In case anyone was wondering, Johnson & Johnson (
) CEO Alex Gorsky is trying to make clear that the healthcare
giant has no intention of unloading its troubled McNeil Consumer
Healthcare unit. In remarks to Wall Street analysts this morning
to discuss earnings, Gorsky says that J&J is "absolutely
committed" to the struggling unit, which has recalled millions of
products and is retooling a key plant that is taking longer than
expected to fix.
The remarks were made shortly after J&J prompted
speculation about the fate of the McNeil unit by selling the
Rolaids antacid brand to Sanofi (
), which owns Chattem, another player in the over-the-counter
business. Initially, the only information about the deal was
simply that the US Federal Trade Commission had approved a sale
of something, suggesting to some wags that J&J may consider
selling much larger chunks of the McNeil operation (reported in
For awhile last year, in fact, there was chatter among some
Wall Streeters that J&J may want to consider such a move,
although the healthcare giant has long considered its consumer
healthcare business to generate dependable cash flow to smooth
out the highs and lows caused by the unpredictable failures
associated with prescription medicines and devices.
J&J and other big drug makers are having a hard time
generating revenue growth, as patents on old medicines expire and
company labs fail to develop enough new drugs.
The consumer business, however, is not performing as well over
the past two years, thanks to the many quality control problems
that caused the FDA to issue a consent decree (see earlier
). Last year, sales generated by the US consumer healthcare unit
fell 2 percent. Overall, the worldwide consumer business fell 2.9
percent, although J&J maintained this decline was largely due
to the impact of currency fluctuations.
Falling profit has made the stock seem pricey, pushing up
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Ed Silverman, a contributing editor of YCharts, is the
founder and editor of Pharmalot. He previously reported on the
pharmaceutical industry and other business topics for the
Star-Ledger of New Jersey, New York Newsday and Investor's
Business Daily. He can be reached at email@example.com.