AI-generated analysis, not investment advice. The articles are written by AI, edited, and checked against company filings — but the judgements are opinions and the figures go stale. How this is made · Terms

Similac and the US Infant Formula ShelfNarrow moat

Abbott Laboratories (ABT) — moat facet

Similac came back from the 2022 Sturgis shutdown, but Abbott cut prices to win back volume in late 2025 and US pediatric sales still fell 11.9% in the first half of 2026.

Similac is Abbott's best-known brand in America, and the US infant formula business shows both the strength and the fragility of a brand on a shelf. US Pediatric Nutrition sold $1,777 million in 20171, $2,192 million in 2021, $1,562 million in 20222 and $2,158 million in 20253.

Abbott US pediatric nutrition sales ($M)1,77720171,87920192,19220211,56220222,20820242,1582025Abbott Forms 10-K FY2019, FY2023 and FY2025, product-line sales
A shutdown, a recovery, and now a slide.

The moat is trust at the point of choice. Parents choose a formula once, often on a hospital's or doctor's recommendation, and tend to stay with it because changing worries them. Abbott markets its nutrition products through health professionals and, where allowed, directly to the public4.

The 2022 collapse was not a competitor's doing. Abbott recalled powder infant formula made at Sturgis, Michigan in February 2022 and stopped production5, and US Pediatric sales fell 28.7% that year6. The brand came back within a year, which is evidence the trust survived.

The current decline has a different cause. In the first half of 2026 US pediatric sales fell 11.9%7, after Abbott took "new strategic price actions targeted to increase volume growth in the future" in the fourth quarter of 20258. Lowering prices to win back volume is what a brand does when its pricing power has weakened.

The quarterly figures show the slide continuing. US pediatric nutrition sold $525 million in the second quarter of 2026, down 10.7%9, and $1,036 million in the first half, down 11.9%10. The recovery after Sturgis took US pediatric to $2,208 million in 202411; the current run rate is below that.

The slide began before the price actions took effect. In the fourth quarter of 2025 US pediatric sales fell 17.7%12, and for 2025 as a whole they fell 2.3% to $2,158 million13, after rising 11.7% in 202414. One recovery year after Sturgis was followed by a year of decline and a sharper one after it. US pediatric sales were $463 million in the fourth quarter of 202515.

Similac's moat holds if volume returns. The price actions get a year. If US Pediatric Nutrition is still below $2.0 billion for 2026, Similac has lost ground it is not winning back.

Moat trajectory: Narrowing

US pediatric -11.9% in 1H 2026 after price actions.

The number that tests this moat
Reported
US pediatric nutrition sales growth, latest quarter
-10.7% (Q2 2026: $525M)

Whether Similac regains volume after the price actions; still negative at year-end would mean it is not.

