Mead Johnson & Company

views updated

Mead Johnson & Company

2404 West Lloyd Expressway
Evansville, Indiana 47721
U.S.A.
Telephone: (812) 429-7800
Toll Free: (800) 222-9123
Fax: (812) 429-8994
Web site: http://www.meadjohnson.com

Private Company
Incorporated: 1905
Employees: 4,500
Sales: $2.7 billion (2005 est.)
NAIC: 424210 Drugs and Druggists' Sundries Merchant Wholesalers

Mead Johnson & Company, better known as Mead Johnson Nutritionals, is a global leader in the manufacture of such nutritional products for infants and children as Enfamil and Enfalac formulas. A subsidiary of Bristol-Myers Squibb Company, Mead Johnson has been headquartered in Evansville, Indiana, since 1921. The company offers more than 70 products in over 60 countries worldwide and maintains major manufacturing facilities in every region where it does business. Mead Johnson was also well known for its adult nutritional products, including the supplement beverage Boost, until it exited that line of business in 2004. Outside the United States, the company offers a full line of infant formulas as well as several nutritional products for toddlers, older children, and adults.

THE EARLY YEARS: 1905–15

While the company traces its origins to 1905, its founder was already a well-established businessman by that time. In 1886, New England druggist Robert Wood Johnson was joined by his brothers James Wood Johnson and E. (Edward) Mead Johnson in founding the surgical bandage company Johnson & Johnson. In 1895, E. Mead Johnson started a company of his own, The American Ferment Company, as a placeholder for future business interests. ("Ferment" at the dawn of the 20th century referred to digestive aids.) In 1897, Johnson parted company with his brothers and set out on his own to develop his new company.

By 1905, The American Ferment Company was thriving. Located in Jersey City, New Jersey, it had seen sales of its main digestive product, Caroid, grow steadily. Other products introduced earlier in the year included a liniment, an ointment, an antiseptic powder, and a cough syrup. Still, Johnson envisioned an even broader range of products designed to help people live healthier lives. During this time he agreed to distribute a new ferment called Cellasin. This product was noteworthy in the history of the company because it included dehydrated milk, an innovation that would ultimately lead to the development of the company's most important product.

American Ferment quickly had a product line far richer than the company name reflected. Johnson petitioned the board of directors, and on November 29, 1905, The American Ferment Company adopted the name Mead Johnson & Company. Johnson and the board also felt the name connoted a more professional identity, which better matched its market: physicians. Moreover, it was broad enough to encompass any product line the company might pursue in the years ahead.

By 1910, Mead Johnson & Company had clinically tested and introduced its first infant feeding product, Dextrilactic Powder, the precursor to what would become its most important product. When a company sales representative presented Dextrilactic Powder to a noted pediatrician, that doctor described the feeding product he really wanted. If Mead Johnson would make it, and it tested well clinically, he would use it and recommend it.

The physician's description reminded Johnson of a mixture prescribed for his own son, Edward "Ted" Mead Johnson, Jr., in 1888. The infant Ted, who was born with a congenital heart defect, was not tolerating his feedings and was growing weaker. Dr. Abraham Jacobi, recognized today as the father of American pediatrics, prescribed a cooked "gruel" mixture on which baby Ted eventually thrived. Thus, based on his personal experience and the opinions of the physician his company had approached, Johnson vowed to develop and market the formula. Before the end of 1911, the company had introduced Dextri-Maltose, a specialty carbohydrate powder designed to be mixed with milk. Marketed to physicians only, the powdered formula gained quick acceptance and soon became Mead Johnson's most important product.

NEW PRODUCT DEVELOPMENT AND THE END OF AN ERA

Mead Johnson & Company enjoyed steady growth until the outbreak of World War I. Since its introduction of Dextri-Maltose, it had been highly dependent upon potato starch, which it imported from Germany. The war cut off its supply of this carbohydrate. Johnson's solution was to move the company to a location where it would have ready access to an alternative and abundant source of carbohydrate—corn.

