has made leadership changes at its major baby-formula manufacturing plant and in its quality organization, following a temporary shutdown of the Sturgis, Mich., plant earlier this year after contamination was found.
The Abbott Park, Ill., company also plans to spend about $500 million to build a new baby-formula plant in the U.S., after analyzing the market and concluding more capacity is needed, Chief Executive
The company is in the final stages of choosing a location for the plant, which will make specialty and metabolic formula, Mr. Ford said on the company’s third-quarter earnings call.
Abbott’s February shutdown of its Sturgis plant to fix unsanitary conditions flagged by federal regulators fueled a severe shortage of baby formula in the U.S. this year.
The company restarted production in July after making upgrades to the plant.
“We recognize there’s more to do, but feel confident in the progress we’re making,” Mr. Ford said.
An Abbott spokesman declined to provide further details about the leadership changes.
Abbott halted production in Sturgis—the company’s biggest formula factory—after Food and Drug Administration inspectors found traces of a potentially deadly bacteria, raising the possibility that contaminated products from the plant had caused the illnesses of several infants.
Abbott has said the Sturgis plant likely wasn’t the source of the infections. The FDA has said it can neither rule in nor rule out the possibility that the plant was the source of the infections.
When Abbott restarted production at the Michigan plant in July, it started with Elecare and other specialty products. It restarted production of its most well-known brand, Similac, in September, and new cans are expected to reach store shelves in the coming weeks, Mr. Ford said. Abbott said it is giving priority to supplies to a federal food-assistance program.
U.S. sales of certain Abbott baby-formula products plunged to $102 million in the third quarter from $332 million a year earlier, Abbott said.
A former employee of the Abbott plant notified federal officials about allegations of problems at the Sturgis plant, including a complaint filed with the Occupational Safety and Health Administration in February 2021.
Mr. Ford said Wednesday that Abbott investigated the former employee’s allegations about quality and concluded they were unfounded. The former employee has withdrawn the federal OSHA complaint, he said.
An attorney for the former employee declined to comment.
The former employee also notified FDA officials about the allegations, which factored into FDA’s decision to inspect the plant earlier this year.
Abbott, which also makes medical devices and generic drugs, said its net earnings for the third quarter fell to $1.44 billion, or 81 cents a share, from $2.1 billion, or $1.17 a share, a year earlier. Excluding certain items, Abbott earned $1.15 a share. Abbott’s sales declined 4.7% to $10.41 billion.
Sales of Abbott’s Covid-19 tests fell to $1.7 billion from $1.9 billion.
Abbott shares closed down 6.5% on Wednesday.
Write to Peter Loftus at [email protected]j.com and Jesse Newman at [email protected]
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Appeared in the October 20, 2022, print edition as ‘Abbott Overhauls Leadership At Troubled Formula Factory.’