Johnson  &  Johnson  Case  Study  Product  Recalls  2009  to  2011  

             IMPORTANT  ANNOUNCEMENTS:      

 

*Note that products do not bear either McNeil’s or Johnson & Johnson’s logo on the front

Recall & Process

Johnson & Johnson underwent 17 separate product recalls from 2009 to 2011, totaling an estimated 288 million items and 40 consumer brands, including liquid Tylenol, Motrin, Zyretc & Benadryl for children and infants; also Sudafed, Sinutab & Rolaids.

J&J announced its first recall in September 2009, taking back millions of OTC pill bottles after consumers complained that they smelled like mold. As recalls continued with alarming regularity, reasons cited include quality and potency; failing to meet internal requirements; the presence of wood or metallic particles; and customer complaints of nausea. No customers, however, have died or fallen seriously ill.

As part of the recalls, J&J closed one plant in Fort Washington, Pa., and acknowledged problems at another plant in Las Piedras, Puerto Rico. Both plants are operated by McNeil Consumer Healthcare Unit, a J&J subsidiary. J&J has faulted lax cleaning procedures and “insufficiencies in the development of the manufacturing process.” An FDA inspection report in May 2010 cited more than 20 manufacturing violations.

By January 2011, J&J announced that its product lines would not be back on the shelves in their entirety until at least October. The company is currently under both federal and state regulatory investigations, and McNeil's Canadian facility has assumed production of J&J medications.

“Our experience with the consumer recalls has been difficult and disappointing for our business, for our employees and most importantly, for our customers.”

— William Weldon, Johnson & Johnson CEO

Quick  Facts  Product  Category:  OTC  medications,  including  children’s  medications  Opening  date:  Sept.  24,  2009  Countries:  U.S.,  Canada,  Puerto  Rico,  Bermuda,  Brazil,  Dominican  Republic,  Dubai  (UAE),  Fiji,  Guam,  Guatemala,  Jamaica,  Puerto  Rico,  Panama,  Trinidad  &  Tobago,  Kuwait  and  The  Caribbean  Compliance  issue  discovery  date:  Sept.  24,  2009  –  Jan.  14,  2011  Brands  affected:  Benadryl,  Motrin,  Tylenol,  Rolaids,  Sinutab,  Sudafed,  Zyrtec  

RECALL TIMELINE (posted at mcneilproductrecall.com/) September 2009: J&J recalls a limited number of children & Infants TYLENOL® liquid products, including grape, cherry, strawberry and bubble gum flavors, because an unused portion of one inactive ingredient did not meet all quality standards. November 2009: J&J recalls a limited number of TYLENOL® Arthritis Pain 100-count bottles after identifying an unusual smell or taste that led to reports of nausea and related symptoms. December 2009: J&J recalls all available bottles of TYLENOL® Arthritis Pain Caplet 100-count bottles, again due to consumer reports of a moldy, musty or mildew-like odor associated with nausea, stomach pain, vomiting and diarrhea. The smell is due to the presence of trace amounts of 2,4,6-tribromoanisole (TBA). This can result from the breakdown of a chemical that is sometimes used in wood pallets that transport and store product packaging materials. The health effects of this chemical have not been well studied, but no serious events have been documented in the medical literature. January 2010: J&J recalls TYLENOL® products including Regular Strength, Extra Strength, Arthritis Pain, PM, Day & Night Value Pack, 8 Hour, and Children’s Meltaways. The recall follows more complaints of an unusual moldy, musty, or mildew-like odor associated with nausea, stomach pain, vomiting or diarrhea. March 2010: J&J recalls a limited number of TYLENOL®, Infants' MOTRIN® and Children’s ZYRTEC® distributed in the United States, because the potential exists for the product lot number and/or expiration date printed on the bottle to become illegible as a result of consumer handling over the life of the product. March 2010: J&J recalls ZYRTEC® Itchy Eye Drops after some samples tested as part of the manufacturer's stability program did not meet product specifications. April 2010: J&J recalls all OTC (OTC) Children’s and Infants’ liquid products manufactured in the United States and distributed in the United States, Canada, Dominican Republic, Dubai (UAE), Fiji, Guam, Guatemala, Jamaica, Puerto Rico, Panama, Trinidad & Tobago, and Kuwait. Brands include TYLENOL®, MOTRIN®, ZYRTEC® and BENADRYL®. June 2010: In a follow-up to the January recall, J&J recalls certain products that were inadvertently omitted from the initial recall action: BENADRYL® Allergy Ultratab tablets, sold in the U.S.; and TYLENOL® Extra Strength Rapid Release Gels, sold in the U.S., Trinidad and Tobago, Bermuda and Puerto Rico. July 2010: J&J recalls 21 more lots of OTC medicines sold in the United States, Fiji, Guatemala, Dominican Republic, Puerto Rico, Trinidad & Tobago, and Jamaica.

