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A deal was reached Monday between Abbott and the FDA to restart baby formula production at a U.S. plant that was shut down due to a recall.
The company signed a consent decree with the FDA that outlines the steps necessary to resume production at the plant. Once the FDA confirms that Abbott has taken the initial steps outlined, the company expects to have the plant up and running in about two weeks, and formula should hit store shelves in six to eight weeks.
In February, Abbott voluntarily recalled powder formulas that included EleCare, Alimentum, and Similac because of the risk of Cronobacter sakazakii. Two babies died and two more got sick after being fed formula.
There is no conclusive evidence to link Abbottt's formulas to these infant illnesses.
Abbottt says it can get some baby formula back on store shelves in July.
The CDC told parents not to feed their babies powdered infant formulas after the recall. According to media reports, some parents tried to make their own formula or rationed it.
This is a major step towards re- opening our facility so we can ease the nationwide formula shortage, and our priority is getting infants and families the high-quality formulas they need. We look forward to working with the FDA to quickly and safely re-open the facility. We will work hard to regain the trust of moms, dads and caregivers who have been using our formulas for more than 50 years.
Abbott executives restated their guidance for the year. The company will face one-time charges related to the consent decree, but they don't think those charges will be material.
Abbott's revenue from its formula business has taken a hit this year. Abbott shares gained about 2% in after-hours trading Monday after the announcement, as the S&P 500 index dropped 15.6%.
Jaimy Lee is a MarketWatch writer.