By Linda Dailey Paulson
Consumer product megalith Johnson & Johnson has a 125-year reputation as a leader in the healthcare industry, bolstered by keystone brands that have become household names such as Band-Aid bandages and “No More Tears” Baby Shampoo. That reputation has been eroded by a string of product recalls and continued scrutiny by federal agencies, including Congress. It has prompted the company to restructure and examine its manufacturing operations.
Since 2010, Johnson & Johnson has issued more than 50 voluntary product recalls, one of the latest of which is for the DePuy replacement hip. Recalls have covered items found in most American medicine cabinets: Tylenol, St. Joseph Aspirin, Benadryl, Zyrtec, and Rolaids. In the year that ended March 8, 2011, the company “was involved in at least 11 major recalls, as defined by the FDA,” according to a Bloomberg report. This is twice as many as its competitors Pfizer and Procter & Gamble.
Reporters David Voreacos, Alex Nussbaum, and Greg Farrell writing in BusinessWeek say the problems are not new and perhaps endemic of systemic manufacturing problems, particularly shoddy quality control at its factories in the United States. The reporting team writes:
Over the last 15 months, the company has also recalled contact lenses, syringes filled with prescription medications, hernia devices, and other products made by subsidiaries around the world. … [I]ts own annual report for 2010 contains eight pages detailing government criminal and civil investigations and thousands of private lawsuits covering a wide range of drugs, devices, and business practices.
The company’s McNeil Consumer Healthcare division alone has recalled more than a dozen products since late 2009, the latest of which covered Tylenol, Sudafed, and Benadryl. These product recalls reportedly cost the company US$900 million in sales last year and prompted Congressional hearings. Through McNeil, Johnson & Johnson sells its popular cold, pain, and allergy medicines including Tylenol, Benadryl, Motrin, and Zyrtec.
Operations at three McNeil Consumer Healthcare plants in the U.S. are being overseen for five years by the Food and Drug Administration (FDA) after a March 10 consent degree; it faces US$10M annually in agency fines. One of these factories remains shuttered until the FDA deems it meets regulatory standards.
Johnson & Johnson announced in late March it would be reorganizing McNeil effective April 4. The unit will be led by Patrick Mutchler, who has been with Johnson & Johnson for 35 years, primarily working its consumer products businesses. Jonathan D. Rockoff of The Wall Street Journal reports that Jesse Wu, an executive responsible for the company’s consumer businesses, told employees that he decided to make McNeil a separate company “‘in order to give focused attention to quality and compliance, and the critical task of restoring’ the reputation of its products…Keeping McNeil separate signals the company wants to focus on its operations and on fixing its problems.”
Image by Ragesoss, used under its Creative Commons license.