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Mead Johnson Achieves Vigorous Growth for Children, Bottom Line

Vigorous healthy growth is the guiding principle at Mead Johnson Nutrition Co. (MJN), both in providing nutritional products to give children the best start in life and in developing the company.

With headquarters in the US state of Illinois near Chicago, MJN is truly a global company as two-thirds of its revenue now comes from Asia and Latin America. Thailand is already one of the company’s top 10 markets. MJN also carries out production here through the subsidiary Mead Johnson Nutrition (Thailand) Ltd. Sales in the country started in 1972, early compared with many American companies in terms of cultivating emerging markets, and production in Thailand commenced in November 2001. MJN also operates its Asia regional headquarters out of Bangkok.

MJN’s roots go way back to 1895 when Edward Mead Johnson, one of the brothers who founded Johnson & Johnson, created his own business in 1895. Renamed Mead Johnson in 1905, the enterprise was acquired by Bristol- Myers Squibb in 1967 and ultimately split off as an independent public company in 2009 and now trades on the NYSE.

“We have really been in one business for 105 years, which is nourishing children through developing, manufacturing and marketing science-based pediatric nutrition products,” said Mr. Stephen W. Golsby, president and chief executive officer of MJN.

The company’s “Enfa” series is the world’s leading brand in nutrition products for infants and children. The line features Enfapro containing nutrients found naturally in breast milk for infant’s balanced nutrition and brain and eye development, Enfagrow for toddlers transitioning from infant formula or breast milk, and Enfakid to strengthen the immune system of children 3 to 6 years of age. Other popular products are Nutramigen for children with food allergies or colic, Lactum children’s nutrition supplement providing 100% of required daily nutrients, Sustagen as a nutritionally balanced milk supplement, and the Choco Milk supplement blending 23 vitamins and minerals.

Competition in this industry is fierce, as the world’s top five pediatric nutrition companies are all household names: Mead Johnson, Nestle, Danone, Abbott and Pfizer. But while others have diversified for scale into product lines such as water, ice cream or pet food, MJN is the only company among the top players that is focused entirely on infant and children’s nutrition. Besides running deep with a century of experience developing nutritional science for children, the company also has an unwavering commitment to quality. “Our history and focus give us a huge edge,” Golsby said.

The trend across the pediatric nutrition industry is toward premium brands as more regulators and parents are demanding leading-edge science and highest-quality products. MJN is well-positioned at the forefront of this. Although it is certainly an industry poised for strong and long growth worldwide, especially in developing markets with favorable demographics, the road ahead is not without obstacles to progress. “The biggest challenge to competitiveness will be finding ways to offset rising costs while continuing to improve productivity and efficiency,” the CEO noted.

Experience and Insight

Golsby was recently named an Honorary Investment Advisor (HIA) of the Thailand Board of Investment (BOI). “I am very flattered by this. I see the HIA opportunity as a way to share insight and information regarding Thailand, both from my positive personal experience living and working in the country and from Mead Johnson’s success in doing business here,” he said.

Being married to a Thai, having lived in the country for 10 years, and with MJN’s operations here, Golsby certainly possesses strong links to Thailand. “As CEO of an S&P 500 company that is fast-growing and which has extensive international operations, I can help position Thailand to potential foreign investors in a way that can support the BOI’s mission,” he said.

His deep expertise in consumer product companies and emerging markets includes previous management positions at Unilever, one of the world’s largest conglomerates. After joining MJN in 1997 and moving up the ranks to the top job, Golsby has steered the company to a several-fold increase of its sales in Asia.

Golsby will also be participating in the CEO Forum of BOI Fair 2011. Running from 10-25 November, the fair in Bangkok will be part of nationwide celebrations marking the auspicious occasion of His Majesty King Bhumibol Adulyadej’s 84th birthday. One of the biggest international exhibitions in Southeast Asia, BOI Fair 2011 will showcase Thailand’s industrial capacity, modern technology and knack for innovation. The event’s CEO Forum brings together top corporate leaders from around the world to discuss Thailand’s investment future and business opportunities.

Golsby said MJN sees Thailand as an excellent operating base for many reasons. These include the country’s welcoming culture, competitive costs and ease of doing business, strong investment environment, good infrastructure and strategic business location at the heart of Asia.

Situated in the Amatanakorn

Industrial Estate of Chonburi Province, the Thailand plant is one of seven MJN manufacturing facilities around the world, with two others in the United States, and one each in Mexico, the Netherlands, China and the Philippines. The Chonburi factory accounts for 10% of total output.

Production at the Thailand facility, which in July 2011 received OHSAS 18001:2007 certification for workplace health and safety systems, is split almost 50-50 between exports and the domestic market. The main overseas markets supplied by the plant are Malaysia, Singapore, Vietnam, India and Sri Lanka.

With 6,500 employees globally, MJN has 500 full-time staff and several hundred temporary workers in Thailand. Along with this are the 400 nutritional consultants who work in the country’s supermarkets to educate consumers to the science of MJN’s products.

“Our ability to attract workers with the appropriate skills to support our operations in Thailand has always been strong,” Golsby said. “As ours is a high science business, we also encourage the government to continue building capabilities in science and engineering. When providing nutrition for precious infants, you can always benefit from a bigger supply of microbiologists, chemists and experts in quality.” He also sees Thailand as an excellent place for conducting R&D. In fact, most of the scientists at the company’s Bangkok and Chonburi facilities are Thai. They develop infant formulas and supplements, and prenatal nutrition products that pregnant and lactating women take. Their breakthroughs serve markets in Thailand and countries across Asia.

Strong Growth for Company, Industry

MJN is in an impressive growth trajectory. Its global sales last year topped US$3 billion and are projected to exceed US$3.5 billion in 2011, with first-half sales already showing a strong 20 percent increase and earnings up by 16 percent.

The pediatric nutrition industry, while not immune from a global economic downturn, is somewhat protected from it. “This is because parents will compromise just about everything else before compromising the nutrition they provide to their children,” Golsby noted.

China is currently MJN’s single- largest market, having overtaken US sales. The one-child policy in China is actually a great boon to the company. Golsby explained: “That one child has two parents and four grandparents, all of whom are funneling money down to the child to give him or her an edge over peers. They equate the highest-quality international nutrition products with an advantage. Because of our leading science and quality, Mead Johnson is seeing real benefits from that.”

The whole of Asia, including Thailand, is at the very core of MJN’s growth strategy as more babies are being born into middle-class families in the region. “Parents now able to buy premium nutritional products want to give their children a better start in life than they had,” Golsby noted.

MJN is at a point where further investment needs to be made to support its strong sales growth. As part of this, the company plans to initiate the move of the manufacturing of its products for Indonesia to Thailand within the next year. Reasons for the move include the Thai plant being modern and efficient, Thailand’s logistical advantages to regional markets, and MJN’s cost- effective skilled workforce in the country.

Social care and concern for the environment are very important to MJN. To give back to the local communities where it operates, the company carries out numerous such projects. Among these is the “Helping Hands for Special Kids” program, together with the Chaipattana Foundation and Srinakarinwirote University, through which underprivileged children in Thailand receive medication at no cost. The company also provides metabolic product donations and lactating rooms at government hospitals. Its “Green Dream” project involves planting 1,365 trees in Chonburi Province.

“We are very proud of our history in Thailand,” Golsby said.


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