Does product recall hurt Johnson & Johnson?

The company's latest recall of children's medicines may push more people to use generics.

By Kim Peterson May 3, 2010 2:55PM
Tylenol. Credit: © Paul Sakuma /AP PhotoA product recall is tough on any company. But when the recall involves children's medicines, the issue becomes very important to parents -- and can have long-lasting consequences.

In the case of Johnson & Johnson (JNJ), some parents are wondering if generic drugs are simply a safer bet. The recent recall of children's Tylenol, Motrin and other medicines is at least the fifth recall in a year for the company's McNeil Consumer Healthcare division.

"Well, then no more baby Tylenol, back to generic brand," one father wrote on his Twitter account, according to The New York Times.

If a growing number of parents feel the same way, then Johnson & Johnson is going to have problems. After all, a brand like Tylenol is supposed to be one that parents trust, and will choose over the generics at the drugstore.

But if Tylenol and Motrin begin to be associated with quality problems, concerned parents will go elsewhere. In the company's press release Friday, it admits that some of its products "may not meet required quality standards."

"It makes me question their quality control," one scientist told the Times. "It makes me wonder if they have the parents’ best interest and the children’s best interest at heart."

One pediatrician in Illinois is even advising parents to choose generic versions of the medicines, according to The Wall Street Journal. And even then, he said, parents should make sure those generics weren't manufactured by Johnson & Johnson.

Comments like those are about as bad as you can get when it comes to corporate PR. Post continues after video:
There are also questions about how Johnson & Johnson handled the recall, at least initially. Our Smart Spending blog reports that the company didn't tell people at first how to get a refund for the products. It merely published a phone number with a three-minute recording for parents. (Now, there is a website with more information at

But despite the fallout from the recall, Johnson & Johnson shares were doing fine Monday. The share price was up nearly 2% in the afternoon to $65.47.

That's because there's a lot more to Johnson & Johnson than children's medications. Barron's estimates that J&J shares should rise as much as 20% within a couple of years, largely due to earnings growth, a strong product pipeline and a solid balance sheet, Reuters reports.
The shares are trading above their 50-day and 200-day moving average and their next resistance level is $65.69, Comtex SmarTrend reports.

So Barron's loves the stock, but others aren't so sure. "Johnson & Johnson can't afford this kind of incompetence and the resulting publicity," writes Brett Chase on

Related reading:

Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

124 rated 1
266 rated 2
452 rated 3
702 rated 4
671 rated 5
604 rated 6
640 rated 7
495 rated 8
267 rated 9
158 rated 10

Top Picks




Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.