Abbott Plans to Spin Off Baby Formula Business Amid Lawsuit Losses
Abbott Laboratories on Oct. 21 announced plans to spin off its nutrition business — including Similac baby formula — into an independent company. The move comes about a month after Abbott agreed to settle baby formula lawsuits for $670 million.
The new publicly traded company will include Ensure, PediaSure, Pedialyte and Glucerna, alongside Similac, with annual sales of about $8.5 billion.
Abbott says independence will allow the nutrition business to focus its resources more strategically as demand for healthy nutrition grows.
Meanwhile, Abbott faces costly litigation over its formulas for premature infants. Lawsuits say cow’s milk baby formulas like Abbott’s Similac can contribute to necrotizing enterocolitis (NEC), a serious and potentially fatal bowel disease affecting premature infants.
Millions of Dollars in Abbott Baby Formula Settlements and Verdicts
In August 2026, Abbott agreed to a $670 million settlement covering NEC claims involving about 2,000 infants. The lawsuits alleged injuries linked to its specialty formulas for premature babies.
The deal also resolved the Gill case, which produced a $495 million verdict after an infant developed NEC and suffered permanent brain damage.
Abbott did not admit liability in the settlement and continues to defend the safety of its products.
However, the settlement didn’t end all lawsuits. Abbott says it still faces about 1,700 outstanding Similac baby formula lawsuits involving roughly 12,700 infants.
CEO Robert Ford said outstanding legal disputes are unlikely to delay the spinoff, according to Reuters. Abbott expects to complete the spinoff by the end of 2027, pending regulatory and other approvals.
NEC Baby Formula Litigation Continues
Baby formula litigation, which also includes Enfamil lawsuits against Mead Johnson, continues in both federal and state courts.
Recent trial results have been mixed.
A Chicago jury awarded $70 million to four families in an April trial against Abbott. Abbott said it would appeal.
In late August, an Illinois jury sided with Enfamil maker Mead Johnson in a federal bellwether case, finding its formula did not cause the infant’s NEC. The judge has since questioned whether additional bellwether trials would help resolve the litigation.
As of October 2026, 844 NEC cases against Abbott were pending in federal court in Illinois, with additional cases pending in state courts.
