IHS Global Insight Perspective | |
Significance | Johnson & Johnson (J&J; US) has announced further product recalls, covering 700,000 vials, 395 injection pens, and 70,000 syringes of its products in the past week alone. Last year, the company announced 17 recalls. |
Implications | The continuing problems put pressure on J&J to further review its manufacturing process and root out problems concerning its product recalls, which drained out USD900 million from its annual revenues in 2010. While the firm has embarked on a restructuring process, efforts may not be sufficient as regulatory pressures are likely to mount. |
Outlook | J&J's chief executive, William Weldon, is optimistic that all recalled products in 2010 will be back on the shelves by the end of 2011. That may well be so, but the continuing recall announcements this year and associated litigations will be reflected in in topline growth rates for 2011 as well. |
Recall List Extends for J&J
US pharmaceutical major Johnson & Johnson (J&J) has announced four product recalls in the past week, including drugs and other products. These include the antipsychotic drug Invega Sustenna (paliperidone palmitate), wound-sealing adhesives Dermabond, hernia repair product Securestrap, as well as the Remicade (infliximab) follow-on product Simponi (golimumab).
Invega Sustenna: The first recall was for 70,000 syringes of Invega Sustenna. The reason behind the move was the emergence that some of the pre-filled syringes may have cracks potentially affecting the sterility of the drug. The voluntary recall affected certain lots of its 234-mg-strength injections. Concerns that the label would cover these cracks, thereby going undetected by the user, were also expressed by the firm. The drug has been in the US market for the past four years and is indicated as a treatment for schizophrenia. J&J expects to resume shipments of the product in March.
Dermabond: J&J's unit Ethicon announced the recall of 700,000 vials of Dermabond, the wound-sealing adhesive, earlier this month due to reports of discoloration and longer than expected timeframe to set. There were voluntary recalls on 31 lots of the product, with 28 based in the United States. The product is a high-viscosity topical skin adhesive intended to hold closed skin edges of wounds from surgical incisions and trauma-induced lacerations.
Securestrap: A recently launched new product, Securestrap is the latest product included on the recall list. The product is a tool designed to help in hernia-repair procedures. The voluntary recall of this product is limited as it was introduced in late December 2011 (source: Wall Street Journal). The recall was announced after it emerged that the sterile packaging barrier may have been compromised, according to company spokesperson Barbara Montresor.
Simponi: Another of J&J's units, Centocor Ortho Biotech, issued a notification recently indicating a temporary shortage in the supply of Simponi 50-mg single-dose Smartject autoinjectors. The shortage came after 395 devices were recalled from a single lot. According to the firm, the move resulted from a manufacturing issue with the autoinjector device that led to an injection of less than the full 0.5 ml dose. J&J said that the autoinjector shortage will be potentially bridged by end of March 2011, and that there were no isses with the drug itself or with the Simponi 50-mg prefilled syringe. Simponi is indicated in the treatment of rheumatoid arthritis, psoriatic arthritis, and ankylosing spondylitis.
Outlook and Implications
The recalls present a worrying trend for the pharma giant. Although there were no adverse events reported in relation to the products withdrawn and the initiative was voluntary, J&J faces a severe dent in consumer and brand confidence in the immediate term. The recall announcements first started intensifying in late 2009, with the major challenge being the mass recall of 43 million bottles of over-the-counter paediatric treatments such as Motrin B (ibuprofen) and Tylenolol (paracetamol). The list now includes a mix of a variety of devices and drugs, including cancer drug Velcade (bortezomib), Simponi, antacids Rolaids and Mylanta, hip-replacements, as well as hernia repair tools and wound-sealing adhesives.
After the 17 recall announcements made during 2010, J&J has continued the trend in the first two months of 2011. The chief executive officer of J&J, William Weldon, has stated that he expects most of the products recalled in 2010 then due to shortage problems to be available on pharmacy shelves by end of 2011. Concurrent with the latest recall announcements, the company has again reiterated that the products will be back on the shelves by the end of March 2011. However, the broader problem apparently lies in J&J's manufacturing processes, which have affected a diverse range of products, and will force J&J to look into whether its current arrangements and procedures are compliant with regulations. While the firm last year announced that it will be investing in just such an exercise, the latest string of recalls will make this decision even more urgent. The impact on the topline growth will be also be significant. The financial figures for 2011 will probably reflect a drop in revenues as stocks are replenished, and profitability could be hit by higher costs due to investments in manufacturing operations. The threat of litigation costs is also expected to be higher, as product liability lawsuits will inevitably increase.