By ZHAO Xiaojuan
Abbott Trading (Shanghai) Co., Ltd. announced on December 14 that it is to cease sales of nutrition products for infants and children in China. Abbott's other businesses in China, including diagnostics, medical devices and drugs, will not be affected, and the company says its commitment to China is unchanged.
Compared with many other foreign milk powder brands such as Mead Johnson and Friesland, Abbott entered the Chinese market earlier. After the melamine incident in 2008, foreign milk powders in China got a huge boost. Abbott, Danone and Wyeth, among others, became the first choice of many consumers. In domestic high-end mother and baby stores, Abbot products must also be on the shelves "to support the store’s face".
But as China's infant milk powder improves and the birth rate declines, domestic brands are on the rise again.
Abbott's market share in its domestic retail sales of milk powder declined from 5.4 percent, fifth, in 2017, to 3.1 percent, ninth, this year.
Apart from the sinking market, Abbott has generally struggled with product problems. Last year, Abbott was fined 9 million yuan (US$1.29 million) after vanillin was found in its baby formula. Abbott has recalled specialty products and milk powder several times this year because of quality problems.
The withdrawal may not have much impact on the company's overall business. The pediatric nutrition product business, including infant milk powder, does not account for much of Abbott's overall business landscape.
Abbott has three major business segments - pharmaceuticals, medical devices, and diagnostics. From Abbott's Q2 earnings report, the nutrition business made US$1.9 billion, diagnostics US$ 4.3 billion, and medical devices US$3.8 billion. Pharmaceuticals made US$1.2 billion. Pediatric nutrition made US$470 million, "negatively impacted by challenging market conditions in China.”
