No More Tears, Far More Fears?

It looks like China's answer to sending us contaminated toothpaste, tainted ingredients that Baxter (NYSE: BAX  ) eventually made into heparin, and toys with lead paint on them sold by RC2 (Nasdaq: RCRC  ) and Mattel (NYSE: MAT  ) , is to respond with a childish, "I'm rubber, you're glue; everything bounces off of me and sticks to you."

This week, China's Food and Drug Administration said that it's investigating products made by our beloved Johnson & Johnson (NYSE: JNJ  ) , after a U.S. group reported that there may be carcinogens in J&J's baby shampoo. Big deal? Frankly, no.

You see, carcinogens are everywhere. Some are manmade, but there are also natural carcinogens in the food we eat: broccoli, nutmeg, peaches, and radishes, for instance. (Kids around the world rejoice: No more broccoli!) You'll even find them in tasty drinks. It's the concentration that's important -- in this case, size (or amount) does matter. Johnson & Johnson reports that there are just "trace levels" in the shampoo.

I can see how China might be on edge after finding toxic melamine in baby formula, but this seems a little blown out of proportion. I'd liken it to biotech corn ending up in Kellogg (NYSE: K  ) cereal and Yum! Brands' (NYSE: YUM  ) Taco Bell tacos. It's highly unlikely that the shampoo will hurt anyone, but it's still a public relations nightmare.

Johnson & Johnson handled the Tylenol contamination in the 1980s -- which wasn't the company's fault -- quite well. But for minor public relation issues, it's had a few missteps recently. It sued the beloved Red Cross because it uses the same trademark, and its Motrin-moms advertising campaign created enough of a negative reaction that it had to pull the ad. Those public relation blunders don't get you very high marks with consumers.

And that should be the big worry here for investors. Not that the shampoo is contaminated, but that merely hearing the word "cancer" will be enough to cause consumers in China and the U.S. to look elsewhere. Johnson & Johnson needs to nip this one in the bud, pronto.

Lather, rinse, repeat to further Foolishness:

  • Sell this tech stock now.
  • These seven great American stocks are on sale.
  • These stocks are cheaper than they appear.

RC2 is a Motley Fool Hidden Gems selection. Johnson & Johnson is a Income Investor pick. Whether you like your companies big or small, dividend-laden or with "multibagger" written all over them, we've got a newsletter for you.

Having handled carcinogens in the laboratory, Fool contributor Brian Orelli, Ph.D., is well aware that concentration does matter. He doesn't own shares of any company mentioned in this article. The Fool's disclosure policy won't sting your eyes.


Read/Post Comments (1) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 22, 2009, at 10:39 AM, Alex1963 wrote:

    I would urge everyone reading this to check out a DVD entitled "Healing Cancer". I'm not much for conspiracy theories. I generally believe that "the system" works OK. But as a husband whose wife is battling pancreatic cancer we are naturally doing our homework. I was shocked and appalled to see the lengths the AMA, FDA, Nat'l Cancer Inst & Amer Cancer Soc have gone to discourage and in many cases outright vilify, even prosecute those who have found legitimate, verifiable and actual cures for cancer. Why? Well because they are natural and cannot be patented. It is now illegal to promote any treatment for cancer which does not involve the standards of detection, radiation and chemo. If you know of anyone dealing with cancer have them at least watch this video. I got it thru Netflix.

    Sincerely

    Alex

Add your comment.

DocumentId: 856845, ~/Articles/ArticleHandler.aspx, 4/18/2014 12:34:40 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement