Bloomberg News

Baby Food Maker Mead Johnson Opens China Bribery Investigation

October 24, 2013

Mead Johnson Nutrition Co. (MJN:US), the U.S. infant food maker that gets almost a third of sales from China (MJN:US), is investigating whether bribes may have been paid by its Chinese unit.

The internal probe is looking at whether the unit paid bribes in violation of Chinese and U.S. law to promote the sale of its products, the Glenview, Illinois-based company said yesterday in a statement. The voluntary investigation was started at the request of the U.S. Securities and Exchange Commission and is being handled by an outside law firm.

“We have committed to doing a thorough job of supplying them with whatever they want,” Chief Executive Officer Peter Kasper Jakobsen said on a conference call. “We don’t have a timeline here.”

U.S. and European drugmakers and health-care companies have been under investigation by Chinese authorities since at least June, when London-based pharmaceuticals company GlaxoSmithKline Plc (GSK) announced a probe. Mead Johnson, which makes the Enfamil formula products, and Paris-based Danone were among six dairy companies that were fined 670 million yuan ($109 million) in August for fixing prices in China.

Mead Johnson provided few other details of the probe.

No Prediction

“At this time, the company is unable to predict the scope, timing or outcome of this ongoing matter or any regulatory or legal actions that may be commenced related to this matter,” Mead Johnson said in the statement.

Christopher Perille, a Mead Johnson spokesman, didn’t return telephone calls and an e-mail requesting more details on the probe.

Mead Johnson fell 2.5 percent to $80.32 at the close in New York yesterday. The stock has gained 16 percent (MJN:US) in the past 12 months.

The company also reported third-quarter earnings (MJN:US), excluding certain items, of 91 cents a share, beating the average of 80 cents of 14 analysts’ estimates compiled by Bloomberg. Mead Johnson also raised its full-year profit forecast (MJN:US) to $3.30 to $3.37 a share from $3.22 to $3.30.

Glaxo faces allegations it traded in sexual favors and had spurious travel and meeting expenses amounting to 3 billion yuan. Eli Lilly & Co. said in August it was investigating allegations that its employees paid bribes and kickbacks to Chinese doctors. Paris-based Sanofi faces an investigation over similar allegations.

Danone also faces a probe after Chinese government authorities this month accused the company of paying bribes to doctors to boost business for its infant formula sales there.

To contact the reporter on this story: Drew Armstrong in New York at darmstrong17@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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Companies Mentioned

  • MJN
    (Mead Johnson Nutrition Co)
    • $95.31 USD
    • 0.26
    • 0.27%
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