Reckitt, Abbott cleared of liability in latest baby formula trial

(Sharecast News) - Consumer health products group Abbott and Reckitt have been cleared of liability in a trial investigating whether they hid bowel disease risks associated with premature-baby formula. A state court in St Louis, Missouri, on Thursday rejected claims that formulas produced by Abbott and Reckitt division Mead Johnson caused necrotizing enterocolitis (NEC) - inflammation of the bowel that can require invasive surgery - in the case of one infant.

While plaintiffs claim that Abbott and Mead Johnson knew of the NEC risk but chose to withhold the information, the companies argued that those claims were flawed and are not based on scientific evidence.

However, more than 1,000 similar cases are still pending, and the companies have been held liable in other trials.

According to Bloomberg Intelligence estimates, Abbott and Mead Johnson face up to $2.5bn in liability exposure over the litigation.

Thursday's victory, however, has sparked hopes that the negative impact may not be as bad as feared, with London-listed shares in Reckitt surging 10% in early deals and Abbott jumping 6% in pre-market trading in New York.