J&J ortho unit recalls hip replacement systems

* DePuy Orthopaedics recalls two hip replacement systems

* ASR XL Acetabular, Hip Resurfacing systems recalled

* More damage to J&J's reputation seen

* J&J shares slightly lower

(Adds details, background, analyst comment, stock prices, byline)

By Debra Sherman

CHICAGO (Reuters) - Johnson & Johnson, whose consumer unit has been plagued by massive recalls over the past year, said on Thursday its orthopedic unit was voluntarily recalling two hip replacement systems.

J&J's DePuy Orthopaedics said it was recalling its ASR XL Acetabular System and ASR Hip Resurfacing System -- both used in hip replacement surgery -- due to the number of patients requiring a second hip replacement procedure, or a revision.

The recall comes a day after the U.S. Food and Drug Administration warned DePuy to halt sales of its Corail Hip System for unapproved use, and about a week after J&J's Vision Care recalled some 100,000 boxes of 1-Day Acuvue TruEye lenses overseas.

Over the past year, J&J's reputation has been tarnished by numerous recalls of Tylenol, Motrin and other nonprescription drugs brands.

Previous recalls were related to manufacturing issues, but the recall of the hip replacement systems "seems to be more of a design issue," said Noble Financial Group analyst Jan Wald. "Perhaps it points to an issue at the company that relates to the quality of design within orthopedics."

He added, "If I were going to get a hip right now, I'm not sure I'd want a J&J hip."

In a press release, DePuy said new, unpublished 2010 data from the National Joint Registry of England and Wales show a five-year revision rate of about 12 percent for the ASR Hip Resurfacing System and about 13 percent for the ASR XL Acetabular System.

"That 12 percent rate is pretty high," Wald said. He noted that since these are older products, the company probably does not sell a lot of them, so the financial impact of the recall will likely be limited.

HARM TO REPUTATION

"It's probably not going to affect (DePuy's) overall business much -- it's the overall reputational harm that's concerning," the analyst said.

Earlier this month, a senior J&J pharmaceutical executive was put in charge of overseeing manufacturing at the company's consumer healthcare unit as well as plants making medical devices. The move was seen as a response to quality-control lapses that led to recalls.

J&J has more than 250 operating companies making products ranging from heart devices to baby shampoo.

DePuy said it intends to cover "reasonable and customary costs" of monitoring and treatment for services, including revision surgeries, associated with the ASR System recall.

It said it was providing hospitals, surgeons and patients with information about the recall to help them determine what steps to take.

The ASR Hip Resurfacing System was introduced in 2003 and is only approved for use outside the United States. The ASR XL Acetabular System was launched in 2004 and has been available worldwide.

In 2009, DePuy decided to discontinue the ASR System because of declining demand and so it could focus on developing the next generation of hip replacement and resurfacing technologies.

Very few ASR System devices remain on the worldwide market, DePuy said.

Shares of J&J were down 9 cents to $57.89 in morning trading on the New York Stock Exchange.

Shares of Stryker Corp and Zimmer Holdings, the other big manufacturers of hip implants, were also slightly lower, as was Britain's Smith & Nephew, another big implant maker. (Reporting by Debra Sherman; editing by John Wallace)