Is J&J CEO Alex Gorsky confident manufacturing problems are solved at McNeil Consumer Healthcare?

Johnson & Johnson CEO Alex Gorsky. (Photo: Johnson & Johnson)

Johnson & Johnson's McNeil Consumer Healthcare unit has had dozens of recalls in the last few years and the plant in the Philadelphia suburb of Fort Washington has been closed since April 2010. (Other units and divisions have had similar issues.)

In a brief interview Wednesday after speaking at the Wharton Leadership Conference at the University of Pennsylvania, J&J chief executive officer Alex Gorsky said the company was waiting for the FDA to "check off" some of the boxes on the list of repairs or renovations that J&J had to complete before a full review is done, perhaps by the end of 2013.

Thursday's Inquirer print story is here.

Gorsky was asked if he was confident that the plant won't have more manufacturing problems.

"Look, we've made a lot of head way," Gorsky said. "We're committed to having the highest quality standards in everything we do and I'm proud of the progress we've made."

McNeil Consumer Healthcare is part of McNeil, PPC, which is part of the J&J global empire.

McNeil has been working under a consent decree filed in federal court in Philadelphia. The Food and Drug Administration and then District Court Judge Ronald Buckwalter will have to say OK before Tylenol and Motrin and anything else is produced at the Fort Washington factory. The plants in Lancaster and Las Piedras, P.R., have been operating, but with fewer products and under greater supervision.

Previously, former employees at the Fort Washington plant told the Inquirer that the problems occurred in the mid-2000s, when J&J bought many of Pfizer's consumer products, added them to the production lines and simultaneously cut staff, including experienced mid-level managers who knew how to make such products without having particles, glass and funny smells ending up in the medicine bottles going to customers. This occurred on the watch of Gorsky's predecessor, Bill Weldon.

Besides Buckwalter and FDA, the company will also be in court over patient and consumer lawsuits, many of which are consolidated in federal court in Philadelphia.

Asked whether J&J had gone to the FDA and then Buckwalter seeking permission to resume making over-the-counter medicine in Fort Washington, Gorsky said, "No. We expect by the end of this year to be in a position to be working with the FDA toward reopening. I'm proud of the fact that we've made a lot of investment back into the factory and making a lot of progress against the consent decree requirements. We submitted our plan, the FDA accepted it and now, literally, what you have are requirements that they have to check off. We’re meeting those, we’re on track and very hopeful that near the end of this year we’ll be able to have the FDA review the entire package to get it back in operation.”

The J&J plan was submitted to the FDA in the fall of 2012.

An FDA spokesman said the company "has been working to complete all milestones," that the process continues and J&J has not yet sought approval to resume operations.

Is Gorsky surprised the process has taken this long?

"Clearly, our first goal was to make sure we could really get it right," Gorsky said. "The other thing is that a consent decree is a significant event. What's most important is that we get it absolutely right. When you think about the investment and the changes we made, it is very significant. I'm encouraged by the progress we're making. We think we should be in a good place."

The company previously has said it was spending $100 million.

“We think it is a good investment in the community and the state of Pennsylvania,” Gorsky said.

The consumer division is a distant third in company revenue rankings, behind pharmaceuticals and medical devices, which includes diagnostics. The company had about $67.2 billion in revenue in 2012, with the consumer division accounting for a bit more than $14.4 billion. J&J has previously said the closure of Fort Washington and the reduced production in the other plants has probably cost the company $1 billion in lost sales per year.

Some financial analysts have suggested J&J divest the consumer division, as Pfizer is doing with its animal health division, and concentrate on higher-margin products in the pharmaceutical and medical devices (and diagnostics) areas.

But Gorsky said he wants to keep the consumer division, which has iconic brands such as Band-Aids, Listerine and Tylenol.

“Absolutely,” Gorsky said. “The consumer part of Johnson & Johnson is a huge historical piece. I think the whole idea of consumerism in health care going forward is going to be an important component and will touch everything. We’re committed to getting those brands back out and continuing a strong consumer division.”

While J&J has lost sales revenue because of reduced production, it also saved money on advertising. As much as J&J would love to believe all former customers will return, the company has said it is planning to market those products once it fixes manufacturing.

"We've got to first get the product on the shelves in a dependable and reliable way," Gorsky said. "We've made a lot of progress on that. We anticipate having about 75 percent of them out by the end of the year. What we're doing now is working with our trade partners, the large retailers, to work in concert with them to get those brands established."