Weldon, J. and J.’s Chief, Set to Testify Before Congress

And on Thursday, the executive, William C. Weldon, is expected to appear at a Congressional hearing, for the first time providing his own account to lawmakers of the manufacturing problems that led to the recalls. Mr. Weldon has asserted that missteps at the company’s McNeil Consumer Healthcare unit, which was responsible for the withdrawal of certain products from the marketplace, have been contained.
“From Johnson & Johnson’s perspective, our response to this issue was the most responsible it could possibly be,” Mr. Weldon said in a recent telephone interview. After months of silence, he has also appeared on CNBC and has toured the company’s own sites to talk about McNeil. “We want to ensure nothing like this happens again,” he said.
His testimony before Congress comes as the company confronts other highly publicized problems that have swirled around Mr. Weldon’s stewardship and the once unassailable integrity of one of the world’s most respected companies.
In recent months, the company has recalled tens of thousands of artificial hips as well as several million contact lenses, made by distinct units. The company is also the subject of numerous government inquiries and a spate of consumer lawsuits. In McNeil’s case, the unit recalled about 136 million bottles of liquid infants’ and children’s medicines in April, and millions of bottles of Tylenol and other pills for adults earlier in the year.
“These problems are accumulating,” said Les Funtleyder, who invests in health care stocks for Miller Tabak & Company in New York. “At some point, investors are going to start to question J.& J.’s management.”
Representative Darrell Issa, the ranking Republican on the House Committee on Oversight and Government Reform, which is holding Thursday’s hearing, said in a telephone interview that the company had failed to adequately oversee the McNeil unit and did not correct the manufacturing problems there quickly.
“Does Johnson & Johnson oversee its divisions properly, or do they have too much autonomy?” Mr. Issa asked. “Does the big name — Johnson & Johnson — mean quality, or do you have to judge each division separately?”
Both Democratic and Republican lawmakers plan to delve into communications between corporate executives and the Food and Drug Administration as recalls were considered or taking place, including attempts by the company to buy back certain vials of Motrin pills rather than formally recall them from the shelves.
Mr. Weldon said in the interview earlier this month that the company had acted quickly to recall the products, inform consumers and explain that the medicines posed no serious health hazard. While the company has temporarily shut the plant in Fort Washington, Pa., that manufactured the children’s over-the-counter products for an overhaul, Mr. Weldon said the company planned to reintroduce certain products later this year.
“We have a standard and we hold all our companies to that standard,” Mr. Weldon said, adding that he took full responsibility for McNeil’s problems. Johnson & Johnson has also announced a series of moves meant to address the concerns over the quality of its products.
In addition to a systemic review of the manufacturing operations at all of its units, the company has overhauled and centralized its quality control operations. This month, it also said Colleen A. Goggins, the senior executive who was in charge of all of Johnson & Johnson’s consumer businesses, would leave. Ms. Goggins also is expected to testify at Thursday’s hearing, her second appearance before the committee on these issues.
To date, some people fault the company’s response as inadequate.
“It’s too little, too late,” said Erik Gordon, a business professor at the University of Michigan. Mr. Weldon had an obligation to address the concerns about McNeil and the decentralized nature of the company earlier this year, he said. The company has long prided itself on, and derived strong yearly profit growth from, its decentralized management structure. By having a diverse array of companies, with more than 250 separate units, the company has managed to innovate and prosper despite its size.
“J.& J. has been a master of that,” said Richard N. Foster, a former McKinsey partner who has written about Johnson & Johnson. “There are very few companies in J.& J.’s class.”
Until the first quarter of 2009, for example, Johnson & Johnson had managed to increase its earnings, adjusted for special items, for 94 consecutive quarters.
The company has also been smart and aggressive about acquisitions, including a recent bid for Crucell, a leading vaccine company in which J.& J. already owns a stake, said Michael Weinstein, an analyst at J. P. Morgan. Even with the hip implant recall, the company’s medical device franchises remain strong, he said, and its pharmaceutical group has promising products like an antistroke drug and an experimental drug for prostate cancer in development.

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via nytimes.com

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