Source: Abbott Q2 2026 earnings release ↗
⚠ Threats to the moat
⚠ THREAT 01
Sturgis: What a Plant Closure Costs
One Michigan plant's 2022 shutdown cut Abbott's recalled-brand formula sales by 60% and its nutrition profit by 60%, and a $385 million federal…
References
  1. ReportedUS Pediatric Nutrition sold $1,777 million in 2017, $2,192 million in 2021, $1,562 million in 2022 and $2,158 million in 2025.
    Abbott Laboratories Form 10-K for 2019 - the four reportable segments with Diabetes Care folded into Medical Devices from the fourth quarter of 2019 and 2017-2018 recast, product-line sales for 2017-2019, net earnings and EPS for 2017-2019 including the 2017 tax reform charge, and the balance sheet at 31 December 2019. — FY2019 · publ. February 2020 · source ↗
  2. ReportedUS Pediatric Nutrition sold $1,777 million in 2017, $2,192 million in 2021, $1,562 million in 2022 and $2,158 million in 2025.
    Abbott Laboratories Form 10-K for 2023 - segment results for 2021-2023 restated for the move of Acelis Connected Health to Medical Devices, product-line sales for 2021-2023, Rapid Diagnostics' fall in 2023, COVID-19 testing as 17.8% and 19.2% of sales in 2021 and 2022, and the balance sheet at 31 December 2023. — FY2023 · publ. February 2024 · source ↗
  3. ReportedUS Pediatric Nutrition sold $1,777 million in 2017, $2,192 million in 2021, $1,562 million in 2022 and $2,158 million in 2025.
    Abbott Laboratories Form 10-K for 2025 (year ended 31 December 2025) - Item 1 and MD&A for Nutritional Products: pediatric and adult nutrition in the US and abroad. — FY2025 · publ. 20 February 2026 · source ↗
  4. ReportedAbbott markets its nutrition products through health professionals and, where allowed, directly to the public.
    Abbott Laboratories Form 10-K for 2025 (year ended 31 December 2025) - Item 1 and MD&A for Nutritional Products: pediatric and adult nutrition in the US and abroad. — FY2025 · publ. 20 February 2026 · source ↗
  5. ReportedAbbott recalled powder infant formula made at Sturgis, Michigan in February 2022 and stopped production, and US Pediatric sales fell 28.7% that year.
    Abbott Laboratories Form 10-K for 2022 - the February 2022 Sturgis infant formula recall, the 16 May 2022 consent decree, recalled-brand US sales of $479 million against $1.2 billion, $176 million of recall charges, COVID-19 testing sales of $3.9bn, $7.7bn and $8.4bn in 2020-2022, net earnings and EPS for 2020-2022, and the statement that product liability losses are self-insured. — FY2022 · publ. February 2023 · source ↗
  6. Moat Explorer calcAbbott recalled powder infant formula made at Sturgis, Michigan in February 2022 and stopped production, and US Pediatric sales fell 28.7% that year.
    Moat Explorer calculation from Abbott Laboratories reported figures ($ millions unless stated; calendar years). Medical Devices: share of total reportable segment operating earnings 3,011 / 6,916 = 43.5% (2017), 4,533 / 13,422 = 33.8% (2021), 7,212 / 11,800 = 61.1% (2025); first half 2026 3,862 / 6,122 = 63.1%. Share of segment sales 21,387 / 44,311 = 48.3% (2025); first half 2026 11,392 / 23,750 = 48.0%. Segment margin 3,011 / 10,325 = 29.2% (2017), 3,038 / 11,787 = 25.8% (2020), 4,533 / 14,485 = 31.3% (2021), 7,212 / 21,387 = 33.7% (2025); Q2 2026 1,969 / 5,853 = 33.6%, Q2 2025 1,796 / 5,369 = 33.5%. Sales growth 2017-2025 (21,387 / 10,325)^(1/8) - 1 = 9.5% a year; operating earnings 2025 7,212 / 6,153 - 1 = +17.2%; sales 2025 21,387 / 18,986 - 1 = +12.6%. Diabetes Care 7,998 / 1,414 = 5.66 times (2017 to 2025); share of Medical Devices 1,414 / 10,325 = 13.7% (2017), 2,524 / 12,239 = 20.6% (2019), 4,328 / 14,485 = 29.9% (2021), 5,761 / 16,887 = 34.1% (2023), 7,998 / 21,387 = 