Reckitt Benckiser CEO Chris Licht has not ruled out spinning off Mead Johnson’s infant nutrition business as litigation continues in the United States.
Mead Johnson, maker of the Enfamil and Nutramigen formula brands, faces up to £2 billion ($2.5 billion) in damages related to life-threatening necrotizing enterocolitis (NEC) disease affecting premature babies. facing.
Barclays, which laid out its worst-case damages scenario in March, says there are about 400 NEC cases pending in the United States. The report comes after Mr Reckitt awarded a £60 million award to Jasmine Watson, the mother of an infant who died from the disease after being given Enfamil Premature 24 powder, manufactured by Mead Johnson. This is what continued.
As Reckitt reported first-quarter group sales of £3.7bn, Licht said on an analyst call that it would spin off Mead Johnson, which is in the nutrition division, the smallest of the company’s three business areas. I was asked about my prospects for doing so.
“I don’t think it’s wise to speculate right now about structural moves that we don’t know if we’re going to consider,” Licht responded.
“We spend a lot of time thinking about how to navigate litigation and how to win litigation. The science is clear, so we’re confident we can win.”
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Regarding the wider impact on the brand, he added: So, while the syndicated data would have shown a slight decline in share at the beginning of the quarter and then a recovery in share, it has remained essentially stable. ”
In March, a jury in Watson’s case in Illinois state court in St. Clair County ruled that Mead Johnson had failed to warn mothers about the risks to premature babies resulting from consuming NEC’s premature babies. It was reported that Johnson was found to have been “negligent.” Reckitt infant formula manufacturer type.
“We do not see a broad impact on the equity of our nutritional brands from this litigation,” Licht told analysts yesterday (April 24). “Science does not support a causal relationship between Mead Johnson products.
“We strongly reject claims that any of our products cause necrotizing enterocolitis and that we failed to warn users of the risks.”
Licht said litigation regarding NEC’s claims is ongoing, including a “subsequent motion and new trial in the Watson case” scheduled for Sept. 30 in St. Louis, Missouri.
He added: “These short-term events do not change our overall outlook and we remain confident in our position. To reiterate what we have said previously, Enfamil’s inexperience and Our baby products are safe and, under the guidance of the medical professionals who manage and specify our products, provide lifesaving nutrition to premature babies.”
First quarter revenue for the Nutrition division was £591, down 9.9% in like-for-like terms, compared to an increase of 1.5% for the group as a whole. The division’s sales volume decreased by 9.4%, and the price mix decreased by 0.5%.
But Reckitt said the decline is due to “the continued review of the nutritional balance in the United States,” and is related to a ripple effect of the Abbott Laboratories recall that will result in a shortage of infant formula across the United States and increased demand in 2022. He claimed that
“The drivers of similar revenue declines in the current quarter are consistent with what we communicated in February as we continue to gain high market share in the U.S. due to the impact of our competitors.” [Abbott’s] We’re going to see supply issues in 2022,” CFO Shannon Eisenhart explained yesterday.
Meanwhile, Reckitt maintained its outlook for full-year nutritional sales to decline in the mid-single digits to low single digits. Groupwide sales are expected to increase by 2% to 4%.
