Johnson &Johnson Still Sees Impact of Recalls, But Brands Are Coming Back!

Johnson & Johnson avoided a third consecutive year of sales declines in 2011 — sales rose 5.6%, to $65 billion, last year, according to the company’s latest financial report, out this week.

The WSJ reported that the company is still feeling the impact of quality-related recalls over the past two years. All of the recalls at J&J’s McNeil business cost it about $900 million in sales in 2010.

The company didn’t do a similar break-out for 2011. However, as you can see from the financial results, sales at its U.S. over-the-counter/nutritionals unit (which is mostly McNeil) fell 23% to $1.43 billion last year from $1.85 billion in 2010.

That implies a drop of about another $400 million last year, though other factors besides the recalls are likely reflected in the decline. (Sales fell 37%, or by $1.04 billion, to $1.85 billion in 2010, a larger amount than the $900 million the company attributed to the recalls.)

CEO William Weldon told analysts that Johnson & Johnson is making progress on the quality-control and other fronts. “We have turned the corner on a particularly difficult period for our company,” he said. And by the end of this year, he expects McNeil to reintroduce most of the OTC brands that were affected by recalls and haven’t yet returned to store shelves.

Some products are already back: the company began shipping Tylenol Cold & Flu Severe caplets in September, while the first Tylenol kids’ products started returning to shelves in November 2010.

J&J also said it was making progress addressing the requirements of an FDA consent decree it signed last March covering a now-closed plant in Fort Washington, Penn. as well as two other plants that are still open. The Fort Washington plant is expected to reopen next year.

Remediating the problems with the McNeil business will cost money; J&J said it sees slightly higher costs associated with those fixes this year compared to 2011.

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