2,000 workers.
And in July, Abbott let go at least 400 full-time employees at two Maine locations tasked with producing the rapid tests—including one site it stood up during the early stages of the pandemic in Westbrook after converting a former sporting goods distribution center into a manufacturing line. It was there that photos acquired by the NYT showed stacks of boxes of BinaxNow test cards lined up for destruction.
As to why the tests could not have been donated internationally, Abbott said in its statement that the process to obtain new regulatory approvals for BinaxNow and ship the test kits overseas would have taken too much time off the cards’ remaining shelf life. Outside the U.S., the company manufactures a similar rapid test, known as Panbio, and the company said it has been able to supply all of its international orders.