The business that began with three brothers in the 19th century created thousands of familiar products. Among them: Band-Aids, Tylenol, Baby Power and Acuvue contact lenses.
The company brought in $67.2 billion in 2012 and employs 129,000 people in 57 countries. It has approximately 250 subsidiaries, including Cilag, DePuy, Ethicon, Janssen, McNeil and Neutrogena. J&J is broken into three divisions: consumer health care, medical devices and diagnostics, and pharmaceuticals. Alex Gorsky is J&J’s chairman of the board.
The U.S. Food and Drug Administration (FDA) launched multiple investigations into Johnson & Johnson related to its promotion of certain drugs and dangerous products. In some cases, the FDA mandated recalls.
In 2012, the FDA censured J&J in a historic marketing case involving claimants from 36 states. By improperly marketing antipsychotic drugs for six years, J&J put patients in danger and violated consumer protection laws. J&J has also been responsible for a number of recalls because of manufacturing problems and defective products.
|Fast facts about Johnson & Johnson|
|Founders: Robert, James and Edward Johnson|
|Headquarters: New Brunswick, N.J.|
|Size: 129,000 employees worldwide|
|2012 Revenue: $67.2 billion|
In addition, subsidiaries of J&J sold medical devices that put patients’ lives at risk. One subsidiary, Ethicon, made transvaginal mesh implants that can lead to serious complications and require multiple revision surgeries. Another subsidiary, DePuy, made hip implants that left some patients with metal poisoning and other complications. Because of these products, J&J faces thousands of lawsuits and is expected to pay billions in legal costs.
History of Johnson & Johnson
The three Johnson brothers – Robert, James and Edward – founded the company in 1886 in New Brunswick, N.J. Their initial focus was on bandages, sterile sutures, wound care and baby products. Their first-aid kits, originally sold to railroad workers, would later become a staple in nearly every household. They also sold women’s health products, including sanitary protection products and maternity kits with first-aid products to assist in home births.
Band-Aids and Baby Powder
Employee Earle Dickson invented Band-Aid adhesive bandages in 1920, the first self-applicable dressing for small wounds sold commercially. His invention was derived from necessity, as his wife often hurt her fingers while preparing meals.
From 1889 to 1934, the director of J&J’s Scientific Affairs, Frederick Kilmer was renowned for pitching antiseptic methods for treating wounds. He distributed a booklet with a summary of doctor and surgeon views on wound care. Another of his accomplishments was marketing talc to soothe skin and selling it as baby powder.
Birth Control and Tylenol
From 1963 to 1973, under the leadership of then-CEO Philip Hofmann, J&J sold birth control and personal care products and a treatment for schizophrenia. Early on, J&J subsidiary Ortho developed the first prescription contraceptive gel. And in 1963, Ortho manufactured birth control pills called Ortho-Novum, which helped launch the birth control pill use revolution in the United States.
J&J acquired two key companies in 1959: Cilag Chemie in Europe and McNeil Laboratories in the United States. McNeil developed the first aspirin-free pain reliever, Tylenol elixir for children. A year later, the medication was available over the counter and became the most recommended pain reliever by pediatricians. The next year, this drug originally designed for children was marketed to adults. (It wasn’t until 2011 that the FDA would confirm a link between Tylenol and liver damage, leading to lawsuits.)
Janssen and Ethicon
In 1961, J&J acquired Janssen Pharmaceuticals, which had begun as a small research laboratory in Belgium in 1953. Dr. Paul Janssen and his team discovered new medications to treat pain, help with mental illness, fight infection and treat digestive problems. Janssen is known as one of the most innovative and prolific researchers of the 20th century. Among his discoveries were Fentanyl, an anesthetic, Reasec, to treat diarrhea, and Haldol, for schizophrenia – which enabled patients to live at home rather than in an institution.
J&J formed a suture business, Ethicon, in 1949. One of Ethicon’s innovative products was a disposable skin stapler. Entering the mechanical wound closure market helped to expand the new suture business. Throughout the 1990s, Ethicon developed minimally invasive surgery techniques, where small incisions allow patients to heal quicker. As the new century dawned, Ethicon came under fire for its transvaginal mesh implants, which are designed to treat gynecological conditions. As of January 2013, J&J faced thousands of lawsuits over its mesh products.