His search took him, and the company, to Evansville, Indiana, where he purchased a cotton mill on the banks of the Ohio River. The vast cornfields of the Midwest, good rail access, affordable utilities, and a willing and capable workforce all appeared to meet the needs of the growing company. Johnson moved production of Dextri-Maltose to Evansville in 1916. The next few years were difficult due to start-up costs and mechanical problems, but by 1920 the company was again solvent and poised for growth.

By the fall of 1921, Mead Johnson had become a family business: all three of Johnson's sons were working alongside him. Ted, whose illness as an infant had inspired the company's most important product, supervised sales and advertising. The second son, Lambert, oversaw manufacturing. The youngest son, James, managed buying, receiving, and warehousing and created the Mead Johnson's first international sales department.

Although international sales did not merit its own department until the 1920s, management had the prescience to prepare for it early in his company's history. In 1902 Johnson had created the Spanish Trading Company to sell his products in Mexico and Cuba. North of the border, in Canada, he placed a sales agent in 1907. Fifteen years later, in 1922, he rented manufacturing space in Toronto, Ontario, and established a separate Canadian organization.

International expansion outside North America progressed slowly. This was due in large part to Johnson's insistence on marketing only to healthcare professionals, whom he felt singly qualified to teach mothers how to mix his products and feed them to their children. Sales of Dextri-Maltose were therefore limited to countries where physicians oversaw the feeding of infants, and physician-supervised feeding was slow to evolve in many countries.

Although Mead Johnson would wait decades for significant global expansion, domestically the 1920s was an exciting era for the company. Nutrition breakthroughs in milk-based products and vitamins were happening quickly, and Mead Johnson was on the forefront. Vitamin research resulted in the introduction of a series of oils that contained vitamin D, beginning with Mead's Standardized Cod Liver Oil in 1924. This product and others like it helped to nearly eliminate rickets, a devastating childhood bone disease that afflicted many children.

COMPANY PERSPECTIVES

Our vision is to be the world's leading provider of science-based pediatric nutrition products. We are dedicated to helping provide infants and children with the best start in life. The company's mantra is cultures and customs may differ from country to country, but children everywhere deserve—and depend on—good nutrition to grow up strong and healthy. Now, and for the next 100 years, we look forward to nourishing generations to come.

During this era Mead Johnson also introduced reconstructed milk products, which were the forerunners of modern infant formula. The earliest of reconstructed milk product was Recolac (1925), which followed on the heels of Casec (1921), a milk-derived protein supplement. Manufacture of reconstructed milks required deconstructing cow's milk and reassembling its major nutritional components, along with other ingredients, into formulations believed to be more appropriate for infant feeding.

Needing a place to manufacture its reconstructed milk products, in 1924 Mead Johnson purchased a cream cheese factory in Zeeland, Michigan. After considerable renovation of the facility, the company moved its production of milk products there in 1925. Also in 1925, in January, the company opened its newly built laboratory in Evansville and continued its product research.

Attesting to the company's success was its entry into the 1930s with no debt. During the Great Depression, Mead Johnson not only assisted its employees with personal loans, but also continued to introduce new products. Among them was Pablum infant cereal. Pablum offered balanced nutrition, it was convenient, and it was affordable to most families even during this perilous time.

While a successful and productive period for the company, the decade also ended an era for Mead Johnson. Ted Johnson succumbed to the heart condition of his infancy and died in 1930 at age 42; E. Mead Johnson died suddenly of a heart attack in 1934, at age 81, while having dinner with family and friends.

1935–55: INTERNATIONAL GROWTH AND RESEARCH

Lambert Johnson took the helm at the company upon his father's death. In 1935 the company introduced Oleum Percomorphum, which would prove to be its most successful product during the decade surrounding World War II. O.P., as doctors called it, was a vitamin A and D supplement that further reduced the cost of preventing rickets.

International operations grew significantly during the 1940s as Mead Johnson established in-market operations in Latin America. At decade's end, it had offices in Mexico, Brazil, and Argentina, each managed by employees native to their respective countries.

New product development included Nutramigen (the first protein-hydrolysate infant formula in the United States for sensitivity to cow's milk protein) and Vi-Sol vitamins (the first water-soluble infant vitamin and mineral supplements available in drop-dosage form in the United States).

