(Yicai) Jan. 8 -- Shares of Cabio Biotech tumbled after Swiss food and beverage giant Nestlé, a major client of the Chinese arachidonic acid supplier, issued a global recall of certain infant formula products over concerns they contain a toxin that can cause food poisoning.

Cabio Biotech [SHA: 688089] closed 11.9 percent lower at CNY21.15 (USD3.02) a share in Shanghai today, after earlier plunging by as much as 14.4 percent.

Nestlé is recalling specific batches of its SMA infant formula and follow-on formula in 31 countries and regions as a precautionary measure following the detection of a quality issue with ARA provided by a leading supplier, it announced on Jan. 5, without naming the supplier.

"Nestlé has undertaken testing of all ARA oil and corresponding oil mixes used in the production of its potentially affected infant nutrition products," the company said. "No illnesses have been confirmed in connection with the products involved to date."

Yicai contacted Cabio Biotech today, with a staffer from the board secretary's office saying that the products have been sent for testing and an announcement will be made once the results are available.

Nestlé's China arm has also released a corresponding list of 30 recalled batches in the Chinese market involving four brands: Lactogen, NAN Bochu, NAN Shuyi, and Wyeth Nutrition Children's Growth Milk Powder.

The batches of recalled baby formula represent much less than 0.5 percent of annual sales, with the financial impact on Nestlé unlikely to be significant, the company said.

Milk powder ingredients suppliers are generally quite concentrated, a dairy industry analyst told Yicai. The leading Chinese producers of ARA are DSM-Firmenich, Cabio Biotech, and Guangdong Runke Bioengineering, the person added.

Following the Nestlé incident, DSM-Firmenich said on WeChat that it did not supply the ARA in question.

Cabio Biotech's revenue from ARA, which is one of its core businesses, jumped 29 percent to CNY390 million (USD55.8 million) in 2024 from the previous year, the Wuhan-based firm said in a financial report. The company has international and domestic clients, with its ARA products having received certifications in Europe and the United States.

Editor: Martin Kadiev