37.4% (2025); share of company 7,998 / 44,328 = 18.0%; CGM share of Diabetes Care 7.6bn / 7.998bn = 95%. CGM growth 2019-2025 (7.6 / 1.842)^(1/6) - 1 = 26.6% a year. Abbott CGM sales over DexCom revenue 7,600 / 4,662.0 = 1.63 times. DexCom distributor share 3,959.0 / 4,662.0 = 84.9%. Product lines 2017 to 2025: Electrophysiology 2,764 / 1,353 = 2.04 times; Structural Heart 2,523 / 1,083 = 2.33 times; Heart Failure 1,448 / 643 = 2.25 times; Rhythm Management 2,649 / 2,132 - 1 = +24.2%; Neuromodulation 1,010 / 808 - 1 = +25.0%; Vascular 2,995 / 2,892 - 1 = +3.6%. Rhythm Management, Heart Failure, Vascular and Neuromodulation together 2,649 + 1,448 + 2,995 + 1,010 = 8,102 (2025) against 2,390 + 1,279 + 2,837 + 962 = 7,468 (2024), +8.5%. Diagnostics: margin 1,912 / 7,713 = 24.8% (2019), 6,237 / 15,526 = 40.2% (2021), 6,640 / 16,469 = 40.3% (2022), 2,433 / 9,988 = 24.4% (2023), 1,740 / 8,937 = 19.5% (2025); Q2 2026 499 / 3,092 = 16.1%, Q2 2025 372 / 2,173 = 17.1%. Share of segment operating earnings 6,640 / 12,831 = 51.7% (2022), 1,740 / 11,800 = 14.7% (2025). Sales 2025 8,937 / 9,341 - 1 = -4.3%. COVID testing share of Diagnostics sales 2022 8.4bn / 16.469bn = 51%, about half. Core Laboratory 5,360 / 4,063 - 1 = +31.9%. Rapid Diagnostics 2,454 / 10,061 - 1 = -75.6% (2022 to 2025). Point of Care 606 / 550 - 1 = +10.2%. Molecular 2020 peak 1,438 / 463 = 3.11 times 2017. Cancer Diagnostics share of Diagnostics Q2 2026 919 / 3,092 = 29.7%. Exact Sciences US share of 2025 sales 3,145 / 3,247 = 96.9%; purchase price over 2025 sales 20.6bn / 3.247bn = 6.3 times. China net sales 1,907 / 2,253 - 1 = -15.4% (2023 to 2025); China share of company 2,253 / 40,109 = 5.6% (2023), 1,907 / 44,328 = 4.3% (2025). Nutrition: margin 1,741 / 6,975 = 25.0% (2015), 1,705 / 7,409 = 23.0% (2019), 1,763 / 8,294 = 21.3% (2021), 706 / 7,459 = 9.5% (2022), 1,333 / 8,154 = 16.3% (2023), 1,558 / 8,451 = 18.4% (2025); Q2 2026 368 / 2,144 = 17.2%, Q2 2025 418 / 2,212 = 18.9%. Q2 operating earnings 368 / 418 - 1 = -12.0%. Sales 2021 to 2025 8,451 / 8,294 - 1 = +1.9%. Share of company sales 6,925 / 27,390 = 25.3% (2017), 7,409 / 31,904 = 23.2% (2019), 8,294 / 43,075 = 19.3% (2021), 8,154 / 40,109 = 20.3% (2023), 8,451 / 44,328 = 19.1% (2025). US Pediatric 2022 1,562 / 2,192 - 1 = -28.7%. International Adult 3,029 / 1,782 - 1 = +70.0% (2017 to 2025); share of Nutrition 3,029 / 8,451 = 35.8%. International Pediatric 1,816 / 2,112 - 1 = -14.0%. Sturgis: recalled brands 479 / 1,200 - 1 = -60%; Nutrition operating earnings 706 / 1,763 - 1 = -60%. Established Pharmaceuticals: margin 658 / 3,720 = 17.7% (2015), 848 / 4,287 = 19.8% (2017), 904 / 4,486 = 20.2% (2019), 889 / 4,718 = 18.8% (2021), 1,206 / 5,066 = 23.8% (2023), 1,290 / 5,536 = 23.3% (2025); Q2 2026 382 / 1,499 = 25.5%. Sales 5,536 / 3,720 - 1 = +48.8% (2015 to 2025); (5,536 / 4,287)^(1/8) - 1 = 3.2% a year (2017 to 2025). Key Emerging Markets share 4,167 / 5,536 = 75.3%. Segment sales growth 2025: Medical Devices +12.6%, Established Pharmaceuticals 5,536 / 5,194 - 1 = +6.6%, Nutrition 8,451 / 8,413 - 1 = +0.5%, Diagnostics -4.3%; net sales 44,328 / 41,950 - 1 = +5.7%. US share of 2025 net sales 17,126 / 44,328 = 38.6%; international share Q2 2026 7,377 / 12,593 = 58.6%. Further: Structural Heart compensation payments 89 / 2,523 = 3.5% of 2025 line sales. Diabetes Care added 7,998 - 6,805 = 1,193 in 2025. One point of CGM growth on 7.6bn = about 76. Medical Devices share of segment assets 10,689 / (3,540 + 4,791 + 8,273 + 10,689 = 27,293) = 39.2%. Total debt over total assets 32,608 / 109,215 = 29.9% (30 June 2026), 12,929 / 86,713 = 14.9% (end 2025). Net debt over Abbott shareholders' investment 27,005 / 51,110 = 0.53. Market value 173.21 / 