With growth in mind, in 1952 Lambert Johnson embarked upon an expanded program of research and development, pertaining also to pharmaceutical products. He transferred leadership of the company to his nephew Daniel Mead Johnson in 1955 and, after serving as the company's president for 21 years, retired. He died a few months later.

NEW PRODUCT INTRODUCTIONS AND DECISION TO MERGE

The period from 1955 through 1967 was marked with significant new product introductions that included both pharmaceutical products and nutritional products for infants. Cytoxan (1959) was Mead Johnson's first chemotherapeutic agent. It continues to be used today in the treatment of many types of cancer. Mucomyst (1963) was a life-saving advance in bronchopulmonary medicine. K-Lyte (1967) was the first effervescent potassium supplement marketed in the United States to solve potassium deficiency problems caused by drugs to treat hypertension.

Daniel Mead Johnson's tenure was also marked by the introduction of significant nutritional products that became well-known brands: Lofenalac (1958), a U.S. first for infants born with phenylketonuria (PKU); Metrecal (1959), a measured-calorie dietary beverage; Enfamil (1959), the company's first successful routine infant formula patterned after the nutritional composition of human milk; and ProSobee (1965), the first infant formula in the United States to include only the soy protein isolated from the whole soybean.

KEY DATES

1895:: E. Mead Johnson establishes The American Ferment Company.
1905:: American Ferment becomes Mead Johnson & Company.
1959:: Enfamil formula is introduced.
1967:: Mead Johnson is acquired by Bristol-Myers.
1978:: Reorganization results in nutritional and pharmaceutical divisions.
1995:: The company completes construction of a manufacturing facility in China.
2004:: Mead Johnson divests its adult nutritional product lines.

Although it would come to be popular among physicians and parents throughout the world, Enfamil was the subject of a "product recall" in March 1967. At the request of the U.S. Food and Drug Administration (FDA), which found that a few batches of the product were not sterile, Mead Johnson recalled all eight-ounce bottles of ready-to-feed Enfamil Nursette. Even though the recall hurt the company's second quarter earnings in 1967, Enfamil would evolve into Mead Johnson's core infant formula brand.

In a period of Mead Johnson's history significant for its introduction of products that became household names for Americans and, in some cases, for physicians and consumers throughout the world, the company was also exploring new growth opportunities. As great as these opportunities were, Daniel Mead Johnson believed the company could achieve even more by merging its interests. In 1967, the Bristol-Myers Company added Mead Johnson to its portfolio of acquisitions; it was able to offer Mead Johnson deeper pockets and research capabilities.

Soon after the acquisition, the parent organization consolidated all international operations into a single division based at Bristol-Myers headquarters in New York City. This new division, Bristol-Myers Company International Division, fostered expansion of Bristol-Myers businesses in many countries. As a U.S.-based division, Mead Johnson focused on growth of its domestic business. Two decades later, in 1989, Bristol-Myers would merge with Squibb Corporation, creating the company Mead Johnson would call its parent: Bristol-Myers Squibb.

1968–92: THE EMERGENCE OF A GLOBAL FORCE

During its early years as a subsidiary of Bristol-Myers, Mead Johnson continued expansion of its pharmaceutical business, introduced new adult nutrition products, and substantially grew its infant formula business—with Enfamil its standard-bearer.

The company's most important pharmaceutical products were Megace (1972) for treating endometrial cancer, Desyrel (1982) for treating depression, and Bu-Spar (1986) for treating anxiety. In 1973 Mead Johnson began marketing Questran for lowering serum cholesterol levels. (It had originally introduced this drug in 1967 for the relief of intense itching associated with partial biliary obstruction.)

Sustacal, introduced in 1971, became the anchor for a comprehensive line of medical nutritional products at Mead Johnson: Isocal (1974), Criticare HN (1981), and Traumacal (1983). The forerunner of these oral- and tube-feeding products was Sustagen, which was discontinued in the United States in 1962. Sustagen and its successors were born of Mead Johnson's early research into reconstructed milks.

