J&J's Image Takes a Beating With Latest Recall

Is Johnson & Johnson the Toyota of the drug industry?

This weekend, the once-highly respected health care giant began a major recall that includes Children's Tylenol and Motrin infant drops. The recall by J&J's McNeil division cites various reasons, including too much active ingredient and "particles." J&J just conducted a recall of children's medicines in January and that followed over the counter drug recalls in November and December.

In January, the company was criticized by Food and Drug Administration officials who basically accused it of being careless and unresponsive to past problems.

This stream of mishaps is coming from one of the mostly highly touted companies in health care. J&J was one of Warren Buffett's favorites stocks until he started unloading shares last year. It's interesting that Barron's ran a glowing story Saturday about J&J and its stock as a potential buy just hours after the recall was announced.

Johnson & Johnson can't afford this kind of incompetence and the resulting publicity. Patent expirations are taking their toll on sales and, as Toyota teaches us, a company can only count on past goodwill for so long.