In 1982, Johnson & Johnson's
No one has been hurt this time. In fact, the company hasn't found any bacteria in the finished product. The bacteria were discovered in a raw material that wasn't used in the production. Still, Johnson & Johnson decided to be extra-cautious and recall products that used any of the raw material produced at the same time.
If Johnson & Johnson does this right, it'll come out looking like an overprotective parent -- in short, exactly the type of company from which parents would want to buy drugs for their children. That's how it won back customers last time: By recalling more than $100 million worth of product and developing triple tamper-resistant packaging, the company was able to show customers that it was serious about safety.
Even if the recall does hurt sales a little, Tylenol isn't a giant contributor to the health-care conglomerate's revenue -- J&J doesn't even break out those sales. After all, it has to compete with generic acetaminophen, not to mention other pain relievers such as Wyeth's
Johnson & Johnson's sales of over-the-counter products increased substantially when J&J bought Pfizer's
These pros aren't scared of health-care reform. Are you?
Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Johnson & Johnson is an Income Investor recommendation. Pfizer is an Inside Value recommendation. Novartis is a Global Gains selection. The Fool has a disclosure policy.