(Bloomberg) -- Reckitt Benckiser Group Plc plunged 15% after a jury awarded an Illinois woman $60 million in damages, saying the company’s Enfamil baby formula led to the death of her premature baby.

The UK consumer goods company’s stock closed down 15% on Friday, falling to the lowest level in 10 years after the verdict, which came in the first case of its kind to go to trial in the US. The fall wiped out about £5.4 billion ($6.9 billion) in market value. 

Jurors in state court in St. Clair County, Illinois, ruled earlier this week that Reckitt’s Mead Johnson Nutrition unit failed to warn Jasmine Watson about the risks of necrotizing enterocolitis, or NEC, in its cow-milk-based Enfamil formula, Ashley Keller, an attorney for Watson, said in an interview. 

The disease, which harms bowels, targets mostly premature newborns and has a fatality rate of as much as 40%, according to researchers.

“The jury’s finding confirms what Mead Johnson folks already knew – that its formula dramatically increases the NEC risk,” Keller said Friday. “This is the first verdict in the US, but won’t be the last, unless baby formula makers accept responsibility for their misdeeds.”

Planning Appeal

Reckitt in a statement that said it stands by the safety of its products and will appeal the verdict.

“While we continue to offer our deepest condolences to Ms. Watson, we strongly disagree with the jury’s decision to fault Mead Johnson and award damages,” it said. “We continue to believe that the allegations from the plaintiff’s lawyers in this case were not supported by the science or experts in the medical community. This was underscored during the trial by a dozen neonatologists.”

The case focused on preterm products used under the supervision of doctors in intensive care and did not involve formula sold in retail channels for term babies, the company said.

Reckitt makes a range of health, hygiene and nutrition products, including well-known brands such as Nurofen, Durex and Lysol. The company said last month when reporting its’ latest figures that its infant nutrition division, which also sells the Nutramigen brand, has a 45% share of hospital contracts in North America. 

The verdict has alarmed investors who have watched other companies get embroiled in drawn-out and costly US product liability litigation. Keller said Mead Johnson and other formula makers face thousands of US lawsuits over NEC risk.

Abbott Laboratories, another maker of infant formula, fell as much as 5.5% in New York. 

Any allegations that its products for premature babies are unsafe are without merit “advancing a theory promoted by plaintiff’s lawyers rather than the medical community, which considers these products part of the standard care for premature infants,” Abbott said in a statement. 

More than 400 suits targeting Mead Johnson and Abbott are consolidated before a federal judge in Chicago for pre-trial information exchanges, Keller said. The judge hasn’t yet scheduled a trial. Thousands of other suits are pending in state courts, he added.

Mass-Tort Cases

“This verdict will reverberate and maybe these companies should start thinking about setting up a compensation fund now, while most of the cases are still in the early stages,” said Carl Tobias, a University of Richmond law professor. “With these kinds of mass-tort cases, it’s always better to nip them in the bud early before they get out of hand.”

Jurors deliberated less than two hours before ruling Mead Johnson officials should pay $60 million in compensatory damages to Watson. Under Illinois law, Watson could not request punitive damages.

“We only asked for $25 million, but the jury came back with more than double that,” Keller said, adding that other cases will be able to claim punitive damages under a revised Illinois law.

The ruling in the Reckitt case will unlikely result in the worst case scenario that the initial headline read implies, according to Robbie Marcus, an analyst at JP Morgan. 

“Reckitt and Abbott do not believe that the science supports a causal connection between its products and NEC, and the products continue to provide lifesaving nutrition options to healthcare professionals,” he said. 

Reckitt bought Mead Johnson in 2017 for $17 billion, more than all of the company’s previous deals combined. The company last month reported lower-than-expected sales, due in part to easing demand for infant formula. 

--With assistance from Jennifer Creery and Thyagaraju Adinarayan.

(Updates with more detail, shares, analyst comment. An earlier version corrected the scale of stock movement.)

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