Abbott, Reckitt Stocks Gain as Baby Formula Makers Score Rare Legal Win

Shares of Abbott Laboratories (ABT) are rising and those of Reckitt Benckiser are gaining in London trading Friday, a day after a jury cleared the two infant formula makers of liability for a boy’s debilitating intestinal disease.

The ruling by a Missouri state court jury Thursday is a rare legal win for Abbott Laboratories, maker of the Similac formula, and Reckitt, which produces the Mead Johnson formula, following their losses in similar trials involving necrotizing enterocolitis (NEC), a life-threatening disease that affects the colon and intestine.

“The decision reinforces what we, the medical community and regulatory bodies have said: that preterm infant nutrition products are safe, and there is no reliable scientific evidence that they cause or contribute to cause NEC,” Abbott said in a statement to Investopedia.

Reckitt echoed those remarks in a press release Thursday.

“Today’s verdict is consistent with the scientific consensus that there is no established causal link between the use of specialized preterm hospital nutrition products and NEC, and that where human milk is unavailable or when supplementation is necessary, specialized preterm hospital nutrition products can provide essential, lifesaving nutrition,” Reckitt said.

Rare Legal Victory for Formula Makers in NEC State Case

“This is the first victory for the two companies in a NEC state case after Abbott was ordered to pay $495m in July in the Gill case and Reckitt’s Mead Johnson $60m in March in the Watson case,” UBS analysts wrote Friday.

Reckitt shares are up 8% in London trading Friday but have lost 7% this year. Abbott shares are rising 5% and have gained 8% in 2024.