217.86 - 1 = -20.5% (end 2025 to 5 October 2026). Second pass: US Structural Heart first half 2026 449 / 1,175 = 38.2%. Rapid Diagnostics 2,454 / 4,376 = 56% of 2020. Diagnostics Q2 2026 operating earnings 499 / 372 - 1 = +34.1%. Nutrition sales (8,451 / 6,925)^(1/8) - 1 = 2.5% a year (2017 to 2025); 8,451 / 7,409 - 1 = +14.1% (2019 to 2025). US Adult Nutrition 1,448 / 1,254 - 1 = +15.5% (2017 to 2025). Adult nutrition 3,029 + 1,448 = 4,477; pediatric 2,158 + 1,816 = 3,974 (2025). Total segment operating earnings 11,800 / 13,422 - 1 = -12.1% (2021 to 2025); Medical Devices 7,212 / 4,533 - 1 = +59.1%. First half 2026 dividends over operating cash flow 2,200 / 3,803 = 57.9%. DexCom revenue 2023 3,095.6 + 526.7 = 3,622.3; 4,662.0 / 3,622.3 - 1 = +28.7%; Abbott CGM 7.6 / 5.3 - 1 = +43.4% (2023 to 2025). US share of first half 2026 sales 9,490 / 23,757 = 39.9%. Diagnostics RPO 6,200 / 8,937 = 69% of 2025 Diagnostics sales; 6,200 / 5,360 = 1.16 times Core Laboratory sales. Libre 7.6 / 1.128 = 6.7 times (2018 to 2025). Medical Devices and Established Pharmaceuticals RPO 455 + 243 = 698, / 6,898 = 10.1%. Cash, debt and dividends: free cash flow 9,566 - 2,171 = 7,395 (2025), 8,558 - 2,207 = 6,351 (2024), 7,261 - 2,202 = 5,059 (2023); after dividends 7,395 - 4,116 = 3,279, about $3.3 billion. Dividends paid over free cash flow 4,116 / 7,395 = 55.7%; over net earnings 4,116 / 6,524 = 63.1%; 2025 dividend per share over adjusted EPS 2.40 / 5.15 = 46.6%; annual dividend 4 x 0.63 = 2.52 over trailing EPS 3.09 = 81.6%. Dividend per share 2.40 / 0.98 = 2.45 times, (2.45)^(1/10) - 1 = 9.4% a year (2015 to 2025). Total debt 3,033 + 9,896 = 12,929 (end 2025), 3,005 + 29,603 = 32,608 (30 June 2026); net debt 12,929 - 8,522 - 417 = 3,990 (end 2025), 32,608 - 5,104 - 499 = 27,005 (30 June 2026), 14,679 - 7,279 = 7,400 (end 2023), 14,125 - 7,967 = 6,158 (end 2024); 27,005 / 3,990 = 6.8 times. Remaining performance obligations 6,200 + 455 + 243 = 6,898, about $6.9 billion; Diagnostics share 6,200 / 6,898 = 90%; beyond 36 months 100% - 52% - 18% = 30%; over trailing twelve-month sales 6,898 / 46,585 = 14.8%, about 15%. Trailing twelve months to June 2026: net sales 44,328 - 21,500 + 23,757 = 46,585; net earnings 6,524 - 3,104 + 2,005 = 5,425; diluted EPS 3.72 - 1.77 + 1.14 = 3.09. Expected amortization 1.5bn (2030) / 2.6bn (2026) - 1 = -42%. Analyst target 120.26 / 100.10 - 1 = +20.1%. 2026 adjusted EPS guidance midpoints (5.55 + 5.80) / 2 = 5.675 (January), (5.38 + 5.58) / 2 = 5.48 (April), (5.45 + 5.60) / 2 = 5.525 (July). Year-end market value (stockanalysis) over net earnings and net sales: 2015 66.99bn / 4,423 = 15.15, / 20,405 = 3.283; 2016 56.55 / 1,400 = 40.39, / 20,853 = 2.712; 2017 99.34 / 477 = 208.26, / 27,390 = 3.627; 2018 127.04 / 2,368 = 53.65, / 30,578 = 4.155; 2019 153.61 / 3,687 = 41.66, / 31,904 = 4.815; 2020 194.06 / 4,495 = 43.17, / 34,608 = 5.607; 2021 248.87 / 7,071 = 35.20, / 43,075 = 5.778; 2022 191.43 / 6,933 = 27.61, / 43,653 = 4.385; 2023 191.09 / 5,723 = 33.39, / 40,109 = 4.764; 2024 196.18 / 13,402 = 14.64, / 41,950 = 4.677; 2025 217.86 / 6,524 = 33.39, / 44,328 = 4.915; 5 October 2026 173.21bn / 5,425 = 31.93, / 46,585 = 3.718 - Nutrition margins, lines and shares. — FY2015-Q2 2026 · publ. October 2026 · source ↗
    Method: Arithmetic on figures reported in Abbott Laboratories Forms 10-K and 10-Q and earnings releases, the DexCom Form 10-K, and stockanalysis.com market values; each operand is stated in the source line.
  7. ReportedIn the first half of 2026 US pediatric sales fell 11.9%, after Abbott took "new strategic price actions targeted to increase volume growth in the future" in the fourth quarter of 2025.
