What led to the Infant Formula shortage in the American market?
Infant formula is one of the most appealing but difficult markets to break into. To acquire customers, a long list of approvals must be obtained, and trust must be built. The news that four children had become ill and two had died prompted Abbott to conduct a voluntary recall at its baby formula factory in Michigan, US. As a result of bacterial contamination (Cronobacter sakazakii) the factory was shut down in February 2022. Because Abbott was one of the largest producers of infant formula in the United States (with more than 50% market share), the factory’s closure has resulted in a 40% shortage of baby formula on store shelves. This, along with COVID, has resulted in a nationwide shortage of infant formula in the United States.
To address this, the US government has launched two initiatives: 1 Operation Fly Formula, which aims to ease import restrictions and let imports from the UK, Australia, and New Zealand 2. The Defence Production Act (to ramp up production by current manufacturers). After resuming operations in June, the Abbott plant in Michigan was forced to close again due to flooding and heavy rain (increased contamination risk). The factory eventually began operations in July while still being monitored by the FDA. During the nationwide shortage, Reckitt overtook Abbott as the leading producer of infant formula. Perrigo was the primary supplier for new entrants in order to avoid the time required to clear mandatory regulations.
Startups are developing alternatives to traditional infant formula products in the form of human milk replicants. However, the existing shortage crisis cannot be relieved by the products that are under development because they are still many years away from commercialization. These products need to undergo FDA review in order to be used in the US market. This might be an upcoming trend, but for now, the infant formula market is dependent on the key players to ease the shortage.