Reckitt Benckiser (RKT) Shares Rose 7% on $60m Illinois Court Ruling

The Reckitt Benckiser Group Plc (LON: RKT) share price rose 7.01% after the company’s subsidiary, Mead Johnson, was ordered to pay $60 million to Jasmine Watson, the mother of a premature infant who passed away from necrotising enterocolitis (NEC) after consuming the company's Enfamil infant formula. 

The decision, rendered by a St. Clair County state court jury, found Mead Johnson liable for negligence and for not adequately informing about the potential risks associated with NEC. This severe condition leads to the deterioration of intestinal tissue, predominantly in preterm infants, with mortality rates ranging between 15% and 40%.

The awarded sum is meant to cover Watson's emotional distress and her child, Chance Dean's, suffering. This case marks the first judgment among numerous claims suggesting infant formulas like Enfamil and Abbott Laboratories' Similac are linked to NEC, especially in premature babies. 

Research from the U.S. National Institutes of Health supports the assertion that formula-fed preterm infants are at a higher risk of developing NEC compared to those fed breast milk.

Ben Whiting, representing Watson, stated, “This verdict reinforces the longstanding knowledge that cow's milk-based infant formula can cause NEC in preterm babies, sometimes leading to death.” 

Meanwhile, Mead Johnson expressed its intention to challenge the ruling, stating, “We remain convinced that the plaintiff's claims lack scientific and medical community support.”

Currently, over 400 NEC-related lawsuits are awaiting trial against Mead Johnson and Abbott in a federal court in Chicago, with additional cases, including Watson's, proceeding in state courts.

The plaintiffs argue that the companies failed to disclose the increased risks associated with their formulas, even those specifically designed for premature infants, compared to alternatives such as donor milk.

Both Mead Johnson and Abbott have refuted these accusations. This litigation is distinct from the ongoing legal issues facing Abbott regarding the closure of its Sturgis, Michigan, facility and the recall of baby formula batches in 2022 due to potential contamination, an incident that exacerbated a nationwide shortage of baby formula. 

Abbott maintains that it did not distribute contaminated products.

Reckitt Benckiser (RKT) share price. 

The Reckitt Benckiser share price rose 7.01% to trade at 4751.8p from Friday’s closing price of 4440.5p.