This Day On The Street
Continue to site
ADVERTISEMENT
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

J&J Recall Woes Infect Pharma ETF

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 - Get Report), 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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
JNJ $100.13 0.00%
IXJ $108.90 0.00%
PPH $71.48 0.00%
AAPL $128.95 0.00%
FB $78.99 0.00%

Markets

DOW 18,024.06 +183.54 1.03%
S&P 500 2,108.29 +22.78 1.09%
NASDAQ 5,005.3910 +63.9670 1.29%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs