Formula maker rebounds from infant death scare

Could this mean long-term growth for Mead Johnson?

By Benzinga Jan 3, 2012 4:57PM
http://moneycentral.msn.com/content/data/images-v2/136/Children_Baby_136_0022A4EC.jpgBy Brandon Pilzner, Benzinga Staff Writer

Shares of Mead Johnson (MJN) were soaring higher Tuesday along with the Standard & Poor's 500 Index ($INX), though for different reasons.

The United States Food and Drug Administration and the Centers for Disease Control announced this weekend that health inspectors had completed testing on formula samples collected from Mead Johnson and concluded that the Enfamil formula in question was safe.

Mead Johnson shares were up nearly 4% Tuesday afternoon to $71.41.

On Dec. 22, the first newborn was preliminarily diagnosed with the rare bacteria, Cronabacteris, after reportedly being fed the Enfamil baby formula made by Mead Johnson.


Cronabacteris is said to be an extremely rare bacteria that causes fatal infections in the bloodstream and central nervous systems, especially in infants with a weak immune system. Only 50 or so cases have been identified in the last 40 years, according to Wall Street Journal.


Wal-Mart (WMT) and other retailers, including Kroger (KR) and Walgreens (WAG), pulled all similarly packaged units of the allegedly tainted Enfamil product as a precaution.


Specifically, Wal-Mart pulled the formula out of more than 3,000 stores in 49 states shortly after it pulled the product from its Lebanon, Mo., store, where the fateful bottle fed to the dead infant had been purchased.


After the news of the infant death hit, and the product was pulled by many retailers, shares of Mead Johnson were under much pressure, falling over 13% within a few days.


From the start of the ordeal, Mead Johnson spokesman Chris Perille assured Benzinga that Mead Johnson was confident in the safety and quality of its products.


Mead Johnson then conducted a new round of rigorous tests on samples of a batch of Enfamil Premium Newborn powdered formula related to an FDA investigation. The company concluded that its new tests did not detect any presence of Cronobacter.


These tests, over the weekend, further and officially confirmed that the Mead Johnson product was safe, and no presence of Cronobacter was detected. This is consistent with the two rounds of testing conducted by Mead Johnson.


"Retailers should be confident in the safety of Enfamil Newborn (formula), based on results of tests performed by the FDA, CDC and Mead Johnson," Perille told Benzinga. "Each chain has its own unique process to work through, but we are aware of a number of national and regional retailers that are releasing the batch they pulled and held back into regular inventory."


A Wal-Mart spokesperson said the company is reviewing the test results and will work with federal agencies and Mead Johnson to determine the appropriate next steps.


When retailers return the formula back to the shelves is likely immaterial, as investors are finding these final results from the FDA and CDC favorable to Mead Johnson.


More from Benzinga: 
5Comments
Jan 4, 2012 9:20AM
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I don't know muich abut MJN, but I'd say that you cant' trrust the food and drug administration. They let too much bad stuff through that shouldn'r be on our shelves!

Jan 3, 2012 5:17PM
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It looks like if you would have trusted MJN's spokesperson originally " Chris Perille assured Benzinga that Mead Johnson was confident in the safety and quality of its products" you could've made some decent coin, as I did.
Jan 3, 2012 5:15PM
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Mead Johnson is a solid company. We will probably continue to have growth in population as an economic depression frequently coincides with couples having more children.
Jan 4, 2012 4:44PM
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I was wondering how their stock would do. I never believed that they were the reason for the infant deaths, so it's good to see that their stock is rebounding on these corrected false accusations. 
Jan 3, 2012 5:20PM
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hmm, Mead Johnson, this one does sound familiar from the trading chatrooms this past few days. glad i found this article, i had been wondering what was up with this ticker MJN
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