    Abbott Laboratories second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - sales by segment and business, comparable growth, income statement, specified items, guidance and the 410th consecutive quarterly dividend - Nutrition sales and pricing actions. — Q2 2026 · publ. 16 July 2026 · source ↗
  8. ReportedIn the first half of 2026 US pediatric sales fell 11.9%, after Abbott took "new strategic price actions targeted to increase volume growth in the future" in the fourth quarter of 2025.
    Abbott Laboratories fourth-quarter and full-year 2025 earnings release, Form 8-K exhibit 99.1 - fourth-quarter sales by segment, the Nutrition decline and strategic price actions, continuous glucose monitor sales growth, adjusted EPS of $5.15, the Volt PFA approval and 2026 guidance. — FY2025 · publ. 22 January 2026 · source ↗
  9. ReportedUS pediatric nutrition sold $525 million in the second quarter of 2026, down 10.7%, and $1,036 million in the first half, down 11.9%.
    Abbott Laboratories second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - sales by segment and business, comparable growth, income statement, specified items, guidance and the 410th consecutive quarterly dividend - Nutrition sales and pricing actions. — Q2 2026 · publ. 16 July 2026 · source ↗
  10. ReportedUS pediatric nutrition sold $525 million in the second quarter of 2026, down 10.7%, and $1,036 million in the first half, down 11.9%.
    Abbott Laboratories second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - sales by segment and business, comparable growth, income statement, specified items, guidance and the 410th consecutive quarterly dividend - Nutrition sales and pricing actions. — Q2 2026 · publ. 16 July 2026 · source ↗
  11. ReportedThe recovery after Sturgis took US pediatric to $2,208 million in 2024; the current run rate is below that.
    Abbott Laboratories Form 10-K for 2025 (year ended 31 December 2025) - Item 1 and MD&A for Nutritional Products: pediatric and adult nutrition in the US and abroad. — FY2025 · publ. 20 February 2026 · source ↗
  12. ReportedIn the fourth quarter of 2025 US pediatric sales fell 17.7%, and for 2025 as a whole they fell 2.3% to $2,158 million, after rising 11.7% in 2024.
    Abbott Laboratories fourth-quarter and full-year 2025 earnings release, Form 8-K exhibit 99.1 - fourth-quarter sales by segment, the Nutrition decline and strategic price actions, continuous glucose monitor sales growth, adjusted EPS of $5.15, the Volt PFA approval and 2026 guidance. — FY2025 · publ. 22 January 2026 · source ↗
  13. ReportedIn the fourth quarter of 2025 US pediatric sales fell 17.7%, and for 2025 as a whole they fell 2.3% to $2,158 million, after rising 11.7% in 2024.
    Abbott Laboratories Form 10-K for 2025 (year ended 31 December 2025) - Item 1 and MD&A for Nutritional Products: pediatric and adult nutrition in the US and abroad. — FY2025 · publ. 20 February 2026 · source ↗
  14. ReportedIn the fourth quarter of 2025 US pediatric sales fell 17.7%, and for 2025 as a whole they fell 2.3% to $2,158 million, after rising 11.7% in 2024.
    Abbott Laboratories Form 10-K for 2025 (year ended 31 December 2025) - Item 1 and MD&A for Nutritional Products: pediatric and adult nutrition in the US and abroad. — FY2025 · publ. 20 February 2026 · source ↗
  15. ReportedUS pediatric sales were $463 million in the fourth quarter of 2025.
    Abbott Laboratories fourth-quarter and full-year 2025 earnings release, Form 8-K exhibit 99.1 - fourth-quarter sales by segment, the Nutrition decline and strategic price actions, continuous glucose monitor sales growth, adjusted EPS of $5.15, the Volt PFA approval and 2026 guidance. — FY2025 · publ. 22 January 2026 · source ↗
Sources
Generated October 6, 2026