Formula maker rebounds from infant death scare
Could this mean long-term growth for Mead Johnson?
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.
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.
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John Stumpf acknowledges that growth has been slow, but he says he's still optimistic.
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