DePuy Hip Implant Recall, Drug Recalls Hit Johnson & Johnson Earnings

The <"">DePuy hip replacement recall is taking a toll on Johnson & Johnson’s bottom line. According to the company’s fourth quarter earnings report, Johnson & Johnson is taking a $922 million charge related to the DePuy ASR hip recall. Other recalls, including probable DePuy knee recall, are also weighing on Johnson & Johnson’s performance, as profits for the fourth quarter fell 12 percent.

Johnson & Johnson’s <"">DePuy Orthopaedic unit issued a worldwide recall for the ASR XL Acetabular Hip Replacement System after data from the National Joint Registry of England and Wales showed that 1 out of every 8 patients (12%-13%) who had received the recalled devices had to undergo revision surgery within five years of receiving it. By then, more than 93,000 patients worldwide were fitted with an ASR hip implant. It is believed that roughly a third of those were patients in the U.S.

DePuy has since been named in scores of product liability lawsuits in the U.S. and elsewhere. Federal lawsuits involving the DePuy ASR hip implants have been consolidated in a multidistrict litigation before U.S. District Judge David A. Katz of the U.S. District Court for the Northern District of Ohio.

According to its fourth quarter earnings statement, Johnson & Johnson posted net income of $1.94 billion, or 70 cents a share, compared with $2.21 billion, or 79 cents a share, for the same period in 2009. The company also said consumer-product sales fell 15 percent to $3.61 billion, mostly because of product recalls like those involving the DePuy ASR hip implant.

In addition to the DePuy ASR hip implant recall, Johnson & Johnson has been plagued by a series of <"">drug recalls issued by its McNeil Consumer Healthcare unit because of quality control issues. As we reported previously, McNeil has recalled more than 300 million bottles of over-the-counter medicines, including Tylenol, Benadryl and Motrin. In the fourth quarter, pharmaceuticals slipped 4.7 percent to $5.71 billion, the company said.

Finally, the company is also revising downwards its estimates for 2011, saying its earnings were likely to grow by 1 to 3 percent. According to a Reuters report, Wall Street analysts had predicted an increase of around 5 percent for 2011.

In the coming year, the news for Johnson & Johnson might not get much better. According to Reuters, in a conference call with investors today, CEO Executive William Weldon did not rule out the possibility of future recalls.

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