Products include: BENADRYL® Allergy Ultratab tablets, Children’s TYLENOL® Meltaways, MOTRIN® IB, TYLENOL® Extra Strength & TYLENOL® PM. October 2010: J&J recalls one lot of TYLENOL® 8 Hour caplets, 50 count, following complaints of a musty or moldy odor.

November 2010: J&J recalls one lot of ROLAIDS® Extra Strength Softchews, Cherry Flavor, 36 count, distributed in the United States, as a precaution following consumer complaints of an uncharacteristic consistency or texture, traced to crystallized sugar in the product.

November 2010: J&J recalls all lots of Children's BENADRYL® Allergy Fastmelt tablets, in cherry and grape flavors, distributed in the United States, Belize, Barbados, Canada, Puerto Rico, St. Martin, and St. Thomas; all product lots of MOTRIN® Junior Strength caplets, 24 count, distributed in the United States. The recall was initiated after a review, conducted as part of McNeil's Comprehensive Action Plan, revealed insufficiencies in the development of the manufacturing process.

November 2010: The same month, J&J also recalls TYLENOL® Cold Multi-Symptom Daytime Citrus Burst, Severe Cool Burst and Nighttime Cool Burst, in order to update the labeling for these products. An internal review revealed that information about the presence of alcohol from flavoring agents was noted as an inactive ingredient listed on the package, but not on the front panel of the product. Certain flavoring agents contribute small (< 1%) amounts of alcohol.

December 2010: J&J recalls all lots of ROLAIDS® Extra Strength Softchews, Extra Strength plus Gas Softchews, and Multi-Symptom plus Anti-Gas Softchews, distributed in the United States, because some consumers reported foreign materials in the product, including metal and wood particles. The company’s investigation has determined that the materials were potentially introduced into the product during the manufacturing process at a third party manufacturer.

January 2011: J&J recalls a limited number of TYLENOL® 8 Hour, Arthritis Pain and Upper Respiratory products; and BENADRYL®, SUDAFED PE®, and SINUTAB® products distributed in the United States, the Caribbean, and Brazil. These products were manufactured at the McNeil plant in Fort Washington, Penn., prior to April 2010, when production at the facility was suspended. The recall was initiated as a precautionary measure after an extensive review of past production records found instances where equipment cleaning procedures were insufficient or that cleaning was not adequately documented.

January 2011: J&J recalls certain lots of ROLAIDS® Multi-Symptom Berry tablets distributed in the United States, in order to update the labeling, after it was determined that the product labeling does not include the language “Does not meet USP” as required by regulation.

February 2011: J&J recalls about 70,000 syringes of an injectable formulation of the antipsychotic Invega after discovering cracks in the syringes, which could potentially lead to infections or reduced efficacy in users.

Johnson & Johnson’s Response

Since 2009, J&J has listed recall information not through its own website but through the Customer Care Center at McNeil’s website, which was likely designed to act as a buffer and deflect attention away from J&J. At McNeil, users can look up products by Lot Number to see if their purchases were affected. Instructions are provided on how to obtain refunds or replacements, and parents and caregivers who have given the products to their child or infant are encouraged to contact their child's health care provider or report issues to FDA's MedWatch Adverse Event Reporting program. Customers can also ask questions via phone, email or callback request.

Home Recalled Products Newsroom Frequently Asked Questions Contact Us

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We have developed this website to provide you with information on McNeil Consumer Healthcare product recalls.

Click here for information related to the recall of certain lots of TYLENOL® 8 Hour, TYLENOL® Arthritis Pain, TYLENOL® Cold, TYLENOL® Allergy, TYLENOL® Sinus, BENADRYL®, SINUTAB® Sinus, SUDAFED PE® and ROLAIDS® products (1/14/11) Click here for information related to the recall of all lots of ROLAIDS® Softchews (12/9/10) Click here for information about Other Recalls.

Please click on a product name below to learn more.

Our Consumer Care Center is here to answer your questions about product recalls and provide information about receiving a refund or coupon for recalled products. You can contact us by phone, by email or by requesting a call back per the options below.

