Johnson & Johnson’s Earnings?

It’s the best of times and the worst of times at Johnson and Johnson:

According to this article, the company is experiencing good economic times as it reported a 2.2% increase in earnings during the second quarter. This is good news for all the corporate executives who may well receive performance bonuses based on these earnings. But it’s bad news for the consumers who have been harmed by several Johnson and Johnson products that have had to be recalled in the last year.

As the article notes:

“J&J, whose products range from Band-Aids to the Procrit anemia drug, had lowered its 2010 profit forecast in July because of ongoing recalls of various OTC drugs such as Tylenol. The most significant was an April recall of more than 136 million bottles of liquid children’s medicines due to problems such as higher-than-appropriate concentrations of active ingredient and the presence of metal particles. Yet another recall of a Tylenol product was announced Monday, with J&J citing complaints of musty or moldy odors in the product. The fiasco caused J&J to shut down a plant in Fort Washington, Pa., where many of the products were made, while it undergoes a refitting. J&J has shifted production to other facilities including one in Canada. J&J has said the recall, plant shutdown and related issues will reduce its 2010 sales by about $600 million. Also, various government entities are investigating J&J’s handling of the recalls, including a criminal probe by the Justice Department. In another incident, J&J in August recalled hip-replacement parts implanted in about 93,000 people worldwide because some recipients needed repeat surgeries.”

So in the past year, J&J has recalled Children’s Tylenol, regular Tylenol and the ASR XL Acetabular Hip Replacement System, manufactured by DePuy, a J&J subsidiary. On top of that, the company closed a plant and is under criminal investigation by the Justice Department. Yet it’s reporting increased earnings?

It sounds like J&J needs to spend less time making money and more time making safe, medical products that don’t have to be recalled.

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