Johnson & Johnson Quality Disaster: Product Recalling Sales Reducing $900 Million

Business community April 18 News After senior Cody Burkins was wounded in the Iraqi battlefield, the military doctor Keith Horley suggested that he implanted a metal artificial hip joint produced by the DePuy Orthopaedics Department of Johnson & Johnson. According to Johnson & Johnson’s propaganda, the artificial hip joint is tough and lasting, especially suitable for young patients like Birkins. On December 13, 2006, Birkins implanted DePuy's ASR XL acetabular system at the Navy Medical Center in San Diego. However, at the end of 2009, when Perkins worked on a maritime criminal investigation in California, he felt severe pain in the hip implant joint and radiated to the back and knees. According to Birkins' current doctor, Richard Cornell, this is because of the implanted DePuy artificial hip joint. Perkins was not the only victim. He and another 1,000 patients jointly sued Johnson & Johnson's DePuy ASR implant joint to obtain medical expenses, low wages, and severe pain compensation.

Johnson & Johnson has promised a $280 million recall and acknowledged “responsible for reasonable testing and treatment costs”, including re-implanting artificial joints for patients. Based on the failure rate of Johnson & Johnson's products, San Francisco lawyer Michelle Kelly estimates that the cost will reach several billion dollars. Worse still, customers and shareholders believe that the recall of DePuy products reflects the systemic problems of internal quality control of Johnson & Johnson, and the company's long-term comfort and caring image has also been questioned.

DePuy is only one of the 50 products that Johnson & Johnson voluntarily recalled in 2010. In addition, the products recalled include Tylenol and Aspirin recalled due to the peculiar smell of drugs, diphenhydramine and senadine that were recalled due to the compositional proportions, and rolizine due to the presence of wood and metal components. The drugs recalled came from Johnson & Johnson's McNeil Consumer Health Products division and were recently exposed for unsatisfactory production status and quality control. On March 10th, the three factories in Pennsylvania and Puerto Rico will continue to be supervised by the US Food and Drug Administration in the next five years. If the factory's production and quality control cannot meet the requirements, Johnson and Johnson will face 10 million U.S. dollars annually. Fine.

So far, investors have begun to prudently invest in Johnson & Johnson. Since March 2009, Johnson & Johnson’s shares have ranked third in the Dow Jones Industrial Average. In the past 12 months, the company's stock price has dropped by 8.6%, while the S&P 500 health sector index has risen by 1.8% over the same period. The company revealed that product recalls have reduced the company’s sales by US$900 million, and it is expected that the 2011 earnings per share will fall by 6%.