Click here to email us. Click here to request a call back.

888-222-6036

TTY 800-722-1322

Click here to request a refund or product coupon on certain recalls.

TYLENOL® Allergy, TYLENOL® Cold

and TYLENOL® Sinus

To learn more, click here

TYLENOL® 8 Hour

To learn more, click here

TYLENOL® Arthritis Pain

To learn more, click here

ROLAIDS®

To learn more, click here

Adult BENADRYL®

To learn more, click here

SUDAFED PE®

To learn more, click here

SINUTAB® SINUS

To learn more, click here

Junior Strength MOTRIN®

To learn more, click here

Children's BENADRYL®

To learn more, click here

MOTRIN® IB

To learn more, click here

TYLENOL® Extra Strength

and TYLENOL® PM

To learn more, click here

Children's TYLENOL® Meltaways

To learn more, click here

Children's TYLENOL®

and Infants' TYLENOL®

To learn more, click here

Children's MOTRIN® and

Infants MOTRIN®

To learn more, click here

Children's ZYRTEC®

To learn more, click here

Information about Other Recalls

Click here for information about Previous Recalls.

If you are a resident of Canada, click here

In July 2010, McNeil announced it would reorganize the Penn.-based plant where the drugs are manufactured and cut 300 positions, or 75 percent of the jobs. McNeil has declined to comment on what specifically led to its manufacturing troubles, but said the company is taking steps to address factors that could have contributed.

J&J also has promised to allocate more than $100 million to upgrade McNeil’s plants and equipment, appoint new manufacturing executives, hire a third-party consulting firm to improve procedures and systems at McNeil, shore up quality control companywide and

create a single framework for its drug, medical device and consumer health divisions. While acknowledging mistakes, the company insists the recalls do not reflect “systemic problems” across the corporation, and that it’s committed to restoring its reputation as a world-class manufacturer of OTC medicines. McNeil is conducting assessments at other manufacturing sites as well, which could lead to more product recalls.

“We will invest the necessary resources and make whatever changes are needed to do so, and we will take the time to do it right.”

— Bonnie Jacobs, a McNeil spokeswoman

Regulatory Response & Litigation

Consumers started complaining as early as April 2008 about moldy-smelling Tylenol arthritis caplets that caused nausea or stomach problems. But McNeil did not alert the F.D.A. until September 2009 and then did not start a substantial recall until December 2009 — during an F.D.A. inspection of the plant, according to F.D.A. documents.

At the same time, Oregon filed a lawsuit against J&J in over a "phantom recall” of Motrin drugs. According to the suit, J&J allegedly sold more than 80,000 packets of defective Motrin products to consumers in the state for more than a year. After discovering in late 2008 that some supplies of Motrin were not properly dissolving, the suit alleges, J&J hired contractors to go into stores in early 2009 and secretly buy the faulty products without telling wholesalers, retailers or consumers about the problem.

At least 14 states are now involved in the lawsuit filed against J&J and its two subsidiaries, McNeil PPC Inc. and McNeil Healthcare Inc. FDA officials learned of this "phantom" Motrin recall in mid-2009, but the suit alleges that J&J's McNeil division did not publicly announce a recall until February 2010, and that despite the secret Motrin

removal, more than 787 eight-count containers of the allegedly defective Motrin remained in stores for sale in the state.

Companies that break the rules and put consumers at risk will be held accountable."

— John Kroger, Oregon Attorney General

During Congressional testimony under

the Committee on Oversight and Government Reform, an FDA representative said that the agency found inspectional deficiencies at all McNeil facilities. The FDA also found itself defending its own actions, rebutting accusations that it maintained a “too-cozy” relationship with J&J and pointing out that it has no legal authority to force a manufacturer to issue a recall.

"One common concern (with J&J) is its failure to investigate and correct product problems in a prompt and thorough manner. FDA intends to keep a close eye on these facilities until the company earns back our confidence.”

— Joshua Sharfstein, FDA deputy commissioner

After months of maintaining that the company did not engage in any deceptive practices in the Motrin recall, J&J CEO William Weldon finally admitted to lawmakers in December that J&J secretly bought up defective drugs without informing regulators and consumers of its actions, and that J&J seriously erred in delaying to issue recalls.

“I know that we let the public down. We did not maintain our high quality standards. Children do not have access to our important medicines. I accept full accountability for the problems and I will take full accountability for fixing them.”