Stents and HIV Treatment
Another surgical endeavor J&J invested in was the Palmaz-Schatz stent, the first coronary stent. Julio Palmaz designed the stent and sold the patent to J&J. J&J provided the funds to finish developing the idea and then market it. This new product kept vessels open to allow blood to reach the heart, and revolutionized cardiology.
J&J purchased Pfizer’s consumer health care unit in 2006, bringing in products such as Listerine, for bad breath, Lubriderm, for dry skin, Rogaine, for hair loss, Bengay for sore muscles, and more.
Today, J&J remains focused on global concerns such as HIV/AIDS. It acquired Tibotec-Virco BVBA, a company dedicated to helping people with HIV/AIDS, tuberculosis and other infectious diseases, in 2002. J&J celebrated its 125th anniversary in 2011.
Recalls and Illegal Marketing
During more than 100 years of creating innovative household and hospital items, J&J has faced many challenges. The household name of J&J, unfortunately, is now associated with numerous recalls and a historic marketing scandal.
Tylenol, an über-successful product, has been recalled more than once. The first Tylenol recall happened in 1982, after seven people died from taking cyanide-laced Extra-Strength Tylenol. J&J immediately recalled 31 million bottles of Tylenol, but never discovered who had tampered with the seven bottles.
In 2008, consumers began to complain that certain J&J drugs had varying problems like a moldy smell, bacteria and metal pieces in the products. Two years later the FDA launched an investigation, and one of J&J’s units, McNeil Consumer Healthcare, conducted a series of recalls covering 288 million items, including liquid Tylenol, Motrin, for pain, Zyrtec, for allergies, and Benadryl, for allergies in infants and children, because of quality control problems.
Based on the FDA findings, such as manufacturing violations and airborne contamination from a chemical used for wood pallets, one of McNeil’s plants in Fort Washington, Penn., was shut down, and another plant in Puerto Rico was examined for quality problems in 2010. After multiple failures to comply with quality assessments, McNeil produced a plan to the FDA to overhaul operations in certain plants, comply with federal stands and submit to inspections by outside reviewers to ensure safe procedures were adhered to.
In March 2012, J&J recalled thousands of bottles of Tylenol again, this time removing 500,000 bottles of infant Tylenol because of dosing problems. While this recall did not necessitate the supervision of the FDA, it put another dent in J&J’s reputation as a trusted family company.
Johnson & Johnson also faced charges of illegal marketing. In 2013, J&J paid $2.2 billion to the federal government and several states for illegal promotion of drugs, including antipsychotics Risperdal and Invega.
Dangerous Drugs and Medical Devices
Among the millions of products Johnson & Johnson sold over the years, several pose a serious risk to consumers. Hip implants sold by J&J subsidiary DePuy and surgical mesh products sold by Ethicon – all designed to improve the quality of life for patients – instead left thousands of patients with serious injuries. Some of them are permanent. After reports of complications from consumers and physicians, the FDA, legal experts and patients themselves have taken action against J&J.
In addition, J&J’s new blood thinner, Xarelto, could create further injuries for users. Studies show Xarelto as having major side effects related to abnormal and uncontrolled bleeding. And Jannsen’s antipsychotic drug Risperdal is under attack after causing many cases of breast development in boys.
J&J in 1998 acquired DePuy, a company that was founded in 1895 when Revra DePuy set out to design a fiber splint. DePuy was the first commercial orthopaedic manufacturer and grew into the leading manufacturer of orthopaedic devices and supplies. In 2010, it was the top manufacturer of hip implants.
DePuy was one of the first device manufacturers to use a metal-on-metal hip design, introducing the Pinnacle Hip Replacement System in 2000, the ASR Hip Resurfacing System (sold internationally) in 2003 and the ASR XL Acetabular System in 2005. DePuy Pinnacle systems have been used in up to 40,000 U.S. patients, as have 37,000 ASR products.
The metal ball and cup components rub together and can release metal ions into the bloodstream, causing metallosis, or metal poisoning. Patients may also experience loosening of the implant or joint dislocation, and may require additional surgeries.
Because of problems with the implants and serious injuries to patients, the ASR and Pinnacle implants have been investigated by the FDA and are the subject of litigation. The ASR implants have been recalled, and the Pinnacle implants have been discontinued.
