Tuesday, October 19, 2010

Fool Me Once...

I'm not a health-care industry analyst, so why am I writing about Johnson & Johnson for the fourth time this year?

It's to say, "I told you so."

And I'm not happy about it.

Back in January (here), I wrote about how long it took McNeil Consumer Healthcare, a J&J division, to respond to consumer complaints about odd smells in some bottles of over-the-counter medications. At that time, I wrote,
As a consumer, I have plenty of generic non-branded choices for pain relief. Unless I have a good reason to trust J&J to provide me with a higher level of product quality, why would I pay extra for Tylenol or Motrin?
I wrote again about McNeil in March (here), about the steps the company was taking to address the funny-smell problem (traced to chemicals leaching from wooden pallets that were used to transport and store product packaging materials), and contrasted the company's behavior with the "gold standard" comments J&J got in 1982 for its Tylenol recall.

And then in August, news broke of more problems, this time at the DePuy Orthopaedics unit and Acuvue contact lens. It was the ninth product recall for J&J this year. In that post (here), I quoted an investment banker who follows the company:
No. 1, is there a systemic issue at J&J? No. 2, is this [the DePuy hip-replacement recall] reflective of that systemic issue? And, No. 3, is there more to come?
I also noted that all these recalls were starting to affect J&J's bottom line.

And now it seems to be affecting consumer behavior.

Andrea Gardner, for American Public Media's Marketplace program today, reports that more and more parents are realizing that "there is no boogieman in the [generics] bottle", which could have a huge, long-term impact on companies like J&J.

Gardner notes (full story here) that she usually bought generics for herself, but bought branded products to care for her infant. With the recall of Infant Tylenol in April, she turned to generic acetaminophen. Will she go back when production ramps up again?

Gardner quotes a pharmaceutical industry analyst, who thinks that she, and other mothers like her, will return to the fold. There will be "a barrage of ads from J&J in 2011 and '12, with a message of trust, and changes made in the wake of the recall," he believes.

But: today's New York Times reports that McNeil is now voluntarily recalling eight-hour Tylenol caplets made at its Fort Washington PA plant, before that plant was closed.

Can a massive advertising campaign really make consumers forget everything they've heard this year? Fool me once.... Fool me twice.... Fool me thrice....

At some point, consumers can't be fooled anymore.

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