Johnson & Johnson ($JNJ) last year said it expected to reopen its Fort Washington, PA, plant by the end of 2013. But late last year, the company decided to make additional investments in the plant that for years was at the heart of a recall by its McNeil Consumer Health unit, and so it remains closed. But even without the linchpin facility, the company has managed a turnaround in the division by producing products like Tylenol and Motrin at other facilities and getting them back on retailer's shelves.
"We made the decision late last year to make further investments in our Fort Washington facility for long-term growth prior to certification," the company said in an emailed statement Wednesday. "It is important to note that this will not impact product availability. We expect to continue producing McNeil products on schedule and delivering them to those that rely on our products."
The consumer health unit, which for years was a drag on quarterly earnings, Tuesday reported a 2.4% growth in sales in Q2, driven by a 9% increase in over-the-counter (OTC) drugs. Sales of OTC analgesics like Tylenol were up 25% in the U.S. as J&J got supplies back to retailers and regained some of the market share lost after the plant was closed, the company told analysts Tuesday, according to a transcript of the call from Seeking Alpha.
In 2011, McNeil signed a consent decree with the FDA after it had to recall and destroy tens of millions of consumer products. At that point, the recalls and lost market share had already cost the company $1.6 billion, and it still faced investing more than $100 million to retool the plant in Fort Washington.
|J&J Group Worldwide Chairman Sandra Peterson|
The company said Wednesday that it has made "tremendous progress as it relates to the Consent Decree, having met our regulatory commitments to date at our Las Piedras, Puerto Rico and Lancaster, PA, facilities, which currently manufacture and distribute products. We are implementing the new Consent Decree requirements in those plants, and have successfully reintroduced many products previously made in Fort Washington, PA, from other sites."
J&J CEO Alex Gorsky brought Sandra Peterson over from Bayer in September 2012 to fix the deeply troubled McNeil Consumer Healthcare division. That has been done, Peterson told Bloomberg, by getting rid of some brands and focusing on the most valuable products, and by bringing more accountability to the unit. In addition to the plant improvements, there have been upgrades for quality assurance, including a program that uses consistent metrics to "track and monitor" every consumer product worldwide.