The first three DePuy hip lawsuits were settled in the summer of 2012 for $200,000 each. The first verdict, which was handed down in March 2013, ordered Johnson & Johnson to pay $8.3 million. In November 2013, J&J agreed to pay $2.5 billion to settle 7,500 state and federal ASR lawsuits, according to Bloomberg.
Ethicon, another subsidiary of J&J, was founded in 1921. Established as Johnson Suture Corp., this company designs sutures, staplers, ligatures and other wound-closing products. In 1949, it was renamed Ethicon. By 1991, Ethicon manufactured 45 products for gall bladder procedures, bowel resections, hernia repair and thoracic and gynecological surgery.
In the late 1990s, Ethicon and several other device manufacturers introduced vaginal mesh implants. These products were designed to treat pelvic organ prolapse (POP) and stress urinary incontinence (SUI), conditions experienced by older women following menopause, childbirth or a hysterectomy. In 2010, nearly 300,000 U.S. women received a transvaginal mesh implant.
Many women have experienced debilitating side effects from the implants, including perforation of organs, vaginal bleeding and scarring, mesh erosion and severe pain. Ethicon stopped manufacturing several of its mesh products in August 2012, including its Gynecare Prolift Kit, Gynecare Prolift + M Kit, Gynecare TVT Secure and Gynecare Prosima Pelvic Floor Repair System Kit.
In February 2013, a New Jersey jury required Johnson & Johnson to pay $11.11 million after Linda Gross suffered from its Ethicon mesh products. J&J is facing nearly 4,000 federal mesh lawsuits and countless suits in state courts.
J&J markets the blood thinner Xarelto (rivaroxaban), a drug created by Bayer. Xarelto is similar to another blood thinner, Pradaxa, in that both drugs can lead to bleeding events with limited treatment available. Unlike warfarin, the standard blood thinner, there is no antidote that can be given to Pradaxa or Xarelto patients to stop bleeding once it starts. Because of this, hundreds of patients suffering from bleeding events related to Pradaxa have filed lawsuits against Pradaxa’s manufacturer.
At least 542 patients have died after taking Pradaxa. The FDA’s adverse event database, physicians, and consumer safety groups received reports of 3,781 serious events from Pradaxa in 2011. Xarelto, which is still new to the market, is likely to cause similar bleeding accidents and may be the subject of future litigation.
Risperdal (risperidone) is an atypical antipsychotic drug approved to treat mental disorders such as schizophrenia, bipolar mania and irritability caused by autism. The drug is manufactured by Johnson & Johnson and its Janssen unit and approved for use in adults and children. The drug works by lowering the amount of dopamine and serotonin in the body.
While the drug is effective at treating a variety of mental disorders, it can also cause a number of serious side effects, including gynecomastia (breast growth in boys), movement disorders, pituitary tumors and death.
Hundreds of boys, young men and their families filed gynecomastia lawsuits against J&J and its Janssen unit after the patients developed breasts, some that required surgery to remove. The suits say that the drug manufacturer failed to warn patients about the complications.
The Future of Johnson & Johnson
Despite lawsuits and recalls, J&J remains a strong force in the pharmaceutical industry. It maintains its position as the largest seller of health care products by creating new products, acquiring other companies and selling divisions that have not performed well.
Recently developed products such as Stelara, for psoriasis, Zytiga, for prostate cancer, Invega, for schizophrenia in adults, and Simponi, for arthritis, have brought J&J profits. J&J is selling products in more than 175 countries and is still growing.
On Dec. 31, 2012, the FDA approved J&J’s tuberculosis drug, Sirturo (bedaquiline), the first new drug in 40 years to fight the disease. Every year, an estimated 1.4 million people worldwide die from tuberculosis. J&J hopes the drug will help people who have found the disease resistant to older antibiotics.
J&J recently acquired Synthes, a Swiss medical device maker, which contributed to a 5.6 percent worldwide operational sales growth. J&J also sold its DePuy trauma business, which manufactures products for reconstructive surgery, such as plates, implants and surgical nails, and technology for shoulder, finger, wrist and ankle injuries.
Analysts predict that J&J will need to have a long period without recalls to keep profits up. Recently appointed CEO Alex Gorsky addressed the problem of maintaining J&J in a time of economic uncertainty. He said, “We’ve got to reinvent how we think about health care.”
Gorsky carries a heavy responsibility, if he wants Johnson & Johnson to maintain its reputation as a trusted family company, in a climate of mounting lawsuits related to hip implants and transvaginal mesh.