J&J Reorganizes McNeil Consumer Unit After Year of Recalls

Johnson & Johnson (JNJ), the world’s second-biggest seller of medical products, has reorganized its McNeil Consumer health unit and reassigned the executive who led the division during more than 40 product recalls last year.

J&J is creating a separate division within its consumer group focused on Tylenol, Motrin and other over-the-counter drugs recalled in 2010, said Bonnie Jacobs, a spokeswoman for the New Brunswick, New Jersey-based company, in an e-mail. The medicines had been part of a unit that also sold consumer products such as Listerine mouthwash. Peter Luther, the previous unit’s president, will lead another division, Jacobs said.

McNeil pulled more than 40 consumer brands in the past year, among them varieties of children’s and infants’ Tylenol, Zyrtec and St. Joseph Aspirin. The withdrawals cost J&J $900 million in lost sales in 2010 and led to a consent decree giving the U.S. Food and Drug Administration more oversight at three McNeil plants. The unit also drew criticism from Congress for allegedly conducting a “phantom recall” of defective Motrin without notifying regulators.

Creating the separate division for over-the-counter drugs will “give focused attention to quality and compliance, and the critical task of restoring McNeil Consumer Healthcare brands,” J&J said in an e-mailed statement.

New Chairman

J&J named Pat Mutchler, chairman of its baby business unit, to head U.S. operations of the McNeil OTC division, Jacobs said. The company first announced the reorganization internally in February, she said. The move was publicly reported for the first time today by the Wall Street Journal, which cited people familiar with the decision.

Luther had led the consumer health-care division since February 2009. He has been appointed to a new role as president of consumer health care, U.S., J&J said in its statement. “Peter is one of several business leaders who have been appointed to new roles as part of the consumer group’s ongoing commitment to development at all levels of the organization,” the statement said.

Among other changes, the reorganization will divide J&J’s consumer business into four groups covering Asia and the Pacific; Europe, the Middle East and Africa; Latin America; and North America; the statement said.

“This regional and franchise structure will enable quicker reaction to changing market conditions and more efficient execution of region-wide initiatives,” J&J said.

J&J shares have declined 8.5 percent in the past 12 months. They rose 16 cents, or less than 1 percent, to $59.38 today in New York Stock Exchange composite trading.

New York-based Pfizer Inc. (PFE) is the leading seller of medical products.

McNeil said yesterday it was recalling 34,000 bottles of a Tylenol brand medicine for a musty odor and withdrawing another 717,696 bottles and packages of Tylenol, Benadryl and other products that were part of a Jan. 14 recall because they may have been produced on improperly cleaned equipment.

To contact the reporters on this story: Rob Waters in San Francisco at rwaters5@bloomberg.net; Alex Nussbaum in New York 5406 or anussbaum1@bloomberg.net.

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net.