Mead Johnson Nutrition

The industry was so hyper-concentrated that there was simply no other company capable of filling the void.

Abbott Laboratories Nutrition Division, along with Reckitt's Mead Johnson and Nestle-owned Gerber, has dominated the multi-billion dollar market for decades.

Abbott alone produces forty percent of all infant formula products consumed in the U.S. Its Sturgis plant, the one under investigation, accounted for at least half of that production.

Yet, even with that massive market share, Abbott's formula business is only a sliver of the company's forty-plus billion dollar a year healthcare empire.

But something about the arrangement feels almost too convenient to be accidental, especially when you consider how clearly Abbott understands the value of acquiring customers early.

Which brings us back to infant formula.

As mentioned earlier, three companies, Abbott, Nestle's Gerber, and Mead Johnson, have dominated the American formula market for decades.

One reason is WIC, the federal nutrition program that has historically accounted for more than half of all infant formula purchased in the United States.

Yeah, so this is quite, um, quite a big development in what's been quite a long ongoing trial, uh, or various trials in the US.

So the latest news is that a jury in Illinois has sided with Mead Johnson, which is, um, Reckitt's infant formula unit.

Um, and this is quite a bellwether trial among, as I say, a group of federal cases in the US, all alleging that, uh, Mead Johnson's formula for premature babies is linked to a deadly bowel disease, which Reckitt and Mead Johnson, uh, which Reckitt and Mead Johnson, uh, obviously deny.

So the, the US jury has sided with Mead Johnson in this, meaning that the company doesn't face any outstanding jury verdicts in the overall litigation.

So basically, um, it's a good verdict for them.

It brings the settlement, overall settlement closer.

It removes what's been quite a key overhang on the stock.

Um, and analysts are saying, you know, this, this should increase confidence both from the company and from investors that the litigation can be settled relatively soon.

Another five had previously secured waivers from USDA, but a court in June vacated the agency's approval of these after the ruling the agency exceeded its legal authority and bypassed required public notice procedures.

A jury ruled that for infant formula maker Mead Johnson yesterday at a case brought by a woman who claimed her premature infant had gotten a fatal intestinal disease after consuming the manufacturer's infamil products.

The decision came in an important bellwether case in consolidated litigation against Mead Johnson and other infant formula makers, alleging they did not properly warn consumers of necrotizing enter colitis.

The company said it welcomed the unanimous jury verdict in federal court in Illinois.

With this decision, there are currently no outstanding jury verdicts in the overall NEC litigation against Meade Johnson, a press release said.

This involves Abbott and a $670 million settlement last week on August 20th and cases alleging that its baby formula caused necrotizing enterocolitis, which is a life-threatening intestinal condition.

Why don't you come in and tell us a little bit more about that settlement, what it means for Abbott and what it means for Reckitts Mead Johnson, which is also facing similar claims.

Sure.

Thanks, Elliot.

It looks like there's a couple thousand cases still pending.

So we really need this good verdict in the MDL to get the momentum, and then hopefully that leads to other settlements with Abbott in the remaining cases, and then also Mead, which has a large number of cases as well.

So Joe, you said, what were the three firms involved in the settlement?

Yeah.

A major change is coming this fall for families who receive infant formula through Michigan's Women, Infants, and Children program.

The state has selected Mead Johnson as its new formula provider under a five-year contract that begins November 1.

WIC participants will transition from Abbott's Similac products to comparable Enfamil formulas following a federally required competitive bidding process.

Michigan WIC serves about 187,000 participants each month and provides nutrition education, breastfeeding support, and supplemental foods.