Mead Johnson Extends Global Sole-Source Supply Agreement with Martek Biosciences
GLENVIEW, Ill., Jun 21, 2010 (BUSINESS WIRE) --Mead Johnson Nutrition Company (NYSE: MJN) announced today that it had extended its supply agreement with Martek Biosciences Corporation for DHA (docosahexaenoic acid) and ARA (arachidonic acid) for use in its infant formula products. Under the terms of the amendment, Martek will continue to be Mead Johnson's global sole-source supplier of DHA and ARA for all of its infant formula products through Dec. 31, 2015, an extension of four years beyond the earliest possible termination date of the current agreement.
"Mead Johnson pioneered the inclusion of DHA and ARA in infant formula in the United States. We continue to choose Martek as the supplier of these key ingredients because of their commitment to innovation and quality in technology and science," said Dirk Hondmann, senior vice president - global research & development. "The use of Martek's trusted sources of DHA and ARA supports Mead Johnson's mission to nourish the world's children for the best start in life."
Martek has been supplying DHA and ARA to Mead Johnson for use in infant formula under a 25-year global license agreement executed in 1992. Mead Johnson launched infant formulas containing DHA and ARA in international markets beginning in 2000 and introduced the first infant formula in the United States with these key nutrients in 2002. In May 2006, a new supply agreement established Martek as Mead Johnson's global sole-source supplier of DHA and ARA for use in its infant formula products. Today, Mead Johnson offers these beneficial ingredients in all its U.S. routine infant formula products, led by Enfamil(R) Premium(TM) LIPIL, and is the first and only infant formula manufacturer to date to receive scientific endorsement by the European Food Safety Authority for an infant formula health claim - specifically involving DHA and visual acuity.
Under the terms of the amended agreement, Martek will provide graduated price reductions to Mead Johnson over the time period of the extension, beginning in 2010. In addition, Mead Johnson has the option to add another four years to the extension beyond 2015. Mead Johnson said that estimated cost reductions for 2010 would not be material and would not affect its previously announced annual earnings guidance.
Naturally present in human breast milk, DHA and ARA are fatty acids important to infant development and growth. Clinical studies have demonstrated numerous benefits for infants receiving DHA and ARA supplemented formula versus non-supplemented formula, including improved mental and visual development.
Certain statements in this news release are forward looking as defined in the Private Securities Litigation Reform Act of 1995. These statements, which are identified by words such as "expects," "intends" and "believes," involve certain risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this news release. These risks include, but are not limited to: (1) the ability to sustain brand strength, particularly the Enfa family of brands; (2) the effect on the company's reputation of real or perceived quality issues; (3) the adverse effect of commodity price increases; (4) increased competition from branded, private label, store and economy-branded products; (5) the effect of an economic downturn on consumers' purchasing behavior and customers' ability to pay for product; (6) inventory reductions by customers; (7) the adverse effect of changes in foreign currency exchange rates; (8) legislative, regulatory or judicial action that may adversely affect the company's ability to advertise its products or maintain product margins; (9) the possibility of changes in the Women, Infant and Children (WIC) program, or increases in levels of participation in WIC; and (10) the ability to develop and market new, innovative products. For additional information on these and other factors, see the risk factors identified in the company's periodic reports, including the annual report on Form 10-K for 2009, quarterly reports on Form 10-Q and current reports on Form 8-K, filed with, or furnished to, the Securities and Exchange Commission, available upon request or at meadjohnson.com. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
About Mead Johnson
Mead Johnson, a global leader in pediatric nutrition, develops, manufactures, markets and distributes more than 70 products in 60 markets worldwide. The company's mission is to create nutritional brands and products trusted to give infants and children the best start in life. The Mead Johnson name has been associated with science-based pediatric nutrition products for over 100 years. The company's "Enfa" family of brands, including Enfamil(R) infant formula, is the world's leading brand franchise in pediatric nutrition. For more information, go to meadjohnson.com.
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