Reckitt says many cases filed against baby formula makers
World
An Illinois jury ordered Reckitt unit Mead Johnson to pay $60mn to the mother of a premature baby
LONDON (Reuters) – Reckitt said on Monday that many cases had been filed against baby formula makers in general, and it was unclear how many directly related to its unit's Enfamil product.
An Illinois jury last week ordered Reckitt unit Mead Johnson to pay $60 million to the mother of a premature baby who died of an intestinal disease after being fed the company's Enfamil baby formula.
The jury in a state court in St. Clair County found Mead Johnson was negligent and had failed to warn of the risk of necrotising enterocolitis (NEC). The disease, which causes the death of bowel tissue, mostly affects premature newborns and has a fatality rate of about 15% to 40%.
The decision is the latest blow to Reckitt's shares, which have fallen 22% since late last month when the Lysol maker missed fourth-quarter like-for-like net sales expectations, and said an investigation showed some employees had under-reported liabilities in the Middle East.
Since Feb. 28, Reckitt's market value has lost about 10 billion pounds ($12.74 billion).
"We grow weary with the surprises at Reckitt," Bernstein analyst Bruno Monteyne said.
Shares of Reckitt, which owns brands such as Lysol, Dettol and Strepsils, on Friday suffered their steepest one-day drop since 1999, making it the top loser on London's blue-chip FTSE 100. Traders told Reuters on Friday that people in the market were concerned more cases would be made against Mead Johnson.
Reckitt said on Friday it would appeal the verdict and an executive added on Monday: "we do not believe that the plaintiff provided any evidence of causation with respect to the warning or any safety issue."
"We strongly disagree with this verdict, and we will pursue all our options to get it overturned," the executive said.
Also on Monday, the executive said more legal cases were expected.
"New cases will be filed and some will be dismissed. And we need to determine whether we're actually involved in the litigation," the executive said.
"It is unclear how many claims actually involve a Mead Johnson product and we believe many will be dismissed or withdrawn in preliminary stages."
Investors remained concerned.
"Reckitt's defensive assertions will not be validated for some time," Tineke Frikkee, a porfolio manager at Waverton Investment Management, said. She added that Reckitt would have to spend more time and money on legal fees, and that bad press about the cases in the United States could weigh on sales.
"With all these uncertainties hanging over the shares for many months, I think there are better investment opportunities elsewhere."
