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Total Recall: Tylenol Troubles Lose J&J $1.4B as Brands Are "Eradicated"

The Tylenol recalls have wiped a staggering $1.4 billion off Johnson & Johnson (JNJ)'s non-prescription drug sales, raising the question of whether some of the brands affected will ever regain a foothold in the marketplace. Although everyone knows that J&J's over-the-counter brands are in short supply as the company refurbishes its McNeil Consumer Healthcare factories in Puerto Rico and Fort Washington, Penn., it is not until you see in black-and-white how much money J&J is losing that you can appreciate the scale of the damage.

Ad Age reported today that Tylenol Simply Sleep, Motrin, Benadryl and Mylanta have been "largely eradicated" from store shelves. J&J's Q1 2011 U.S. consumer sales are down 13.8 percent, but that doesn't sound like much until you see it laid out this way:

  • Sales of J&J's OTC products: 2008: $5.9 billion
    2010: $4.5 billion
  • Liquid painkiller market share before and after recalls:
    J&J's Tylenol: 34.7%;9.2%
    J&J's Motrin: 37%;0%
    Pfizer's Advil: 1.1%; 13.6%
  • Selected J&J brands' current market share:
    Liquid Motrin: 0%
    Mylanta: 0.6%
    Benadryl: 2.9%
A year ago, executives familiar with J&J's Tylenol business had predicted that the company had every chance of returning triumphantly to the market. Jim Joseph, president of Lippe Taylor Brand Communications in New York, spent 12 years marketing Tylenol on the agency side:
"The brand really reacted responsibly and pulled the product off the shelves, and did a good job of communicating and getting in front of the story -- the news came from them," he added. "They've got this incredible story in trust and nurturing, so I think consumers will welcome Tylenol back into their lives."
But full production has now been pushed back to 2012 -- more than two years after the recalls first began. J&J can't advertise the brands until they're fully supplied because it doesn't want to send customers to stores that are in danger of running out. Now, experts are scratching their heads as to how J&J can possibly relaunch several brands at once:
"I think this is unprecedented," said Don Riker, OTC drug consultant and publisher of the OTCProductNews blog. "I'm not sure there's ever been a case where you've had so much destocking of a brand for such a long period of time."
There is no sign of that "destocking" letting up soon. The FDA still has J&J under supervision, but hasn't bothered to reinspect its Puerto Rico facility. Meanwhile, the only reason Tylenol is currently in the news is because of the FBI's attempt to link the Unabomber to the 1982 Tylenol cyanide poisonings.