Another J&J recall, another hit to J&J's image

Johnson & Johnson's ($JNJ) broken record plays on. The company announced yet another consumer-drug recall. This latest in a long line of similar recalls affects almost 50 million bottles and packages of popular remedies such as Benadryl, Tylenol and Sudafed. The repeated recalls have made a major dent in J&J's consumer-drug sales and handed market share to other players, perhaps permanently.

Most of the products--some 43 million units--were recalled because of inadequate equipment-cleaning procedures at J&J's troubled Fort Washington, PA, plant, while 4 million Rolaids packages were called back because of labeling omissions. J&J says the recalled meds probably don't have quality problems and aren't likely to hurt patients. 

But will they hurt J&J and its already pummeled reputation? Already, J&J has lost 12 percentage points' worth of market share in the $4.2 billion cough-and-cold market, Pharmalot reports; J&J now claims about 5 percent of that market, compared with about 17 percent in early 2009. In pain and arthritis, J&J's remedies lost half their share, which fell to 10 percent from 20 percent during the same time frame.

Of course, store shelves have been empty of many J&J consumer meds, so drugstore customers couldn't have bought them if they had wanted to. So, a lack of inventory may be as much to blame as--or more than--loss of consumer confidence. Until J&J's products are readily available again, we just won't know for sure. 

Still, market observers say, J&J's image has to have taken a hit. One recall headline after another paint a picture of a company that just doesn't have its act together. "It looks like a plane spinning out of control," David Vinjamuri, a former J&J marketing employee who now trains brand managers at his company, ThirdWay Brand Trainers, told the New York Times.

The company is obviously determined to reverse the trend; it's working to root out any problems at J&J plants, an effort that could prompt more recalls in the short term, but help boost quality in the long run. "McNeil will not hesitate to take whatever steps are needed to ensure that its products meet world-class quality standards," the company pledges in a statement. It will have to persuade not only consumers, but investigators at the FDA and U.S. Justice Department that it's doing enough.

- read the release from J&J
- check out the news from Reuters
- get the NYT coverage
- see the post at Seeking Alpha