J&J: McNeil production to slow down

NEW BRUNSWICK, N.J. — Johnson & Johnson on Tuesday announced that distribution of McNeil Consumer Healthcare consumer products will slow in the coming months as the company shifts production of its over-the-counter medicines to other manufacturing plants and implements additional third-party quality controls within those plants.

Consequentially, J&J doubled its projected impact from bringing McNeil fully back on line to 12 cents per share for the year. During the quarter, McNeil signed a consent decree with the Food and Drug Administration that governs all of its manufacturing operations. The consent decree allows McNeil to continue the work already initiated under a comprehensive action plan to bring its product portfolio back to full production, and identifies procedures that will help provide additional assurance of product quality to the FDA.

“The increase of 6 cents — just to be clear, from 6 cents to 12 cents — ... is, in fact, related to the consent decree in two main buckets: One is the shipments from the facilities will be slowed, if you will, or [will] slow down as we implement the quality procedures and the reviews that the consent decree now requires. And ... we will also embark on additional remediation efforts,” said Dominic Caruso, J&J CFO and corporate VP finance.

That slowdown in production will delay resumption of broad distribution of McNeil Consumer products until 2012 from a previous projection of the second half of 2011, Caruso said. “We expect to begin launching the products toward the back half of [2011], but the majority of the products will be launched in 2012,” he said. Caruso suggested the lion’s share of marketing that will herald McNeil’s return to market will correspond to when most of McNeil’s products are being brought back on line.

McNeil expected its products to be in full production prior to the reopening of the Fort Washington, Pa., plant.

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