MW Abbott Labs and Reckitt Benckiser shares surge on court's baby formula ruling

By Louis Goss

Abbott Laboratories and Reckitt Benckiser shares surged on Friday after a Missouri court ruled in the two companies' favor in a dispute over claims their specialist infant formulas had caused a child to develop a life-threatening bowel disease.

Jurors at a court in St Louis, Missouri on Thursday rejected claims the two companies' infant formulas cause babies to develop necrotizing enterocolitis $(NEC.AU)$, an inflammatory bowel disease, in a major win for the firms.

Lawyers acting on behalf of Kaine Whitfield, a seven year old child who developed NEC after being fed infant formula at St. Louis Children's Hospital, had urged the Missouri court to award $6.2 billion in damages to the plaintiff.

The lawsuit, which was brought forward by Kaine Whitfield's mother Elizabeth Whitfield, claimed Abbott and Reckitt Benckiser subsidiary Mead Johnson had failed to issue proper warning about risks linked to using the specialized baby formulas.

Reckitt Benckiser Group (UK:RKT) (RBGPF) shares, listed on the London Stock Exchange, increased 10% on Friday morning having lost 6% of their value in the year-to-date. Abbott Laboratories $(ABT)$ shares, listed in New York, were up 5% in Friday's premarket session having 3% in 2024 so far.

The two companies are currently facing almost 1,000 similar lawsuits over their alleged failure to warn patients about possible risks linked to feeding infants the specialized formulas that are used in hospitals' newborn intensive care units.

In a statement, Mead Johnson said the Missouri court's ruling "demonstrates that the claims in this case were not supported by the science or experts in the medical community, and this case, like all the others brought by the plaintiff's bar, should be dismissed."

"Today's verdict is consistent with the scientific consensus that there is no established causal link between the use of specialized preterm hospital nutrition products and NEC, and that where human milk is unavailable or when supplementation is necessary, specialized preterm hospital nutrition products can provide essential, lifesaving nutrition," Mead Johnson said.

In July, a St Louis, Missouri court previously ruled against Abbott Laboratories in a similar case that saw plaintiff Margo Gill awarded a combined $495 million in damages over its alleged failure to warn patients about the possible risk of developing NEC.

Reckitt Benckiser and Abbott Laboratories have both denied their infant formulas cause patients to develop NEC.

Abbott Laboratories was contacted by MarketWatch for comment.

-Louis Goss

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November 01, 2024 05:37 ET (09:37 GMT)

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