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J&J CEO: Most Product Recalls are Behind Us; With Changes, We’ll Come Back Even Stronger

[Canadian Press DataFile] April 28, 2011 — NEW BRUNSWICK, N.J. — Johnson & Johnson‘s chief executive told shareholders at their annual meeting Thursday that the company will come back “stronger than ever” after addressing quality problems that resulted in an astounding string of product recalls.

William Weldon CEO of J J index

William Weldon, who became CEO in 2002, said the series of “disappointing recalls” troubled him and employees and meant thousands of parents could not get medicines they needed for their children.

Since September 2009, the company has had about two dozen recalls of prescription and nonprescription medicines, replacement hips, contact lenses and diabetes test strips, including tens of millions of bottles of children’s and adult Tylenol and Motrin.

Many of those nonprescription drugs were made at a liquid medicines factory in Fort Washington, Pa., that J&J closed a year ago, gutted and is rebuilding as a state-of-the-art factory. Shareholders saw photos of the plans and steel framework as work there continues, while Weldon tried to reassure them.

“You would be right to ask if we made mistakes, and yes, we did,” Weldon said. “Our goal is to restore McNeil Consumer Health Care to the highest level of quality … thus restoring confidence in McNeil.”

Weldon, 62, said J&J has inspected 120 plants around the world and invested millions to improve the quality of its manufacturing and satisfy federal regulators, who have three of its factories under scrutiny.

J&J has shifted manufacturing of some products to other factories.

Its biggest challenge may be winning back consumers as recalled products such as Tylenol and Motrin come back on the market this year and next.

Roughly 1,300 shareholders – fewer than in recent years – packed into four different rooms at a hotel opposite J&J’s headquarters seemed satisfied with Weldon’s explanation of the recalls and what J&J has been doing to rectify the problems. The audience clapped repeatedly during his comments and lengthy presentations about the company’s financial results and innovative medicines and medical devices in development.

After 2 1/4 hours of speeches, slideshows and testimonials about J&J products and health care programs, only six people in the audience asked questions or made comments.

“When I look at what’s been happening at J&J over the last couple of years, I see a fundamental attack on the credo,” Tom Williamson told Weldon.

He referred to J&J’s corporate pledge, displayed prominently at headquarters, that stresses responsibility to patients, doctors and nurses.

“Your company tried to do a stealth recall of Motrin,” he added.

William Weldon 2

Congress has been investigating that 2008 incident, in which J&J paid a third company to quietly buy up faulty Motrin packets, rather than issuing a recall.

But another shareholder, Kathleen Bennett, told Weldon she appreciates his efforts to fix the recall-related problems.

“I say, Mr. Bill Weldon, well done,” she said, drawing loud applause.

Shareholders also sided with the company on the three shareholder proposals on the agenda, voting them all down by 95 per cent or more.

One, by the Sisters of Charity of Saint Elizabeth and other religious groups, would have restricted future prescription drug price increases sharply. Another would have expanded J&J’s employment nondiscrimination policy to include people with health problems, but J&J said its broad policy is sufficient.

The third would have required ending use of animals in training surgeons to use J&J’s high-tech surgical tools; Weldon said J&J already tries to use alternatives when possible. That proposal was presented by Alka Chandna, a spokeswoman for People for the Ethical Treatment of Animals. The group had four picketers outside the hotel protesting on the issue, two in big pink piggy suits because pigs are sometimes used in surgical training.

A second group of three medical students picketed beside them, because J&J has not agreed to join an international “medicine patent pool” that would make it easier and cheaper for generic drugmakers to produce inexpensive HIV medicines for developing countries.

Weldon opened the meeting by touting J&J’s biggest deal ever, reached the day before. J&J agreed to buy U.S.-Swiss medical device maker Synthes Inc. for $21.3 billion. The deal, which should close next year, would give J&J a much bigger share of the market for surgical trauma equipment and orthopedic implants.

“It is consistent with our long-term strategy to strengthen our leadership position around the world,” Weldon said.

“Our pipeline today is considered one of the best in the industry,” Weldon added.

He also noted that J&J’s board had just decided to raise the quarterly dividend on company stock by 5.6 per cent, from 54 cents to 57 cents per share.

In afternoon trading, shares of the company fell 8 cents to $65.49.

(c) 2011 The Canadian Press

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