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Reckitt Benckiser shares plunged 20% after a U.S. jury awarded $60 million in damages to a mother whose baby died after consuming the company's Enfamil infant formula.
Shares in the London-listed consumer goods company fell to their lowest level in a decade on Friday as investors absorbed the news.
Its shares closed nearly 15% lower in London trading after falling 20% from the previous day's close.
An Illinois court jury concluded that Enfamil, manufactured by Reckitt Benckiser and U.S. infant formula company Mead Johnson, caused Jasmine Watson's baby to develop necrotizing enterocolitis (NEC), an intestinal disease.
The jury awarded $25 million more in damages than the plaintiffs' attorneys had sought in the case.
“This verdict confirms what Mead Johnson has known for years: Cow's milk-based infant formula can cause NEC in premature infants, often with fatal consequences,” said Keller Postman, one of the companies representing the mother. ) said Ben Whiting, a partner at.
Hundreds of similar claims have been filed in state and federal courts across the U.S. against Reckitt's Mead Johnson and another infant formula maker, Abbott.
About 450 of those cases have gone through preliminary proceedings in federal court, with four selected as “bellwether” cases, but trials are still months away.
Reckitt Benckiser denies that its products cause NEC and says the allegations have no scientific basis.
“While we continue to express our deepest condolences to Ms. Watson, we strongly disagree with the jury's decision to impeach Mead Johnson and award damages,” the statement said. “We will use all means to overturn the verdict.”
Reckitt's $17 billion acquisition of Mead Johnson in 2017 didn't go smoothly. The company, which also makes Dettol disinfectant and Nurofen painkiller, said in 2020 it had taken a £5 billion write-down on acquisitions.
However, the company recouped some of its losses with increased sales in the United States during a national infant formula shortage that saw rival Abbott Laboratories close a plant amid reports of bacterial infections in infants.
Last year, the U.S. Food and Drug Regulatory Agency sent warning letters to Mead Johnson and two other formula makers over their infant formula manufacturing standards after Reckitt Benckiser was forced to recall batches of formula due to the presence of harmful bacteria.
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