Well, this just stinks for Johnson & Johnson (NYSE: JNJ ) .
Last month, the company had to recall one version of its Tylenol Arthritis drug because of a "moldy, musty, or mildew-like odor" that it linked to a chemical in the wood pallets used to ship the drugs. Now it's expanding the recall to include a wide variety of over-the-counter drugs including Rolaids antacid, allergy drug Benadryl, and pain reliever Motrin.
The chemical, 2,4,6-tribromoanisole, isn't getting a rousing "2, 4, 6, 8 who do we appreciate?" from the people exposed. The reports of side effects include nausea, stomach pain, vomiting, or diarrhea. Earlier this week, the Food and Drug Administration issued a report chastising Johnson & Johnson for not investigating the problem earlier; reports of the smell apparently date back to 2008.
This doesn't seem quite as bad as Genzyme's (Nasdaq: GENZ ) manufacturing issues last year -- the company said the recall won't have a material effect on earnings -- but it still doesn't help Johnson & Johnson keep its immaculate image.
Another tarnish to Johnson & Johnson's image came today in the form of Department of Justice allegations that the health-care giant gave kickbacks to Omnicare (NYSE: OCR ) to encourage the pharmacy-services specialist to buy and recommend Johnson & Johnson's drugs. Omnicare has recently settled allegations against it involving "kickbacks" from J&J and Teva Pharmaceutical Industries (Nasdaq: TEVA ) . Johnson & Johnson says the "kickbacks" were completely legal rebates. Only time, and perhaps a jury, will decide whose version of the story is correct.
Large conglomerates like Johnson & Johnson, General Electric (NYSE: GE ) , and Honeywell (NYSE: HON ) with lots of moving parts are bound to have issues. Heck, even smaller companies like Sequenom (Nasdaq: SQNM ) can't control everything. The best investors can hope for is that the stench doesn't reach levels that have a major effect on the companies' earnings.