Mead Johnson to pay $12 million to close China probe

Last Updated Jul 28, 2015 4:50 PM EDT

Mead Johnson Nutrition (MJN) will pay $12 million to settle allegations by the Securities and Exchange Commission (SEC) that its Chinese subsidiary paid health care professionals to pitch its products to new or expectant parents.

The baby formula giant made improper payments of about $2.07 million to medical professionals at state-owned hospitals from 2008 to 2013, the regulatory agency said in a statement. Mead Johnson, which did not admit or deny the allegations in agreeing to the settlement, made about $7.77 million in profits from the payments.

The payments were made to medical workers to "provide the company with contact information for patients who were new or expectant mothers so it could market its infant formula to them directly," according to the SEC, which found Mead Johnson had violated the Foreign Corrupt Practices Act.

The settlement resolves "the SEC's investigation of certain of Mead Johnson's promotional practices in China during the period 2008-2013," Mead Johnson said in a statement.

"We have been informed by the U.S. Department of Justice that it has closed its inquiry into possible violations of the Foreign Corrupt Practices Act by Mead Johnson," Chris Perille, a spokesperson for the company emailed.

Two weeks ago, the company reduced its 2015 sales and profit outlook, in part due to China's slowing economy.

In 2014, the Glenview, Illinois-based company received nearly a third of its sales from China.

"Our China business is one of Mead Johnson's most important operations, and we remain confident in its continued long-term growth," Kasper Jakobsen, Mead Johnson's chief executive officer, said in the company's statement.