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Heinz Remedia and the German company Humana have agreed that Humana, manufacturer of soy-based baby formula, will bear the responsibility of compensating those families affected last fall by a defective formula lacking vitamin B1. The food company Remedia says the compensation could reach NIS 70-100 million.

A spokesman for Remedia yesterday said the company was in talks with 17 families, in two of which babies died. The spokesman said a third baby had died before the B1 deficient formula had been marketed. The spokesman added that the company had set up a team, headed by attorney Yossi Ashkenazi, to lead the talks and conduct arbitration.

Humana made the soy-based milk substitute Remedia marketed in Israel that was later found to have been deficient in vitamin B1 after several babies fed the formula were taken ill, seriously in several cases. Humana accepted responsibility at the time, last November, for the deficiency of vitamin B1 after changes had been made in the formula.

The agreement on compensation has been signed between the two companies, Heinz Remedia and Humana, and the affected families are not party to this agreement. The agreement stipulates that Humana will pay the families such compensation as will be ruled in any lawsuit filed by the affected families.

So far nine families, represented jointly by attorney Shmuel Yelinek, and three families by attorney Eli Zohar have filed suit. All files are being dealt with by Herzog Fix Neeman on behalf of Remedia.

No compensation deals have so far been closed but Remedia has paid out several million shekels to the families in advance of future compensation rulings. Three class action suits against Remedia have also been filed for more than NIS 1 billion, most of it for damages to Remedia customers following the case last year. These cases are also covered by the agreement reached between Remedia and Humana.

Part of the damages to be paid will be covered through insurance policies. Recently Remedia signed a bridging agreement with Eliahu insurance, in which Eliahu will pay $1 million according to its policy.

Remedia hopes the agreement will restore the company in the eyes of the public regarding responsibility for the tragic affair last year. The company lost a great deal of the market following the case.

According to a February 2004 report commissioned from Maalot from Ma'abarot, manufacturer of Materna baby products, the tragedy pushed Materna's share of the baby milk substitute market from 37 percent to 54 percent, while Similac, marketed by Promedico, saw its share rise from 26 percent to 38 percent.

All of this was at Remedia's expense, which saw its share plummet from 37 percent before the tragedy to just 8 percent. As well as the compensation agreement, Remedia is also taking other steps, and the company recently approved removing the brand name from its other products, including bottles and pacifiers, which will be marketed under the name NUK.