— William Weldon, J&J CEO

Additionally, the lawsuit alleges that J&J's activities reflected multiple violations of Oregon's Unlawful Trade Practices Act (UTPA), which prohibits companies from "employing unconscionable tactics, making certain false or misleading representations, or failing to disclose a fact."

The state is suing J&J for civil penalties of up to $25,000 for each violation of the UTPA, which could amount to millions of dollars. Originally Oregon offered a proposed settlement to J&J prior to the lawsuit, which included a payment of $725,000 by J&J to the Justice Department to settle the dispute. But J&J rejected the offer and said it intends to defend itself in court.

McNeil has said that its actions were "consistent with applicable law and there was no health or safety risk to consumers associated with this limited recall."

In March 2011, the FDA announced that it is taking over three of McNeil’s plants — two in Pennsylvania and one in Puerto Rico — under a consent decree that can impose daily fines of $15,000 until the factories are brought to compliance. The agreement also requires McNeil to destroy all drugs that have been recalled since December 2009.

In addition, two bills introduced this year would impose stricter regulations on the industry and give the FDA authority to mandate recalls. The FDA is also cooperating with an ongoing Justice Department criminal investigation into J&J's recall issues. Meanwhile, a shareholder lawsuit filed last month against Johnson & Johnson’s directors, catalogs a long list of “federal and state regulatory investigations, subpoenas and requests for documents, F.D.A. warning letters, news articles and the recall of products accounting for hundreds of millions of dollars of corporate losses.”

Media Attention

In terms of brand crises, J&J ranked third in 2010 behind the Toyota recall and the BP oil spill. Unsurprisingly, the recalls and ensuing legal troubles received extensive coverage from nearly major news outlets, including USA Today, The New York Times, Reuters, NPR, Washington Post, Huffington Post, Yahoo News, ABC News, Fox News, MSNBC, CNN Money, Forbes and BusinessWeek. The Wall Street Journal’s Health Blog kept tabs on the recalls starting in November 2010, often with the headline “J&J Recall Watch.”

Many websites covered the recall to varying degrees, including efitness, fiercepharma, pharmalot, redOrbit, digitaljournal, portfolio, smartabouthealth, mainstreet and thestreet, the last of which created a 20-page “J&J Recall Slideshow.”

A Google search for “J&J Recall” yields 14.9 million hits; a Google news search yields 339 news items. Hitwise reported that online searches for Tylenol reached a four-year high during a one-week period in late September/early October 2009 shortly following the J&J recall of Tylenol products.

Search traffic

spiked again in May 2010, likely because of April’s recall, the largest to date of OTC medications for children & infants. Nearly all Web traffic came from within the United States.

Most coverage in traditional media outlets has been neutral. Though product recalls are still ongoing, coverage has tapered off, likely because of “media fatigue” and the fact that the recalls involve similar products with little new information. A spurt of coverage will likely resume if J&J goes to trial to defend itself against pending lawsuits.

J&J issued a statement on their website regarding the recalls but appears to be practically silent in discussing their investigation of the problem and did little, if any, public service announcements to reassure the public.

The most incriminating media coverage against J&J often came from testimonials of frustrated parents. In some cases, customers tossed out medicines during the first recall, bought replacements, and were then forced to toss medicines out during the second recall.

“It makes me question their quality control. It makes me wonder if they have the parent’s best interest and the children’s best interest at heart.”

— Mark Mandel, father of 21-month-old-daughter, Chicago YouGov BrandIndex, a market research firm that tracks consumer attitudes, says it has noticed a steady erosion over the last 18 months in how consumers perceive not just drug brands like Tylenol but J&J as a whole. “They’ve really got to stop the bleeding. What the company really needs to do is not have any more recalls for six months, nine months, 12 months.”

— Ted Marzilli, BrandIndex executive

Social Media Response

During September 2009, a flood of news coverage addressed consumer health complaints following J&J’s recall of children’s Tylenol products, resulting in more than 3,000 blogs on the subject during the month of September alone.

“I don’t even consider buying them any more. I’m done. Now I have to go back to a generic version as well as beg and bribe my kid to take her allergy medicine. No fun for any parent who has kids who won't take their medicines. Since I have no idea when a safe version will be available.”

— Thien-Kim Lam, blogger and mother of two

J&J’s blog doesn’t acknowledge the recalls until January 2010, and most of it is taken from a press release. The author did not list his full name or title in the blog post, but did so after being prompted in a reader comment (Marc Monseau, Director, Corporate Communication, Social Media, Johnson & Johnson).

