Latest Report of Baby’s Death After Consuming Formula Mentions Cronobacter Bacteria

The FDA has said that its investigation into the latest baby’s death is in its preliminary stages. An agency spokesman declined to elaborate beyond saying that the report mentioned cronobacter.

Disclosure of the investigation adds to scrutiny of one of the top U.S. formula makers and threatens to hurt future sales of the company’s widely used formula.

In an inspection last winter, the FDA found what it described as unsanitary conditions at Abbott’s formula-making plant in Sturgis, Mich., including the presence of cronobacter bacteria. The inspection led to a production halt at the plant and product recall of Abbott’s Similac and other formula in February.

Abbott’s formula and other pediatric-nutrition product sales, which totaled $4.3 billion globally last year out of the company’s $43 billion total sales, have already taken a hit, according to Bernstein Research.

Abbott’s share of U.S. formula sales was 28% the week ending May 21, compared with 48% right before the recall, Bernstein said. The share of

Reckitt Benckiser Group

PLC, another leading formula seller, rose to 46% the week ended May 21 from 37% before the recall.

Rex Briggs, an author and brand consultant, said ongoing reports of infant deaths potentially tied to Abbott will hurt the company’s standing with consumers, prompting some parents to seek out products other than Abbott’s when choosing formula for their babies.

“It’s certainly not going to be the first choice you start with as a new parent thinking about which formula you want to try,” Mr. Briggs said.

Given Abbott’s dominance in a highly concentrated U.S. formula market, however, Mr. Briggs said consumers have relatively few alternatives. “The dynamics favor Abbott,” he said.

Lee Hambright, an analyst with Bernstein, said the impact of the recent baby-formula recall could also be relatively brief. “My view on the most likely scenario is that there probably is a fairly rapid recapture of market share, given the overall supply constraints in the market,” he said.

After Abbott issued a formula recall in 2010 because of the detection of beetles or beetle larvae in some powder, it took the company about a year to regain its market share, according to analysts.

An Abbott spokesman said the company will do whatever it takes to regain consumer trust and that it is “committed to industry-leading quality and safety standards.”

The FDA said Wednesday that it received a consumer complaint on June 10 about the baby’s death in January. The agency is investigating to see whether the death was linked to Abbott’s formula and potentially to unsanitary conditions at the company’s Sturgis plant. The FDA hasn’t been able to definitively link the bacteria found in the plant to the four prior illnesses including the two deaths.

An Abbott spokesman has said that there is no evidence to suggest a causal relationship between Abbott’s formulas and this newly reported case. The spokesman said Abbott was provided with limited product and clinical information to evaluate the case.

The spokesman said on Thursday that the FDA informed Abbott of the consumer complaint last week in an email. He said it is the company’s understanding that the consumer was unable to provide the lot or universal product numbers or date information for the product, and no samples are available for testing.

The company will investigate further if additional information becomes available, according to the spokesman. Abbott has said that formula made at Sturgis likely isn’t the source of the previous infections.

Abbott’s February recall and production halt worsened an existing shortage of baby formula in the U.S.

The company has said it has taken steps to improve the conditions at its Sturgis plant. It restarted production earlier this month under tight FDA supervision, only to suspend it again last week because of flooding from a storm.

Abbott could follow the examples of other companies, such as

Johnson & Johnson

after a Tylenol scare in 1982, that have faced potential reputational damage from high-profile recalls, according to Mr. Briggs.

J&J quickly alerted the public and immediately recalled millions of bottles of Tylenol after seven people died from taking cyanide-laced capsules of Tylenol. J&J changed the form of its pills after that episode, making them more tamper-resistant, which helped the company rebuild consumer confidence in its products, Mr. Briggs said.

J&J dealt with more recalls of Tylenol and other over-the-counter medicines more than a decade ago, as well as safety concerns surrounding its baby powder.

Abbott could potentially rebuild any trust lost with consumers by being transparent about upgrades to the company’s Sturgis plant through, for example, virtual tours, or other steps indicating that the company takes seriously the responsibility of feeding babies, Mr. Briggs said.

