Beginning on Dec. 1, Sandra E. Peterson, a Bayer executive, will become the group worldwide chairman of Johnson & Johnson (J&J), and will oversee a consent decree at the company’s troubled over-the-counter drug manufacturing plants after dozens of product recalls.
As Reuters reports:
J&J’s McNeil Consumer Healthcare has been operating under a consent decree after three of its manufacturing plants failed to curb quality lapses that had sparked a flood of recalls for its nonprescription medicines, such as Tylenol painkiller.
Linda A. Johnson, writing for CBS Money Watch, calls the company’s more than two dozen product recalls in the last three years “eye-popping.” Reasons for the recalls range from tiny glass and metal shards in some liquid medicines to incorrect levels of active ingredients as well as nauseating odors in product packing, CBS Money Watch reports.
Because of faulty manufacturing, the McNeil unit has recalled millions of bottles and packages of Tylenol, Motrin, Rolaids, Benadryl, and other products, some of which affected worldwide distribution, Reuters writes. The recalls have tarnished J&J’s image as one that puts patients, doctors, and employees ahead of profits, and have cost the company more than $1 billion in lost sales, CBS Money Watch writes.
The recalls are the main reason that total company revenue declined in 2009 and 2010, a first since the Great Depression, according to CBS Money Watch.
Peterson will be responsible for J&J’s consumer units, which are still working to return popular brands like Band-Aid and Tylenol to stores, after “a series of embarrassing recalls,” writes Katie Thomas for The New York Times Business Day section. CBS Money Watch writes that J&J has repeatedly moved back the date by which it hoped to have all recalled products back on store shelves, and now says that will not happen until some time in 2013.
No injuries have been reported related to the recalled products, Linda A. Johnson writes for CBS Money Watch, and adds that J&J is also negotiating a settlement with the federal government over promoting prescription drugs for unapproved uses, a settlement expected to be in the $2 billion range.
The 52-year-old Peterson is currently the chief executive of Bayer CropScience, and will become one of six worldwide group chairmen and six members of the executive committee, CBS Money Watch reports.
In the consent decree J&J is under with the U.S. Food and Drug Administration, the company has promised to review, revise, and repair operations at its three plants that manufacture over-the-counter products, Thomas writes.
Erik Gordon, who teaches business at the University of Michigan and follows the pharmaceutical industry, told Thomas he thinks that hiring Peterson is “a smart move” on the part of J&J. Morale has suffered at the company, Gordon said, because of 10 years in which it valued profits over quality.