Finding the source of J&J's river of woe

Is something seriously rotten in New Brunswick, NJ? That's the question Bloomberg BusinessWeek asks in a new analysis of Johnson & Johnson's ($JNJ) ongoing quality problems. Rounding up info on the company's repeated recalls, government probes and patient lawsuits, along with an interview with CEO William Weldon (photo), the story offers a condensed version of woe.

Smelly Tylenol, inconsistently potent Benadryl and Zyrtec, wood-and-metal contaminated Rolaids. Faulty hip replacements. Cracked syringes. Potentially unsterile medical supplies. Off-label marketing allegations involving the antipsychotic drug Risperdal. Wrongful death lawsuits over a birth control patch. And so on.

Weldon promises that J&J's quality problems are centered in McNeil Consumer Healthcare, which is operating with an FDA consent decree. But analysts aren't so sure. Some see J&J as too decentralized, with its independent-operating-company approach. Others see too much emphasis on cost-cutting. Others call it a management failure to live up the J&J's famous patient-first credo.

"I can tell you factually that we will never put a dollar ahead of a patient," Weldon told the publication, going on to say that cost-cutting wasn't an issue, either. And forget blaming the company's structure: "If it was a weakness of decentralization, it would be a systemic problem across J&J," Weldon said, still maintaining that it's McNeil that's the real problem.

Late last week, the company confirmed it would restructure its consumer operations, splitting the U.S. over-the-counter products unit off on its own for close supervision. The man who's been running McNeil, Peter Luther, was shuffled into another consumer health position. Weldon says recalled products will return by year's end. It remains to be seen if the changes--and the FDA oversight--will lead to better days.

- read the Bloomberg BusinessWeek story