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J&J Revamps McNeil Unit After Recalls

By Jonathan D. Rockoff
687 words
31 March 2011
The Wall Street Journal Online
WSJO
English
Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved.
Johnson & Johnson is revamping the troubled unit that makes Tylenol and giving it new leadership in an
effort to fix quality problems that have prompted multiple recalls, according to people familiar with the matter.
The changes are the latest in a series of efforts by the New Brunswick, N.J., health-care-products company
to address manufacturing issues, which have damaged its reputation with consumers and invited scrutiny
from Congress and regulators.
Through its McNeil Consumer Healthcare unit, J&J sells Tylenol as well as such other popular cold, pain and
allergy medicines as Benadryl, Motrin and Zyrtec. Within the J&J organization, the McNeil unit had been
lumped together with a wider group of consumer health-care businesses, selling products ranging from
Listerine mouthwash to Visine eyedrops.
Starting on April 4, McNeil Consumer Healthcare in the U.S. will be its own organization, according to people
familiar with the matter.
The unit will be overseen by Patrick Mutchler, a 35-year J&J veteran who has held a variety of assignments
on the company's consumer side, most recently overseeing the sale of baby products such as Johnson's
Baby Lotion, these people said.
Marc Robinson, who had overseen J&J's over-the-counter businesses world-wide, and Peter Luther, who
had been president of McNeil Consumer Healthcare, have been given other roles. Neither was available for
comment, a J&J spokeswoman said.
Jesse Wu, the J&J executive who manages all of its consumer businesses, told employees in a message
reviewed by The Wall Street Journal that he is making McNeil separate "in order to give focused attention to
quality and compliance, and the critical task of restoring" the reputation of its products.
A J&J spokesman confirmed the reorganization and declined further comment.
Since late 2009, McNeil has issued more than a dozen recalls due to manufacturing problems that have
included the presence of metal shavings in some children's medicine bottles. The problems prompted the
shutdown of one of McNeil's manufacturing facilities and dealt a notable blow to the company's once-sterling
reputation for quality.
Some parents say they won't buy Tylenol for their children anymore. Congress has held two hearings
probing the problems. The company says the recalls cost it $900 million in sales last year.
Separating out McNeil is an unusual move for sprawling J&J.
In fact, the rest of the company's consumer businesses will be organized regionally, with different units for
different parts of the globe, such as Latin America and Asia-Pacific. Keeping McNeil separate signals the
company wants to focus on its operations and on fixing its problems.
Still, resolving them will depend on the ability of Mr. Mutchler and other officials to figure out what led to the
lapses and establish stringent new systems to ensure raw materials are handled properly, machinery is
maintained correctly, testing of finished products is done appropriately and complaints are investigated
promptly, said one person familiar with the undertaking.
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"Everybody will make a speech saying, 'We are going to clean this up.' The question is, are you going to putup or shut up, because these things are difficult to fix," this person said.
Chief Executive William Weldon, who has faced criticism for his handling of the quality issues, hasreorganized manufacturing companywide, and a review of operations has resulted in recalls of some hip-repair parts, certain contact lenses and a variety other products that are made by units aside from McNeil.
In March, the McNeil unit signed a consent decree with the Food and Drug Administration that puts three keymanufacturing plants under at least five years of close regulatory supervision. Among the plants is the one inFort Washington, Pa., that made Benadryl, Motrin, Tylenol and Zyrtec. It was shut down in April 2010 andcan't re-open until the FDA certifies a re-fitting has fixed its problems.
Write to Jonathan D. Rockoff at Document WSJO000020110330e73v00c1d Page 2 of 2 2011 Factiva, Inc. All rights reserved.

Source: http://blog.richmond.edu/acct305s11/files/2011/04/JJ-Revamps-McNeil-Unit-After-Recalls-WSJ.pdf