About a half dozen blogs from J&J’s site address recalls throughout 2010, often providing links to the McNeil site or reprinting public statements. Reader responses are largely critical, even when coming from McNeil employees. Some customers claim to have had adverse effects to recalled medications; others expressed difficulty in obtaining refunds or customer service.

One group of frustrated parents started their own Facebook page, with the aim of pressing J&J to disclose full details of the recall. Generating hundreds of wall posts and six discussion threads, the site comprises 1,366 members. The last comment in August 2010 heralded the Oregon lawsuit as a victory.

McNeil Product Recall - Children's Tylenol, Motrin, Zyrtec and Benadryl

Name: McNeil Product Recall - Children's Tylenol, Motrin, Zyrtec and Benadryl Category: Common Interest - Health & Wellness Description: This group represents angry and frustrated parents who give their children Children's Tylenol, Children's Motrin, Children's Zyrtec and Children's Benadryl. Attempts to call the 800# to inquire getting additional safety information and refunds has been met with less than stellar results. The goal of this group is to press McNeil Consumer Healthcare and its parent company Johnson & Johnson to disclose full details on the recall. There is much we do not know. Privacy Type: Open: All content is public.

Hello Marc, I started a group on Facebook so that parents could voice their concerns in regard to your recall. This group is the link attached to this posting. Furthermore, I would highly recommend that J&J and McNeail Consumer Healthcare take a serious look at how

you’ve handled this situation thus far. To be specific: your recall announcement at 9:15 pm on a Friday night was deliberate to minimize media exposure. You know very well that consumers watch very little news during the weekend compared to a weekday. Your hopes that this will be “played out” come Monday morning is completely irresponsible. Your press release was very vague not detailing what products have which issues nor how extensive these issues have become. There are a lot of angry parents whom need additional information and I hope you’ll come clean. Until that time, I will do whatever I can to be the REAL story to light. If any questions please feel free to contact me. In addition, I’ve notified all members of the group and posted what I wrote on your blog so if they visit here and don’t see this posting they’ll know that you deleted it. Regards, Evan D. Owen

McNeil also started its own Twitter account, @McNeilRecall, which tweeted 17 times to 118 followers between January and July of 2010. Sample tweets:

McNeilRecall McNeil Recall McNeil Consumer Healthcare has recalled 21 product lots as follow-up to the 1-15-2010 recall. Details at www.mcneilproductrecall.com 8 Jul Favorite Retweet Reply McNeilRecall McNeil Recall Statement: "We apologize to those who rely on our medicines for the concern & inconvenience this recall may have caused"http://bit.ly/YnLeH 5 May Favorite Retweet Reply McNeilRecall McNeil Recall For details on why we are doing a voluntary recall, read our press release at www.mcneilproductrecall.com 15 Jan 10 Favorite Retweet Reply

J&J’s Twitter feed, @JNJComm, does not mention the recalls. The company also has its own YouTube channel, but none of its published videos address the recalls. Its RSS feed doesn’t mention the recalls either, though it’s accessible only for the last 30 days to nonsubscribers.

Markets & Financial Impact

For J&J (NYSE: JNJ), the cost of the recalls comes to about $900 million in lost sales for the fiscal year 2010. J&J lost $300 million in the fourth quarter alone; overall losses averaged 12% in quarterly profits due to the recalls. During the first quarter in 2010, sales dropped 25% in the U.S. to $542 million; world-wide sales were off 10.5% at $1.2 billion. U.S. sales of J&J consumer brands also plunged 25 percent in the third quarter, consistent with the 25 percent decline in overall consumer sales in the U.S., to $1.3 billion from $1.7 billion for the same period in 2009. Meanwhile, sales of over-the-counter medicines and nutritional products declined about 40 percent, to $438 million.

During the recalls, J&J consistently underperformed the Dow Jones and Dow Jones US Pharmaceutical Indices. Share price fluctuation between J&J (blue) versus Dow Jones (green) and Dow Jones US Pharma (red) is illustrated below. J&J began to lag significantly behind the Dow Jones US Pharmaceutical Index following the first recall in September. Entering 2011, the gap has only widened, with J&J shares potentially underperforming by more than 10% relative to the sector index.

