Can Johnson & Johnson Get Its Act Together?

LITTLE red flags jut out from the shelves at a CVS drugstore in suburban Boston, alerting shoppers to shortages of nearly a dozen Johnson & Johnson products. Among them are Motrin, Rolaids, children’s Tylenol liquid and adult Tylenol, Mylanta, Pepcid AC and even some Neutrogena skin care products. “Looking for Tylenol pain relief products?” asks one of the signs. The notices at CVS serve as a stark reproof to Johnson & Johnson, whose brands have for more than a century been synonymous with quality. Some of its products are in short supply at drugstores and supermarkets because the McNeil Consumer Healthcare unit of J.& J. last year recalled about 288 million items, including about 136 million bottles of liquid Tylenol, Motrin, Zyrtec and Benadryl for infants and children.

Johnson & Johnson has had to recall such a variety of products because of quality-control problems across product lines, in multiple factories and in several units last year. Some of its consumer products, for instance, may have contained bits of metal. Others came in bottles with a moldy smell. And some products have gone missing from stores with hardly an explanation. All of this has put the company and its manufacturing under the intense scrutiny of lawmakers and officials at the Food and Drug Administration.

“It looks like a plane spinning out of control,” says David Vinjamuri, a former J.& J. marketing employee who now trains brand managers at his company, ThirdWay Brand Trainers.

While the drugstore signs that helpfully suggest “Try CVS/pharmacy brand” are intended to assist frustrated shoppers in identifying alternatives to missing brand-name products, they also serve as constant reminders of another of J.& J.’s continuing problems: It must persuade millions of disappointed customers to once again pay a premium for products that may no longer seem to be of any higher quality than the less expensive store brand.

“I don’t even consider buying them any more,” says Thien-Kim Lam, a mother of two and a blogger in Silver Spring, Md. In a post last spring titled “Makers of Tylenol, I’m Disappointed in You” on the blog DC Metro Moms, Ms. Lam wrote about the huge recall of J.& J. infants’ and children’s medicines.

Now, she says, the frequent recalls have prompted her to switch to generic cold and cough medicines for her children. “It’s like a breakup,” she says. “I’m done. I’ve moved on.”

Bonnie Jacobs, a McNeil spokeswoman, says the company is committed to restoring McNeil’s reputation as a world-class manufacturer of over-the-counter medicines. “We will invest the necessary resources and make whatever changes are needed to do so, and we will take the time to do it right,” she wrote in an e-mail last Thursday.

If Queen Elizabeth II had been the chief executive of Johnson & Johnson, she might have called 2010 an “annus horribilis.”

J.& J.’s troubles with some of its consumer products began in earnest last January, when McNeil recalled millions of pill bottles after some consumers complained that they smelled like mold. By December, when it recalled 13 million packages of Rolaids soft chews that may have been contaminated with metal or wood particles, the company had closed one plant in Fort Washington, Pa., for an overhaul and had yet to solve the quality problems at another, in Puerto Rico.

The response of J.& J.’s chief executive, William C. Weldon, has been to allocate more than $100 million to upgrade McNeil’s plants and equipment, appoint new manufacturing executives, hire a third-party consulting firm to improve procedures and systems at McNeil and shore up quality control companywide. In Congressional testimony last fall, he promised that when the Pennsylvania plant reopened, it would “represent the state of the art in medicine production.” And he has repeatedly tried to reassure consumers, as he did when he promised that J.& J. had “no higher concern than providing parents with the highest-quality products for their children.”

Those reassurances, however, have been followed by yet more recalls. What is most perplexing is the seeming inability of executives to solve — and satisfactorily explain — the manufacturing issues that dog the company. Federal regulators have continued to fault the McNeil unit for failing to identify and address systemic problems at its plants, and consumers remain mystified about why simple products like O.B. tampons can disappear from drugstore shelves.

In July, McNeil submitted a plan to the F.D.A. detailing how it intends to overhaul its operations. To comply with regulatory standards, McNeil is undertaking thorough manufacturing and quality-control reviews for all its products, Ms. Jacobs says.

That means the recalls may continue. Last Thursday, Ms. Jacobs said the company would “take whatever steps are needed to ensure our products meet quality standards, including further recalls if warranted.”

Only a day later, McNeil recalled 47 million units of Sudafed, Sinutab, Benadryl and other drugs from wholesalers because of issues like inadequate equipment cleaning practices. The company said that the recalls were not a result of health problems and that consumers could continue to use the products.

JOHNSON & JOHNSON, with about $62 billion in sales in 2009, makes thousands of different kinds of products, including Band-Aids, baby shampoo, cardiac stents and advanced drug treatments for rheumatoid arthritis. It solidified a reputation for product quality with a company credo, dating from 1943, saying that the company owed its first responsibility to the mothers and fathers, doctors, nurses and patients who use its products.

With such a diversity of products and operating companies, Johnson & Johnson’s overall business has not suffered significantly. But the string of recent recalls at McNeil threatens to weaken the kind of trust that made many people willing to pay more for J.& J. brands.