J&J says it has upped its quality game across all 120 plants

The public focus on Johnson & Johnson's ($JNJ) drug manufacturing in recent years has been squarely on the closed OTC plant in Fort Washington, PA, whose problems have led to a consent decree and hundreds of millions in lost sales. But what is happening with that plant is only part of its manufacturing story.

J&J executives claim they have taken the hard lessons learned there and put them to use in a three-year plan to move up the quality across the company's entire manufacturing network, Sandra Peterson, group worldwide chairman, said during a call with investors Tuesday. The company has trimmed its suppliers by a third to make that part of the supply chain more manageable. It has audited its contract manufacturers to ensure they are meeting J&J standards. This is no small effort when the network involves more than 120 manufacturing sites, 450 distribution centers and more than 500 contract manufacturers. One of the upsides of this focus on quality has been to close out a number of warning letters, Peterson explained.

"We went through a three-year cycle ... where we have gone through all of our manufacturing facilities, all of our core strategic suppliers, as well as all of our R&D sites to ensure that all of them are living up to the appropriate regulatory standards... a standard that at J&J, we believe is one of the highest in the industry," she said. "So this effort is not just a focus on the OTC business, it is really across all of our businesses in all of our countries globally."

So what is happening with McNeil Consumer Healthcare's Fort Washington plant? Executives said the company will have 75% of its consumer brands back on retailers' shelves by the end of the year. According to the Philadelphia Inquirer, Chief Financial Officer Dominic Caruso told reporters that the Fort Washington plant also should be ready for an FDA inspection toward the end of the year. Once that is completed and a federal judge says the company has met the dictates of its consent decree, the plant will come back online.

Executives didn't, however, address issues that J&J's consumer health business is facing elsewhere in the world, like in Korea. Authorities there recently launched an investigation after J&J's Janssen unit was slow to report that it had released some Children's Tylenol products that contained excessive levels of acetaminophen.

- here's a transcript of the earnings call from Seeking Alpha
- read the Philadelphia Inquirer story