US – AS United States regulators are exploring ways to allow foreign baby formula manufacturers to stay on the market long term, diversify the nation’s tightly concentrated industry and prevent future shortages, Abbott Nutrition has plans of investing US$500 million in building a new plant.

The announcement comes as the US formula shortage continues and experts have called for more domestic production and diversity among suppliers.

An analysis of the domestic market showed the U.S. could use more capacity to ensure a shortage of specialty and metabolic infant formula doesn’t happen again.

A survey conducted by the US Census Bureau found that nearly a third of households with a baby younger than 1 said they had trouble finding formula over one week last month. More than 40% said they had only a week’s supply or less on hand.

Chairman and CEO Robert Ford told analysts: “We’re moving forward with plans for a half-billion-dollar investment in a new US nutrition facility for specialty and metabolic infant formulas.”

“We’re currently in the final stages of determining the site location and will work with regulators and other experts to ensure this facility is state-of-the-art and sets a new standard for infant formula production. We recognize there’s more to do but feel confident in the progress we’re making.”

The news came during Abbott’s third-quarter earnings call, where it reported lower sales attributed to softening demand for its at-home COVID-19 test kits and the continued fallout of the closure of a baby formula plant in Sturgis, Mich.

 The U.S. Food and Drug Administration found signs of harmful bacteria at its largest production plant early last year, resulting in its closure from February to July.

Abbott, the largest infant formula manufacturer in America, reported that its sales dropped 4.7% to $10.4 billion for its third quarter, which ended Sept. 30.

Ford highlighted that supply chain, medical staffing, inflation, and currency exchange rate pressures adversely affected the performance of the company.

Abbott’s strongest area was its medical device group, with U.S. sales climbing 11.3% compared to the same period a year ago, led by diabetes care products that were up 31.3%.

Pediatric sales in its nutrition division — which includes baby formula — were down 39.1% in the U.S. for the quarter. The company restarted production of Similac and EleCare at its Michigan plant during the quarter.

Meanwhile, Abbott has also issued a new recall for Similac liquid baby formula because the caps on the bottles may not have sealed properly, which could result in spoilage.

The company said the recall affects only a small percentage of bottles and is not expected to impact the infant formula supply in the United States, according to an announcement with the U.S. Food and Drug Administration.

The recalled liquid formula was distributed to hospitals, doctor’s offices, distributors, and retailers in the United States, including Puerto Rico, and some other countries.

Abbott said the amount recalled is “less than one day’s worth of the total number of ounces of infant formula fed in the U.S. and is not expected to impact the overall U.S. infant formula supply.”

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