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Is it Feast or Famine at Johnson & Johnson?

|Includes: Johnson & Johnson (JNJ)
Is it Feast or Famine at Johnson & Johnson?

Courtesy of Pharmboy at PSW and Phavorites of Pharma

Over the past few years, there has been a lot of talk about pharmaceutical manufacturing and persistant problems in quality control.  Genzyme, Schering Plough, are ones that comes to mind, but now Johnson & Johnson came under fire.  Manufacturing is a killer for any pharmaceutical company, as news breaks, companies scramble, and CEOs come on saying that everything is OK, and we are going to recall the product and get things fixed.  Unfortunately, those fixes take a lot longer than one would think, and in the case of a company as diverse as Johnson & Johnson (NYSE:JNJ), their current crisis is a good one.

Johnson & Johnson is a global American pharmaceutical, medical devices and consumer packaged goods manufacturer founded in 1886.  The corporation's headquarters is located in New Brunswick, New Jersey, United States. Its consumer division is located in Skillman, New Jersey. The corporation includes some 250 subsidiary companies with operations in over 57 countries. Its products are sold in over 175 countries. J&J had worldwide pharmaceutical sales of $22.5 billion for the full-year 2009 represented a decrease of 8.3% versus the prior year.  Net earnings and diluted earnings per share for the full-year 2009 were $12.3 billion and $4.40. Full-year 2009 net earnings included an after-tax restructuring charge of $852 million and an after-tax gain of $212 million representing the net impact of litigation matters. Full-year 2008 net earnings included special items related to in-process research and development charges of $181 million with no tax benefit and an after-tax gain of $229 million representing the net impact of litigation matters. Excluding these special items, net earnings for the full-year 2009 were $12.9 billion. Diluted earnings per share for the full-year 2009 were $4.63, representing an increase of 1.8%, as compared with the full-year in 2008.

The Company announced earnings guidance for full-year 2010 of $4.85 to $4.95 per share, which excludes the impact of special items.

In 2010, a suit brought by the United States Department of Justice alleges that the company from 1999 to 2004 illegally marketed drugs to Omnicare, a pharmacy that dispenses the drugs in nursing homes.  JnJ is vigorously fighting this claim, but I think they will settle it out of court.  More recently JnJ has broadened their recall children's medications for a manufacturing issue in a Puerto Rico plant.  Since last November, McNeil has recalled about 11.7 million bottles of various Motrin products and about 6.3 million bottles of Tylenol Arthritis  Pain caplets, according to the F.D.A.’s Web site. The company began the recall after receiving consumer complaints about a moldy odor emanating from some products.  The smell was caused by contamination from a chemical byproduct of a substance used to treat wooden transport pallets, the company said.  Senators on capital hill have called JnJ uncooperative.  Time will tell, but I thought all the companies have survived these ordeals (at least the big pharma have), and JnJ should be no different.  Wit the recent pull back in price, I thought we should look under the hood to see what they have leaving (patent expiries), what is moving, and what is coming down the pipe.

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