Abbott Nutrition to invest $500 million in infant formula manufacturing as shortages continue

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Abbott Nutrition has announced plans to invest half a billion dollars in an infant formula manufacturing plant, saying it has determined that the domestic formula supply chain needs to be strengthened due to capacity shortfalls. .

“We are moving forward with plans to invest half a billion dollars in a new nutrition facility in the United States for specialized and metabolic infant formula,” said the president and CEO of Abbott Nutrition, Robert Ford, on a conference call Oct. 19.

Ford said the company is in the final stages of deciding where to build the plant, which it hopes will be “state of the art” and which would set “a new standard for infant formula production”.

“We recognize that there is still much to do, but we are confident in the progress we are making,” he added.

Infant formula was in short supply in the United States due to supply chain pressures and a labor shortage.

The supply shortage came to a head in May when an analysis by Datasembly showed around 40% of top-selling infant formulas were out of stock at the end of April.

“That’s a shocking number that you don’t see for other categories,” Ben Reich, CEO of Datasembly, told CBS News at the time. “We’ve tracked it over time and it’s increasing dramatically.”

Prior to the shortage, stock-out levels of infant formula were around 5%.

The supply shortfall has prompted an outcry from worried parents, prompting the Biden administration to airlift supplies from other countries, including Australia, New Zealand and Switzerland, as part of of an initiative called Operation Fly Formula.

The US Department of Health and Human Services (HHS) said in an update in early October that as of September 29, Operation Fly Formula had flown 74 flights and imported more than 97.9 million bottle equivalents of 8 ounces of formula milk.

The supply problem worsened when Abbott Nutrition closed an infant formula factory in Sturgis, Michigan, in February and recalled its infant formula after reports of bacterial infections in babies who had consumed products produced in the establishment.

The Abbott Laboratories facility in Sturgis, Michigan, May 20, 2022. (Eric Cox/Reuters)

The Sturgis plant has since reopened, but the Food and Drug Administration (FDA) recently warned that the fragility of the infant formula supply chain remains.

“Years of consolidation in the infant formula industry and regarding food safety processes and general procedures at some of the facilities producing these products have resulted in a fragile supply chain that is susceptible to production disruptions when quality issues are identified,” FDA Commissioner Robert Califf said. , in a Sept. 20 statement.

Califf said domestic infant formula makers like Abbott Nutrition “have stepped up to answer the call to increase production capacity and are working diligently” to address supply chain vulnerabilities, but there are still a lot to do.

“The long-term resilience of the infant formula supply chain will depend on greater diversification of manufacturers, including new entrants to the U.S. market, investments in new manufacturing facilities by formula producers infant formula and a commitment by these companies to consistently and continuously adhere to FDA quality and safety standards,” he said.

The FDA said it conducted an internal review of its response to the infant formula shortage and that a number of factors, including limited infant formula training among FDA investigators, hampered the agency response.

In addition to aspects that fall within the FDA’s purview, the agency cited other factors that need to be considered by external stakeholders, such as a limited number of domestic infant formula manufacturers and needed improvements. in the ingredient supply chain.

Tom Ozimek

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Tom Ozimek has extensive experience in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he’s ever heard comes from Roy Peter Clark: “Hit your target” and “Save the best for last.”

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