Tylenol products are in jeopardy
TYLENOL PRODUCTS CAUSING HEADACHES FOR JOHNSON AND JOHNSON, by Kim Peterson
NEW YORK (Money Central) – Tylenol is one of those products you just expect to be around forever, but that might not be the case. The brand is in serious trouble, and if Johnson & Johnson (JNJ) doesn’t do something about it, Tylenol is doomed. In the internal-analgesics market, the company’s sales and market share are down 65% from a year ago, according to Advertising Age. This is a crisis on par with the 80% market share drop Tylenol suffered after its tablets were laced with cyanide in 1982.
But unlike in the 1982 crime, JNJ has only itself to blame for the Tylenol headaches this time around. The company has serious manufacturing problems, and its McNeil Consumer Healthcare division, which makes Tylenol, announced seven recalls between September and March. Of course, those were nothing compared with the big April 30 recall of liquid children’s Tylenol and other pediatric products. That recall — estimated to include 136 million bottles — was significant enough to trigger a congressional investigation.
Last month, McNeil announced yet another recall, this one involving Benadryl allergy tablets and Extra Strength Tylenol gel pills, The New York Times reported. Sales of the company’s cough/cold and allergy medicines are down 59% from a year ago, Ad Age reported. A government inspection of the Pennsylvania plant that makes some versions of Tylenol, Benadryl, Motrin and Zyrtec found bacterial contamination, thick dust and grime, a hole in the ceiling and pipes covered with duct tape.
Things were so bad that Johnson & Johnson shut down the plant in May, and it’s still closed. Those affected medications won’t be back on store shelves until 2011 or possibly later. Shares of J&J dropped 10% from May to June but have begun a small climb back to about $61 this week. Of course, there’s much more to Johnson & Johnson than Tylenol. The company had sales last year of $62 billion, and the products made at the Pennsylvania plant generated only $650 million in sales, The Wall Street Journal reported.
But when even the U.S. Food and Drug Administration urges people to choose generic alternatives to Tylenol and Motrin, there’s clearly a bigger problem at stake. Tylenol and, to some extent, Johnson & Johnson have suffered brand and reputation damage. “It all raises the question of how well the brands can ever bounce back from a once-in-a-generation beating,” writes Jack Neff at Ad Age.
It’s going to cost J&J a good deal of money and time to get its Pennsylvania plant back on track. Once that’s finished, the real challenge begins: convincing people, especially parents, that Tylenol is safe to use again.