In the infant formula arena, it introduced Pregestimil (1971) for infants unable to absorb fats properly. It also continued to research new ways of bringing Enfamil even closer to the nutritional composition of human milk. Through this research, and introductions of reformations of this brand, in 1971 and 1972 Enfamil was Bristol-Myers' top-selling product.

Because of success in both of Mead Johnson's business lines (nutritional and pharmaceutical) the company was reorganized in 1978 into the Mead Johnson Nutritional Division and Mead Johnson Pharmaceutical Division. Each had its own sales, marketing, and research functions. A few years later, two new pharmaceutical divisions were created: Mead Johnson Oncology (1982) and Mead Johnson Laboratories (1984).

In 1985 the company underwent further restructuring with the consolidation of Bristol Laboratories and Mead Johnson businesses into a new entity: Bristol-Myers U.S. Pharmaceutical and Nutritional Group (USPNG). Based in Evansville, Indiana, the new organization had five business units: Mead Johnson Nutritional Division, Mead Johnson Pharmaceutical Division, Mead Johnson Laboratories, Bristol Laboratories Pharmaceutical Division, and Bristol-Myers Oncology Division.

By the end of the 1980s, the company was poised to become a major player on the world stage. However, in addition to boosting sales, the aggressive marketing that Mead Johnson and its peers had done to grow their global reach garnered some negative notice and legal challenges. Some watchdog groups felt that baby formula products were negatively affecting the health of infants and children. In 1978, for example, the company settled a lawsuit brought by a group of Catholic nuns, who asked for detailed information about Mead Johnson's promotional practices abroad. The result of this action and similar moves against other marketers of infant formula (including the 1977 widely publicized Nestlé boycott) was the adoption in 1981 of the International Code of Marketing of Breastmilk Substitutes by the World Health Organization (WHO) and the United Nations International Children's Emergency Fund (UNICEF). This code had ten provisions designed to protect and promote breast-feeding and to ensure the proper use of breast-milk substitutes through adequate information and appropriate marketing and distribution. Mead Johnson defended the nutritional value of its infant products and continued to focus on improving the formulas.

GLOBAL EXPANSION IN THE NINETIES

Bristol-Myers' merger with Squibb Corporation in 1989 was to bring more change in the structure of the organization. In addition, the merger was the catalyst for new approaches to international business development. Mead Johnson's pharmaceutical business was consolidated with the new company's other pharmaceutical businesses and transferred to New Jersey in 1992. It was hoped that these integrated businesses would position the company for globalization and unprecedented global growth.

Meanwhile, in 1990 Mead Johnson's nutritional businesses in 19 countries were integrated with its U.S. business to form Mead Johnson's first global organization in 25 years. The organization was best known in Canada and the United States for its infant formulas, but vitamins and medical nutritional products also contributed. In Latin America and several Asian countries, Mead Johnson was known for its nutritional milks for children, including staged formulations for children of different ages.

The mid-1990s were eventful. In 1995, Mead Johnson completed construction of a manufacturing plant in China, having established business there and in Vietnam, and it expanded into Central and Eastern Europe. The following year, the company assumed responsibility from Bristol-Myers Squibb for its Latin America nutritional business and held its first worldwide business meeting, in Vancouver, British Columbia, Canada.

In 1997, a new logo with the tagline "where good health begins" was introduced, the first redesign of Mead Johnson's logo in 32 years.

In the late 1990s, marketers at Mead Johnson explored new ways to attract customers. Premiums offered in conjunction with free samples of formula included diaper bags, baby dishes, and, in 1999, compact discs of classical music, believed to help support brain development in babies.

While unique marketing opportunities blossomed, the company was challenged with another product recall. After investigating an inquiry from a parent who thought a package of ProSobee smelled strange, Mead Johnson recalled 190,000 cans of this brand of its infant formula. Because of a labeling error, these cans actually contained Vanilla Sustacal, an adult nutritional supplement.

