Given the ongoing problems at the healthcare giant -- and the tremendous attention they've generated -- it is hardly surprising that some physicians have their doubts about Johnson & Johnson (NYSE:JNJ) management. The problems include a consent decree; manufacturing gaffes that led to the recalls of tens of millions of products; an alleged cover-up of the problems; government probes; and reduced sales.
And so Wall Street analyst David Maris of Credit Agricole Securities (OTCPK:CRARY) posed a simple question to 100 doctors: Has Johnson & Johnson lost its way?
What were the responses? Well, 53 percent reported that they trust J&J as much as ever. A few offered some off-the-cuff explanations, such as “everyone has ups and downs; can’t judge just by one year’s activity.” Another doc wrote: “These are minor issues in their products. We’ve lost all rationality due to fearmongerers.” And still another volunteered, “I feel that J&J has had some adverse events occur that may be related to the production of product because of poor controls in the factories. Some of these are related to the economy and some to human error. I think that J&J will pull out of this funk in 2011.”
Of course, to some, the glass may be half empty. The remaining 47 percent were not so confident. One respondent, in fact, expressed disappointment industrywide: "Few companies are the way they were.” Said another: “Certainly, we must assume they may be cutting a few corners to reduce production costs.” A third offered: “I have a family member in the pharmaceutical production field and know the stringent measures his company follows to assure compliance with standards and assuring patient safety. It surprises me that J&J has had so many recent issues.”
A few others had this to say: “The frequency of incidents speaks volumes,” wrote one doc. “They portray on ads a standup company, but unfortunately their public record proves otherwise,” yet another volunteered. “Sometimes problems stack up on you, other times when you lose control the wheels come off … where there is smoke there is often fire,” was another reply. And then one doc simply wrote: “Too many problems in too short a time to be a coincidence.”
This is hardly a scientific survey. At best, the questionnaire offers a window into the thinking of a small group; 100 doctors is not a large sample. Moreover, it is not clear which kind of physicians were queried or the extent to which their opinions will sway consumer choice, given that so many recalls involved over-the-counter meds such as Tylenol, Benadryl and Motrin -- although syringes, contact lenses and hip replacement devices were also yanked, which require physician involvement.
However, the response does suggest that Johnson & Johnson has a lot of work to do, not only with regulators, investors and consumers, but also with the one group that has a huge influence on the success of its prescription and surgical products, as well as its prestige. The findings hint that some doctors may think twice about the reliability of Johnson & Johnson products in general. And winning them back will take time and, possibly, expense. As Maris notes, the recalls may have a lasting impact.