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Mead Johnson Falls 8 Percent on China Probe

Shares of Mead Johnson (NYSE: MJN) fell 8 percent after the company announced that Chinese regulators were investigating whether the price of its baby formula was too high.

Mead Johnson was down 8.1 percent to $68.65 after China’s National Development and Reform Commission said it had evidence that milk-powder companies were selling products that have risen 30 percent since 2008. The commission believes that Mead Johnson as well as other companies like Abbott Labs (NYSE: ABT) used a 2008 scandal where melamine-tainted milk from local sources kill six infants. This caused Chinese consumers to purchase more milk products from international sources.

In 2012, Mead Johnson had a 14 percent share of the country’s more than 78 billion yuan milk market.

The stock hasn’t had a good year. In the past 12 months Mead Johnson is down more than 8 percent and well below its 50 day moving average.

[stock-tools exchange=”NYSE” symbol=”MJN” image_height=”230″ image_width=”350″]

Disclosure: At the time of this writing, the author had no position in the above mentioned companies.

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