Storm over J&J`s child drug recall only grows
J&J recalled 40 widely used nonprescription products for children and infants.
Washington: Johnson & Johnson late last month, recalled 40 widely used nonprescription products for children and infants, such as Tylenol and Motrin, after Food and Drug Administration inspectors found filthy equipment and contaminated ingredients at a Pennsylvania factory.
"This is an issue of trust," House Oversight and Government Reform Committee Chairman Edolphus Towns told a hearing held to investigate the recall. "When parents and grandparents give these medicines to their children, they want to be confident that they are not harmful."
A J&J executive told the panel that the company had not lived up to its reputation and apologized for the concern and inconvenience created by the recall.
The FDA says there have been hundreds of complaints but no children have been known to be harmed.
Investors, previously confident the problems were a minor financial concern for the diversified maker of medical and consumer products, are beginning to be cautious.
JP Morgan analysts said on Tuesday that the recall could shave J&J`s sales by $300 million this year to nearly $62.3 billion. It is also likely to dent earnings by 3 cents per share or more depending on how much it costs to fix the problems, they said.
Shares of J&J closed down 0.2 percent at $59.03 on the New York Stock Exchange on Thursday, underperforming the S&P Pharmaceuticals Sub-Industry Index which rose 1.3 percent on a day of broad stock gains.
"I think it`s beginning to be" an issue, Noble Financial Group analyst Jan Wald said of the recall. "The more serious the government is going to take it, the more serious investors are going to take it."
Lawmaker said the episode highlighted the need to give FDA more power over drugmakers. Towns said he would introduce legislation to expand FDA`s ability to order a drug recall, something that now requires a lengthy legal process and court orders if a drugmaker refuses to voluntarily issue a recall.
Since the nationwide recall was announced last month, 136 million bottles of medicine have been recalled in the fourth company recall in the last 12 months.