Johnson and Johnson earnings drop due to artificial hip, product recalls

The recall of artificial hips made by DePuy Orthopaedics, a subsidiary of Johnson & Johnson, along with multiple recalls of over-the-counter drugs, also made by Johnson & Johnson, have taken a toll on the world’s largest health-products maker. The company posted a 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. This year’s quarter isn’t getting off to a stellar start either, with a $922 million charge to cover costs related solely to the recall of Johnson & Johnson/DePuy Orthopaedics hip replacement systems. Overall, Johnson & Johnson’s revenue fell 5.5 percent to $15.64 billion.

A string of consumer product recalls that included popular products such as Tylenol and Rolaids took a substantial bite out of Johnson & Johnson’s earnings and stifled sales not only by reducing its inventory but also by damaging the company’s reputation as a provider of consumer products. Injuries from those recalls were no more serious than gastrointestinal disturbances.

But the real pain is with the near-100,000 people who received Johnson & Johnson/DePuy Orthopaedics defective implants.

While the company says it will cover the cost of any revision surgeries needed to remove and replace its faulty devices, some consumers worry they may be short-changed. As a result, many artificial hip patients are filing lawsuits against the company in hopes of being compensated not only for the surgery, but for their pain and suffering.