Johnson & Johnson has traditionally been one of the most trusted manufacturers of medical and health products in the United States. In the last several years, however, many Johnson & Johnson subdivisions have been roiled by waves of controversy over product quality. The company’s latest recall of DePuy hip replacement products is yet another scandal for Johnson & Johnson which may have untold effects on the company and its most valuable asset: its good name.
Many Johnson & Johnson products, such as “No More Tears” shampoo and “Band-Aids” bandages have been synonymous with stability and high quality in the markets they have served for many years. Thus, consumers might be surprised to learn that since the beginning of 2010, Johnson & Johnson and its subsidiaries have recalled over 50 separate products.
Additionally, two company manufacturing plants operated by its McNeil Consumer Healthcare unit are being supervised by the U.S. Food and Drug Administration for a five-year period after the agency became aware of numerous problems with its manufacturing processes.
In August 2010, Johnson & Johnson announced a recall of its DePuy hip replacement products, even though more than 90,000 had already been implanted worldwide. Some doctors have asserted that the type and amount of metal used in these artificial hips can contaminate the bloodstream of recipients and cause infection.
British medical authorities have put the failure rate of these hips at 49%, roughly four times higher than the company’s own given failure rate. Worse yet, lawsuits against the company allege that DePuy knew by 2007 of the potentially high failure rate of its products. DePuy also reached a $311 million settlement with federal attorneys in New Jersey after being accused of paying off doctors to promote and install their DePuy hip replacement products.
Some observers attribute Johnson & Johnson’s apparently ongoing quality issues to a confluence of its traditional culture of decentralization and a new emphasis on profitability. The fact that the company recalls appear to be spread across several of the company’s subsidiaries may indicate that problems at Johnson & Johnson extend to its highest executives, who have been accused of taking a “hands off” approach as long as their subsidiaries remain profitable. If this is the case, this would be directly at odds with the company mission statement penned in 1943 by then-CEO Robert Wood Johnson II, who urged that “everything we do must be of high quality.”
Ironically, the Johnson & Johnson name was once synonymous with corporate damage control. In response to a 1982 incident when a still-unknown person laced bottles of Tylenol in the Chicago area with cyanide, the company recalled Tylenol, introduced industry-standard tamper-proof packaging, and then basked in the glow of years of widespread accolades for the public relations acumen with which it handled the crisis. Only time will tell if Johnson & Johnson can regain the goodwill it once held among customers, or if the actions and attitude of its corporate leadership have irreparably damaged the company brand.
