As the Biden administration dodges on providing a projected timeline for the current baby-formula shortage to subside, the CEO of one of the four companies that dominates nearly 90 percent of the U.S. sector predicts that the shortage will last through 2022.
The supply-chain gridlock plaguing the baby-formula market will likely last for the “balance of the year,” Perrigo Company PLC CEO Murray Kessler told Reuters. Perrigo Company PLC manufactures store-brand baby formulas for retailers such as Walmart and Amazon and makes up 8 percent of the U.S. baby-formula market.
The baby-formula crunch has been at the forefront of media coverage and public concern as families scramble to find stores with product left in stock to feed their infants. Beyond pandemic-induced production bottlenecks, the recall of a baby formula made by Abbott Nutrition, one of the country’s leading baby-formula manufacturers, has been identified as a major culprit in the shortage. Due to cronobacter-/salmonella-contamination concerns, Abbott closed its plant in Sturgis, Mich., further fueling the shortage and leaving many big grocery chains with extremely limited inventory.
Kessler said his company is working overtime, with two facilities in Ohio and Vermont operating at 115 percent capacity, to help compensate for the shortfall.
“We have stepped up and are killing ourselves to do everything we can,” he told Reuters. At the direction of the FDA, Perrigo is mainly producing four items: the store-brand versions of Similac Pro Sensitive and Pro Advance and Enfamil Gentle Ease and Infant, he said.
During her last-ever press briefing Friday, now former White House press secretary Jen Psaki refused to give reporters an estimated time window for when the Biden administration believes the shortage will end, although Biden said Friday he believes shelves should start filling up again in a matter of weeks.
On Thursday, the White House announced a plan to address the shortage by allowing more imports, which currently are inhibited by protectionist policies. “The FDA will, in the coming days, announce specific new steps it is taking concerning importing certain infant formula products from abroad,” the plan states. The Biden administration did not specify how it would expedite the process to increase baby-formula imports, however, which could be done by immediately eliminating existing trade barriers between the U.S. and Europe.
Because of the spiking demand, Kessler said that business is booming for Perrigo, but also that his company isn’t immune to “massive” inflationary pressures, which forced it to raise prices by about 3 percent in the first quarter.