Investment accounts
Adult accounts
Child accounts
Choosing Fidelity
Choosing Fidelity
Why invest with us Current offers Fees and charges Open an account Transfer investments
Financial advice & support
Fidelity’s Services
Fidelity’s Services
Financial advice Retirement Wealth Management Investor Centre (London) Bereavement
Guidance and tools
Guidance and tools
Choosing investments Choosing accounts ISA calculator Retirement calculators
Share dealing
Choose your shares
Tools and information
Tools and information
Share prices and markets Chart and compare shares Stock market news Shareholder perks IPOs and placings
Pensions & retirement
Pensions, tax & tools
Saving for retirement
Approaching / In retirement
Approaching / In retirement
Speak to a specialist Creating a retirement plan Taking tax-free cash Pension drawdown Annuities Investing in retirement Investment Pathways
Reckitt Benckiser tumbles on baby formula compensation woes
(Sharecast News) - Reckitt Benckiser tumbled on Friday amid concerns about baby formula compensation. According to Reuters, an Illinois jury has ordered Reckitt unit Mead Johnson to pay $60m 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 an Illinois state court in St. Clair County on Wednesday found that Mead Johnson was negligent and that it failed to warn of the risk of necrotizing enterocolitis (NEC), Reuters said.
The disease, which causes the death of bowel tissue, mostly affects premature newborns and has a fatality rate of about 15% to 40%.
The $60m verdict includes compensation for plaintiff Jasmine Watson's loss and grief, and for the pain and suffering of her baby, Chance Dean.
The verdict comes in the first trial out of hundreds of lawsuits claiming that various Enfamil and Abbott Laboratories' Similac formulas caused NEC.
According to the US National Institutes of Health, there is evidence that formula increases the risk, opens new tab of NEC in premature infants compared with breast milk.
"This verdict confirms what Mead Johnson has known for years: cow's-milk based baby formula causes NEC in preterm infants, often with fatal consequences," Ben Whiting, a lawyer for Watson, said in a statement.
Mead Johnson said in a statement that it was disappointed with the verdict and would appeal it.
"We continue to believe that the allegations from the plaintiff's lawyers in this case were not supported by the science or experts in the medical community," it said.
At 1325 GMT, Reckitt shares were down 10.5% at 4,699p.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "This ruling has come at a bad time for the Reckitt which had already been struggling with falling volumes across its household goods and hygiene ranges. It's not simply the size of this payout which has caused nervousness, but the fact a long line of other lawsuits are pending, which could mount up to be huge sum for the company.
"Based on the size of this fine, the share move is massively overstating the initial impact, which suggests investors are preparing for more to come. Plaintiffs are accusing its division, Mead Johnson, and rival Abbott, of concealing the higher risks of formula for premature infants compared to donor milk.
"Although nutrition is Reckitt's smallest division, it's also been another volume drag, and hitting the headlines for the wrong reasons could also lead to reputational damage. After missing expectations in the fourth-quarter, investors were always going to be highly sensitive to set-backs and this judgement has led to a fresh loss of confidence."
Share this article
Related Sharecast Articles
Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.
Award-winning online share dealing
Search, compare and select from thousands of shares.
Expert insights into investing your money
Our team of experts explore the world of share dealing.
Policies and important information
Accessibility | Conflicts of interest statement | Consumer Duty Target Market | Consumer Duty Value Assessment Statement | Cookie policy | Diversity and Inclusion | Doing Business with Fidelity | Fidelity gender pay report | Investing in Fidelity funds | Legal information | Modern slavery | Mutual respect policy | Privacy statement | Remuneration policy | Security | Statutory and Regulatory disclosures | Whistleblowing policy
Please remember that past performance is not necessarily a guide to future performance, the performance of investments is not guaranteed, and the value of your investments can go down as well as up, so you may get back less than you invest. When investments have particular tax features, these will depend on your personal circumstances and tax rules may change in the future. This website does not contain any personal recommendations for a particular course of action, service or product. You should regularly review your investment objectives and choices and, if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser. Before opening an account, please read the ‘Doing Business with Fidelity’ document which incorporates our client terms. Prior to investing into a fund, please read the relevant key information document which contains important information about the fund.
This website is issued by Financial Administration Services Limited, which is authorised and regulated by the Financial Conduct Authority (FCA) (FCA Register number 122169) and registered in England and Wales under company number 1629709 whose registered address is Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey, KT20 6RP.