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Mead Johnson Lowers Baby Formula Prices in China

Thu, 07/11/2013 - 12:24pm

GLENVIEW, Ill. (AP) — Mead Johnson Nutrition Co. said Wednesday it is cutting its infant formula prices in China, as several of its competitors have done, amid a government price-fixing investigation.

Mead Johnson said it will cut the prices of its main products by 7 to 15 percent starting Tuesday. It is changing its sales and marketing and will review its business practices to make sure it is complying with Chinese antitrust laws.

Chinese regulators have been investigating possible price-fixing by foreign suppliers of milk. In China, imported milk formula can cost up to three times as much as domestic competitors. The imported formulas are popular because of widespread distrust of Chinese dairies following product quality scandals.

The action could help the new Communist Party leadership demonstrate its solidarity with a public frustrated by skyrocketing costs for housing, education and health care. Those rising costs have outpaced income gains.

Nestle SA has also cut its baby formula prices in China, by an average of 11 percent, and FrieslandCampina, a Dutch dairy cooperative, said it would reduce prices in the country by 5 percent. Other companies under investigation include Danone and Abbott Laboratories.

Mead Johnson plans to update its guidance to reflect its price cuts when it reports its second-quarter results on July 25. The company had predicted an annual adjusted profit of $3.22 to $3.30 per share. Analysts expect $3.27 per share, according to FactSet.

Shares of Mead Johnson rose $2.76, or 3.9 percent, to $73.01 in afternoon trading.

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