This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

J&J Recall Woes Infect Pharma ETF

Stocks in this article: IXJ JNJ PPH

By Eric Dutram of ETFdb

NEW YORK ( TheStreet) -- Through almost six months, 2010 has not been kind to many of the world's largest companies, as a choppy market has given investors plenty of reasons to stay on the sidelines; debt issues threaten to drag down bank profits and a massive oil spill in the Gulf has sliced BP's shares nearly in half since the spill began almost six weeks ago (weighing on the entire sector in the process).

Meanwhile, an often overlooked situation is brewing at pharma giant Johnson & Johnson (JNJ), as the firm was recently forced to recall several children's pain and cold medicines over manufacturing issues which may have put metal particles into the products. Since hitting its 2010 high of just more than $66/share, J&J has plummeted more than 11.2% to its current share price of roughly $58.6/share, and some believe that the worst could still be ahead for the pharmaceutical giant.

The formal recall, announced on April 30, involved more than 136 million bottles of medicine, had metallic molecules and more active ingredients than approved. Moreover, the FDA found bacteria in some raw materials as well. This issue is likely to be dealt with easily by the gigantic firm but it could have long-term repercussions in terms of J&J's brand name power which is likely to suffer greatly from the incident. In addition to outrage from the public, many government officials are furious at the company for allegedly hiring a contractor to pose as consumers to buy the medicines in question rather than issue a formal recall.

The FDA is now looking into criminal penalties against J&J with Joshua Sharfstein, the FDA's principal deputy commissioner, telling lawmakers at a hearing that J&J's McNeil Consumer Healthcare unit had a "pattern of noncompliance" and that regulators were considering "seizure, injunction or criminal penalties" in order to punish the firm. More recently, the House Committee on Oversight and Government Reform said that J&J had not met its 4 p.m. deadline for handing over the recall related documents and that the committee is mulling its next steps in order to get J&J to hand over the documents including subpoenaing them.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs