New Tylenol recall adds to maker's woes

By Parija Kavilanz, senior writer


NEW YORK (CNNMoney.com) -- Johnson & Johnson reported a sales drop in its third quarter Tuesday, saying that successive recalls of its over-the-counter drugs have "significantly impacted" its business.

New Brunswick, N.J.-based Johnson & Johnson (JNJ, Fortune 500) said total sales last quarter fell 0.7% over the same period last year to $15 billion.

The company said sales were significantly impacted by "previous announced recalls" of certain over-the-counter medicines such as Tylenol, Benadryl and Motrin, and the temporary shutdown of a manufacturing plant that makes those drugs.

Johnson & Johnson said its domestic sales fell 2.5% while international sales increased 1.1%.

Late Monday, Johnson & Johnson's McNeil Consumer Healthcare division, which makes the non-prescription drugs involved in this year's recalls, announced another recall of a Tylenol product sold in the United States and Puerto Rico.

McNeil recalled 127,728 Tylenol 8 Hour Caplets 50 -count bottles for an "odor" problem that led to consumer complaints.

The company said the odor was potentially caused by the presence of a chemical called 2,4,6-tribromoanisole.

Earlier this year, McNeil recalled several lots of Tylenol drugs for the same problem. The company said at the time that the chemical, which is applied to wooden pallets that are used to transport and store packaging materials, somehow leached into the products.

But the U.S. wooden pallet industry took issue with McNeil's explanation.

Children's recalled drugs returning

After an five month absence from stores, Johnson & Johnson restarted limited shipment some of its recalled over-the-counter children's drugs to retailers this month.

The company said its is on track to ship 4 million bottles of liquid Children's Tylenol, in the 3.38 fluid-ounce grape flavor, by the end of the year.

McNeil's plant in Fort Washington, Pa., which makes the children's medicine, is still shut for production following serious manufacturing violations. The plant is not expected to reopen until late next year.

In the meantime, the company has temporarily shifted production of its children's medicines to a plant in Canada and said it expects production of the recalled children's drugs to reach "normal" levels by the middle of 2011.

Economy hurting its consumer business

McNeil spokesman Marc Boston said Monday that the new recalled lot was not part of the lots manufactured and recalled earlier this year. He said the lot recalled this week was made this past March.

While the recalls have dented its non-prescription drugs business, Johnson & Johnson said the economy was also hurting performance of some of its other key consumer business units.

"There was a third-quarter deceleration in growth trend in the overall health spending that is related the economy," Johnson & Johnson's CFO Dominic Caruso told analysts during a call Tuesday to discuss the company's results.

The company said over-the-counter U.S. drug sales in the quarter fell 40.2% from a year earlier. Skincare product sales dropped 15.9%, while sales of oral care products declined 12.3%.

Total consumer products sales slid 24.5% in the United States and declined 10.6% internationally.

For the full-year, the company expects flat operational sales versus last year.

However, Johnson & Johnson upped its full-year earnings guidance, excluding items, to $4.70 to $4.80 a share, citing recent currency exchange rates.

Shares of Johnson & Johnson fell 1.6% in premarket trading. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,356.87 288.00 1.69%
Nasdaq 4,644.31 96.48 2.12%
S&P 500 2,012.89 40.15 2.04%
Treasuries 2.15 0.08 3.72%
Data as of 2:27am ET
Company Price Change % Change
Bank of America Corp... 17.26 0.54 3.23%
General Electric Co 24.66 0.23 0.94%
Apple Inc 109.41 2.66 2.50%
Cisco Systems Inc 26.81 0.22 0.85%
Microsoft Corp 45.74 0.58 1.28%
Data as of Dec 17

Sections

That number will likely grow as the Obama Administration eases restrictions with the Communist country. More

Laurie Segall sits down with Reddit founder Alexis Ohanian and founder of AeroFS, Yuri Sagalov, to discuss how immigration reform could bring more skilled tech workers to the U.S. More

News startup The Skimm announced a new round of funding, 1 million active readers, and plans to expand into a 'lifestyle brand.' More

Congress waited until the last minute to decide what to do with a slew of expired tax breaks. They extended most of them, and a handful will affect individuals directly. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.