*Yahoo Finance J&J’s stock price in March 2011 is comparable to Sept. 2009 and is of the order of approx. $59. This corresponds to a market capitalization of approx. $159 billion. Missed potential growth opportunities (relative to the market index) since Sept. 2009 is a whopping $16 billion. Though it is difficult to quantify how much of these losses are a direct result of the recall, the apparent lost TSR is certainly significant. To reflect the impact of the voluntary recall and the suspension of manufacturing at the McNeil facility, the company lowered its earnings guidance for 2010 to a range of $4.65 to $4.75 per share from an earlier outlook of $4.80 to $4.90 a share. Analysts expected J&J to earn $4.75 per share in 2010 and $4.99 per share in 2011. J&J has begun to resell some of its brands, such as St Joseph's aspirin, the subject of an earlier recall. Sales of children’s liquid Tylenol and Motrin decreased 60 percent or more while drugstore brands have gained 93 percent. In addition, J&J is taking a $922 million hit related to its recall of certain DePuy hip implants that occurred in August 2010. Government intervention by the FDA and potential fees incurred could cost J&J another $50 to $100 million by some estimates.

J&J employees eligible for bonuses last year will receive only 90 percent of the recommended amount due to a decline in overall company performance in 2010. The company paid out 100 percent of recommended bonuses the previous year.

Currently J&J is attractively valued at 12.70 times earnings and yields 3.6 percent. Note that adjusted earnings exclude litigation costs. The most direct costs are the manufacturing lots that had to be destroyed, and J&J has declined to specify how many units are in a lot. In January 2011, Goldman Sachs lowered its 2011 earnings estimates for the company to a “neutral” rating and a $59.00 price target on the stock, partly because of the time it might require to bring the closed plant up to FDA standards. The same month, analysts at Wells Fargo & Co. also downgraded shares of Johnson & Johnson from an “outperform” rating to a “market perform” rating, with a $65 price target on the stock, down previously from $69. J&J expects to incur "significant costs" in 2011 related to product recall and quality issues. J&J CFO Dominic Caruso said those costs will chop about 6 cents per share from earnings, as compared to the $4.40/share the company earned in 2009. Full-year sales in 2010 hit $61.6 billion, down 0.5% versus 2009. Caruso estimated that sales in 2011 will reach $64 billion. Analysts surveyed by Bloomberg have predicted adjusted earnings of $4.98 a share for 2011 and sales of $64.2 billion.

Lessons Learned

What J&J did right:

• Accepted responsibility: CEO William Weldon accepted blame before a Congressional hearing and admitted the company had made serious missteps. If J&J does fully regain the public trust, Weldon’s admission was the beginning.

• Took concrete actions: J&J has closed or retooled its plants, created new oversight positions and invested millions of dollars. Its products are scheduled to be back on shelves in their entirety by the second half of 2011.

• Engaged on social media: J&J used blogs and a Twitter feed to convey a human face and a conversational voice, and to answer questions and point consumers in the right direction.

• Minimized damages: Throughout all the recalls, no one has been killed or seriously injured. And despite significant financial losses, the company appears to be in no jeopardy of going under.

What J&J did wrong:

• Lost sight of its mission. Confidence in the quality of family medicines is a sine qua non and not something that can ever be compromised. Quality control is an essential core competency in any sector dealing with family health and well-being. How J&J lost sight of this fundamental principle is frankly puzzling.

• Lost sight of the importance of quality control. Implementing a phantom recall and refusing to answer questions about other recalls only further weakened the trust that made many people willing to pay a premium for J&J brands.

• Took too long to respond: A month or even a week is an eternity on the media’s clock. Rapid responses are critical. Online critics noted that J&J announced recalls late on Friday night in an apparent attempt to limit coverage.

• Delivered poor customer service: J&J failed both to reassure frustrated parents and to provide adequate channels for them to quickly reach help centers by phone or Internet. The shoddy behavior in this regard is at odds with J&J’s reputation for family values.

• Displayed shortsightedness on social media: The use of such tools raises the expectation of dialogue and building long-term relationships, but J&J used them as a one-way conduit to push off users to other websites or rehash press releases.

• Lost the confidence of the FDA: By failing to properly notify the FDA or comply with its recommendations in a timely fashion, J&J now has to endure government oversight until compliance is reached. The financial costs will likely be in the tens of millions, to say nothing of the cost of bad publicity. Additionally, even after this crisis is resolved The FDA is hardly likely to be well disposed towards J&J in any future dealings together.

• Eroded brand equity & consumer confidence: If recalls continue in 2011, the public may lose confidence in J&J altogether. The length of time the products are off the shelf provides greater opportunity for others to fill the niche and it will be correspondingly more difficult to win back market share.