The pharma sector continues to be swamped by product recalls. Pfizer, Inc.’s (PFE) wholly owned subsidiary, Greenstone, recently announced the voluntary recall of two products in the US due to possible mislabeling. The recalled medicines are citalopram 10mg tablets (100-count bottle) and finasteride 5mg tablets (90-count bottle).
Pfizer indicated that a third-party manufacturer may have placed the incorrect labels on the bottles. While bottles containing citalopram, an anti-depressant, have been labeled finasteride, the reverse has been done for bottles containing finasteride, which is used for the treatment of benign prostatic hyperplasia. Only one lot has been recalled.
Over the past few quarters, the pharma sector has seen several product recalls. A company that has consistently been in the news for product recalls is Johnson & Johnson (JNJ).
Last week, Johnson & Johnson recalled several lots of Blake Silicone Drains, Blake Silicone Drain Kits, Blake Cardio Connectors, J-VAC Reservoirs and J-VAC Drain Adapters. In February, the company had announced the voluntary recall of certain lots of its schizophrenia product, Invega Sustenna (234 mg).
Other products that were recalled over the past few quarters include Tylenol, Benadryl, Motrin, Rolaids, Invega Sustenna, Simponi and Sudafed Pe among others.
Frequent product recalls have adversely affected the sales of Johnson & Johnson’s Consumer Healthcare segment in 2010. In fact, Consumer segment sales declined 7.7% in 2010 to $14.6 billion with OTC/nutritional sales declining 19.2%. The product recalls and the suspension of manufacturing at McNeil’s Fort Washington plant resulted in a $900 million negative impact on 2010 revenues.
Johnson & Johnson had submitted a Comprehensive Action Plan (CAP) in July 2010 to the US Food and Drug Administration (FDA) for the improvement of quality systems at its US manufacturing plants.
In March 2011, the FDA imposed a consent decree on a subsidiary of Johnson & Johnson. The agency imposed restrictions on the manufacturing facilities of the Consumer Healthcare Division of McNeil-PPC, Inc.
Three manufacturing plants will be affected by the decree. The affected plants include the Las Piedras facility in Puerto Rico, the Fort Washington and Lancaster facilities in Pennsylvania.
The consent decree did not come as a major surprise considering the deluge of product recalls at Johnson & Johnson in the past several quarters.
Neutral on Pfizer and Johnson & Johnson
We currently have Neutral recommendations on both Pfizer and Johnson & Johnson, as well as a Zacks #3 Rank (short-term Hold rating).
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