This Recall Is Different -- In a Good Way

Johnson & Johnson (NYSE: JNJ  ) is recalling another product. But don't worry; it's not nearly as bad as the multitudes that have come before it.

First, it isn't even Johnson & Johnson that manufactures the anemia drug, Procrit. Amgen (Nasdaq: AMGN  ) produces both Procrit and its identical twin Epogen. J&J sells Procrit under a license from Amgen.

Second, the issue has to do with vials that were produced some time ago. Apparently a reaction between the drug and the vial causes small glass flakes to be released. Not exactly a good thing for an injected drug, but since it only affects older vials, production shouldn't be affected. The drug will have a shorter shelf life -- from 36 months down to 12 to 15 months -- which could potentially cut into gross margins, but that's really only a minor issue.

There doesn't seem to be the same kind of fallout for this recall as the others. Unlike Johnson & Johnson's earlier recalls that involved widely used children's medicines, the press hasn't played this one up as much. Even if patients noticed the recall, there's not much doctors can do since there aren't many other options for boosting red blood cells. That's in contrast to Johnson & Johnson's issues with over-the-counter medications, where consumers have the option of generic drugs from a company like Perrigo (Nasdaq: PRGO  ) or to switch brands to competing medications made by Bayer, Pfizer (NYSE: PFE  ) , Merck (NYSE: MRK  ) , or sanofi-aventis (NYSE: SNY  ) .

No one wants to see the company they invest in slip up, but if you're going to have to deal with a manufacturing issue every now and then, hope it's like the one like Amgen and Johnson & Johnson are experiencing.

In his own words: Charlie Munger on communism, Botox, and goldbug jerks.

Pfizer is a Motley Fool Inside Value pick. Motley Fool Options has recommended a diagonal call position on Johnson & Johnson, which is a Motley Fool Income Investor recommendation. Try any of our Foolish newsletter services free for 30 days.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool owns shares of Johnson & Johnson and has a disclosure policy.


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