J&J Extends Delay In Returning Some OTCs To Market
This article was originally published in The Tan Sheet
Executive Summary
CFO Caruso says operating under a consent decree with “a third party in the manufacturing facilities with us” makes it “very difficult for us to predict exactly when products will return.” Some products will not return to stores until 2013, significantly later than the original goal to relaunch all recalled liquid OTCs before 2012.
Johnson & Johnson is “making good progress” in remediating quality control problems linked to massive OTC recalls beginning in 2009, but has again pushed back the anticipated return of some recalled brands to 2013, a top executive says.
Subsidiary McNeil Consumer Healthcare has “achieved all the major commitments to date” under its consent decree with FDA, J&J Chief Financial Officer Dominic Caruso said March 6 at the Cowen Group Health Care conference.
But Caruso acknowledged operating under the consent decree “where we have a third party in the manufacturing facilities with us” makes it “very difficult for us to predict exactly when products will return to market” because “we’re subject to their review and approval timelines.”
McNeil ran into a “bit of a setback” when it voluntarily recalled a relaunched infant Tylenol product after consumers reported problems with its new dosing mechanism. – CFO Dominic Caruso
As a result, some of the products recalled due to malodorous packaging, contamination with particulate matter and other quality concerns “may be returning a little later than we previously anticipated,” he added.
Some products will not return to store shelves until 2013, significantly later than the original goal to relaunch all recalled liquid OTCs by the end of 2011, he said (Also see "Under Consent Decree, J&J Delays Full Return Of Recalled OTCs Until 2012" - Pink Sheet, 25 Apr, 2011.).
But most products will return in 2012, Caruso insisted. The firm already relaunched Tylenol Cold & Flu Severe caplets, and previously said it would reintroduce Benadryl, Motrin and Zyrtec liquids in 2012 (Also see "J&J’s Caruso Pitches OTC Comeback To Analysts" - Pink Sheet, 19 Sep, 2011.).
The path back to market for some brands has been bumpy for other reasons, too. Caruso explained McNeil ran into a “bit of a setback” when it had to recall voluntarily a recently relaunched infant Tylenol product after consumers reported problems with its new dosing mechanism (Also see "McNeil Recalls Liquid Infants’ Tylenol With Dosing Device Problem" - Pink Sheet, 20 Feb, 2012.).
McNeil also expects in 2013 to reopen its Fort Washington, Pa., facility where many of the recalls and quality control problems originated, Caruso said.
As part of the consent decree McNeil entered with FDA following the agency’s investigation of the firm’s good manufacturing practices compliance and its responses to consumer complaints, the firm is rebuilding the Fort Washington facility, which Caruso says will be “a state of the art facility when it is completed” (Also see "FDA Enforces Consent Decree Over J&J/McNeil's OTC Manufacturing" - Pink Sheet, 14 Mar, 2011.).
In the meantime, he noted, J&J is broadening its consumer business with line extensions of unaffected brands, including the launch of the Neutrogena Naturals line (Also see "Neutrogena Enters Naturals Fray With Bio-Nutrient-Driven Skin Care" - HBW Insight, 9 May, 2011.).
In addition, “robust pipelines” and a “renaissance of new product approvals in the pharmaceutical business” helped J&J return to sales growth in 2011 after “a couple of years of slight decline,” Caruso said, adding that 2011 “was a pretty good year for us” with about a 5.5% overall sales growth to $65 billion (Also see "Andrx Concerta" - Pink Sheet, 29 Mar, 2004.).
He expects “a continuation of that story in 2012” as Alex Gorsky succeeds William Weldon as J&J’s CEO.
Gorsky “has a vision for the corporation which, I think, is one that we all share in terms of growth and health care and expanding and improving the lives of people around the world,” Caruso said.
He expects Gorsky will continue down the same path Weldon charted, including accelerated product launches and continued OTC relaunches.
Like Weldon, Gorsky has little consumer health background and comes instead from J&J’s device and prescription pharmaceutical businesses. J&J tapped Gorsky for the top spot over fellow vice chairman Sheri McCoy, who has worked mostly on the consumer side of the business (Also see "J&J CEO Choice Likely Will Not Raise Consumer Business Profile" - Pink Sheet, 27 Feb, 2012.).