Write to Jesse Newman at [email protected] and Peter Loftus at [email protected]

The FDA has said that its investigation into the latest baby’s death is in its preliminary stages. An agency spokesman declined to elaborate beyond saying that the report mentioned cronobacter.

Disclosure of the investigation adds to scrutiny of one of the top U.S. formula makers and threatens to hurt future sales of the company’s widely used formula.

In an inspection last winter, the FDA found what it described as unsanitary conditions at Abbott’s formula-making plant in Sturgis, Mich., including the presence of cronobacter bacteria. The inspection led to a production halt at the plant and product recall of Abbott’s Similac and other formula in February.

Abbott’s formula and other pediatric-nutrition product sales, which totaled $4.3 billion globally last year out of the company’s $43 billion total sales, have already taken a hit, according to Bernstein Research.

Abbott’s share of U.S. formula sales was 28% the week ending May 21, compared with 48% right before the recall, Bernstein said. The share of

Reckitt Benckiser Group

PLC, another leading formula seller, rose to 46% the week ended May 21 from 37% before the recall.

Rex Briggs, an author and brand consultant, said ongoing reports of infant deaths potentially tied to Abbott will hurt the company’s standing with consumers, prompting some parents to seek out products other than Abbott’s when choosing formula for their babies.

“It’s certainly not going to be the first choice you start with as a new parent thinking about which formula you want to try,” Mr. Briggs said.

Given Abbott’s dominance in a highly concentrated U.S. formula market, however, Mr. Briggs said consumers have relatively few alternatives. “The dynamics favor Abbott,” he said.

Lee Hambright, an analyst with Bernstein, said the impact of the recent baby-formula recall could also be relatively brief. “My view on the most likely scenario is that there probably is a fairly rapid recapture of market share, given the overall supply constraints in the market,” he said.

After Abbott issued a formula recall in 2010 because of the detection of beetles or beetle larvae in some powder, it took the company about a year to regain its market share, according to analysts.

An Abbott spokesman said the company will do whatever it takes to regain consumer trust and that it is “committed to industry-leading quality and safety standards.”

The FDA said Wednesday that it received a consumer complaint on June 10 about the baby’s death in January. The agency is investigating to see whether the death was linked to Abbott’s formula and potentially to unsanitary conditions at the company’s Sturgis plant. The FDA hasn’t been able to definitively link the bacteria found in the plant to the four prior illnesses including the two deaths.

An Abbott spokesman has said that there is no evidence to suggest a causal relationship between Abbott’s formulas and this newly reported case. The spokesman said Abbott was provided with limited product and clinical information to evaluate the case.

The spokesman said on Thursday that the FDA informed Abbott of the consumer complaint last week in an email. He said it is the company’s understanding that the consumer was unable to provide the lot or universal product numbers or date information for the product, and no samples are available for testing.

The company will investigate further if additional information becomes available, according to the spokesman. Abbott has said that formula made at Sturgis likely isn’t the source of the previous infections.

Abbott’s February recall and production halt worsened an existing shortage of baby formula in the U.S.

The company has said it has taken steps to improve the conditions at its Sturgis plant. It restarted production earlier this month under tight FDA supervision, only to suspend it again last week because of flooding from a storm.

Abbott could follow the examples of other companies, such as

Johnson & Johnson

after a Tylenol scare in 1982, that have faced potential reputational damage from high-profile recalls, according to Mr. Briggs.

J&J quickly alerted the public and immediately recalled millions of bottles of Tylenol after seven people died from taking cyanide-laced capsules of Tylenol. J&J changed the form of its pills after that episode, making them more tamper-resistant, which helped the company rebuild consumer confidence in its products, Mr. Briggs said.

J&J dealt with more recalls of Tylenol and other over-the-counter medicines more than a decade ago, as well as safety concerns surrounding its baby powder.

Abbott could potentially rebuild any trust lost with consumers by being transparent about upgrades to the company’s Sturgis plant through, for example, virtual tours, or other steps indicating that the company takes seriously the responsibility of feeding babies, Mr. Briggs said.

Write to Jesse Newman at [email protected] and Peter Loftus at [email protected]