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TheStreet Open House

J&J Sales Plunge As New Drug Recall Announced

LINDA A. JOHNSON

TRENTON, N.J. (AP) â¿¿ Sales of Johnson & Johnson pain relievers are collapsing as a string of recalls appears to have made consumers wary of once-sterling brands such as Tylenol and Benadryl.

An eighth recall, announced Thursday, could worsen consumer reaction. That wariness and the huge amount of products pulled off store shelves together look to be costing J&J tens of millions of dollars a month.

Thursday's recall by Johnson & Johnson's McNeil consumer health care unit covers 21 lots of products, including Children's Tylenol. Those were recalled because of a musty or moldy smell, extending a large Jan. 15 recall tied to a nauseating chemical on shipping pallets.

The company said the new lots were added to the recall as a precaution after an internal review found those lots, shipped and stored before Jan. 15, had been on the same type of wooden pallets.

An April 30 recall of more than 130 million bottles of children's and infants' liquid medicines involved products J&J said "may not meet required quality standards," may contain tiny metal particles or may have too much active ingredient.

The string of recalls is an embarrassment for a company that set the standard on how to do it correctly when it rushed to pull bottles of Tylenol â¿¿ deliberately poisoned by someone who was never caught â¿¿ off store shelves in the early 1980s.

This time, the culprit appears to be a lack of internal quality control. That's harder to forgive, particularly given that the public has little tolerance for mistakes or carelessness involving products for children, said analyst Steve Brozak of WBB Securities.

"This is pain by a thousand cuts," Brozak said of the repeated recalls.

Erik Gordon, a professor and analyst at the University of Michigan's Ross School of Business, said J&J has been too conservative about replacing those responsible.

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