Synutra Goes Beyond Government Orders in Infant Formula Recall

Sep.17.08 | About: Synutra International, (SYUT)

A second child in China has died after being given tainted infant formula, and more than a thousand other children became sick from various forms of the product. China’s Ministry of Health has determined the problem lies in the chemical additive melamine. The chemical is never supposed to be used in infant formula, but its addition increases the reading levels of protein in milk, though not the actual amount of protein. The MOH theorizes that the chemical was added by collection centers, rather than individual farmers or formula companies.

The scandal reminds the worldwide public of safety problems caused by poor regulation in China-sourced food and drugs, even though China-produced formula is not exported.

The milk powder that caused the problem came from the Sanlu Group, one of the largest producers of dairy producers in China. Sanlu recalled its milk powder last week. However, there have been complaints of problems for almost six months. The first child died on May 1 and the second on July 22.

The long time lag has caused complaining in some quarters that the company has been dragging its feet before taking this drastic action. The action is certainly drastic: the MOH says that over 10,000 tons of milk powder have been recalled.

Melamine was also the culprit in the China dog food scandal that occurred last year.

Synutra International (NASDAQ:SYUT) reported that it would recall certain lots of its U-smart line of infant formula. The company said that melamine was found in its formula, though at a level of just 150 milligrams per kilogram. The worst offenders produced melamine readings of 2560 mg per kilogram.

Synutra said it did not add the melamine and that its products are tested in accordance with government specifications, which do not include testing for melamine. Synutra said it would cooperate fully with the recall, though it did not say how much of its product would be involved. So far, Synutra has not heard that its formula products caused health problems in any babies.

Synutra also revealed that it would go beyond the strict guidelines of the government order and recall all products that contain milk sourced from the Hebei and Inner Mongolia regions of China. This would include any products in its U-strong line or adult formula products with milk from the region, even though these products have not been found to be tainted.

Altogether, the infant formula products of 22 companies were found to contain melamine.

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