New product introductions continued through the end of the decade. In January 1999, Mead Johnson introduced VIACTIV Soft Calcium Chews, a chewable calcium supplement for women aged 35 and over. In July 2001 the company sold this brand to McNeil Nutritionals, a division of Johnson & Johnson.

A NEW MILLENNIUM: FOCUS ON INFANTS AND CHILDREN

Realizing the value of its Enfamil family of products worldwide, and the difficulty of establishing brand recognition from one country to another due to language and cultural barriers, in 2001 Mead Johnson developed a universal brand stamp for Enfamil. At the time the company had 140 stock-keeping units (SKUs) in the United States, and another 450 SKUs internationally. This move gave Enfamil a global brand identity.

Another major recall occurred in 2001, when preparation instructions were translated incorrectly into Spanish and printed on the labels of some 3.7 million cans of powder Nutramigen formula and 930,000 32-ounce cans of the ready-to-use version. In 2004, a blunder in translating preparation instructions from English to Spanish again resulted in a product recall when the FDA reported that following instructions on both the 16-ounce powder infant formula and the 32-ounce ready-to-use infant formula could cause serious health problems.

During this time, Mead Johnson decided to divest its adult nutritionals business, which included the products Ultracal, Lipisorb, Choice dm, and Boost. It completed the sale of its global adult medical nutrition business to Swiss healthcare major Novartis in March 2004.

This divestiture allowed Mead Johnson to focus on its infant and children's businesses and to continue its global expansion. One stronghold for this business was Southeast Asia. Business Times (Malaysia) reported on January 16, 2002, that Mead Johnson held a 17 percent share of the premium milk market in Malaysia, a country it had entered in 1967. Its projected 20 percent growth in sales for 2002 matched the compounded average annual growth rate MJN had experienced in Malaysia for the previous five-year period. One reason cited for its growth was its ability to forestall price increases through cost and supply chain efficiencies. Because it was a global company, it could purchase raw materials in bulk and negotiate on pricing.

In 2003 Mead Johnson purchased OPR Development, L.P.'s Cafcit (caffeine citrate) Injection and Oral Solution. At the time of the acquisition, Cafcit was the only drug approved by the FDA for short-term (10 to 12 days) treatment of apnea of prematurity in infants between 28 and 33 weeks' gestational age.

In March 2005 Mead Johnson announced plans to expand its presence in Vietnam, where it had been operating successfully for many years through Trade Winds Asia. The expansion called for opening representative offices in Hanoi and Ho Chi Minh City. Later that year, Bristol-Myers Squibb announced it was bringing its global nutritional products division, Mead Johnson Nutritionals, to India, where it would markets its Enfamil brand of baby nutritional products, which had grown to include EnfaCare Lipil, Enfamil Next Step, Expecta, Enfalyte, and several others.

Although Asia represented a significant growth opportunity for the company, it also proved problematic when, in February 2006, China's quarantine authority ordered a ban on faulty milk powder Mead Johnson had produced. This order came on the heels of the company's recall of this Gentlease-branded product sold in the United States. Also identified as defective was Enfamil Lipil, a product sold in South Korea. Mead Johnson recalled both products due to unidentified metal particles contained in the milk powder. The China authority also ordered a nationwide checkup of other milk powders produced by Mead Johnson and sold in China.

When the company marked its 100th anniversary, under the leadership of Mead Johnson Nutritionals president Stephen W. Golsby, Mead Johnson & Company's 2005 annual sales exceeded $308.4 billion. To commemorate its first 100 years, the company published a book titled A Century of Caring, which asserted that Mead Johnson "looks forward to its next 100 years of nourishing generations to come." Even so, the infant formula maker faced challenges as some scientists continued to question the advisability of infant formula over breast milk.

In May 2006 WHO celebrated the 25th anniversary of the International Code of Marketing of Breastmilk Substitutes. As the breast milk versus infant formula controversy continued, Mead Johnson and its peers in the industry found themselves waging a global battle of sorts to market their products. The company, along with several of its competitors, scored a major court victory in the Philippines in August 2006 when the Philippines Supreme Court ordered the government to stop its absolute ban on the marketing of breast-milk substitutes.

Patti Lodato