Ever since Johnson & Johnson's ($JNJ) consumer healthcare business hit the shoals in 2009, we've been watching its manufacturing recovery--and handicapping the fallout from that string of recalls and the ensuing dearth of supply. Now, there's more solid evidence that the McNeil unit has a long row to hoe.
CVS, the drugstore chain, will stop stocking Tylenol in some of its stores. Ongoing supply problems have store shelves still empty, and CVS wants to fill those holes. So, it's consolidating its Tylenol offerings in fewer stores. That way, it can put other products in that now-empty space.
As Reuters reports, the chain gets enough Tylenol to stock about half its 7,400 stores. It plans to try to offer Tylenol in each market, but not in every store, spokesman Michael DeAngelis told the news service.
CVS isn't alone in its McNeil supply problems, of course. Shelves in drugstores across the country yawn open, at a time when widespread cases of influenza have customers snapping up cold and flu remedies. And that dearth of Tylenol products--including children's products that were subject to a massive recall in May 2010--is now years old.
In the absence of McNeil's brands, customers have tried alternatives from Novartis ($NVS) and other consumer-drug makers. They've also picked up store brands, which CVS and its ilk have been pushing hard, because they offer a better profit margin for retailers, Reuters notes. Euromonitor says Tylenol's share of the U.S. acetaminophen market has dropped to 24% from 56% in 2009, before the recalls started. Private label market share has grown to 62% from 32%.
- read the Reuters news
Timeline: The Battered Brand: A Tylenol Recall Timeline