Johnson and Johnson Suffers Financially After Hip Replacement Recall

Johnson and Johnson Suffers Financially After Hip Replacement RecallAfter recalling a hip replacement device manufactured by one of its subsidiary companies, Johnson & Johnson has experienced a decline in earnings, reports the Asbury Park Press.

The metal-on-metal hip device, made by DePuy Orthopaedics in Indiana, was recalled for failing at a higher than normal rate. According to the publication, the net income for Johnson and Johnson in the second quarter this year was $2.8 billion, down from $3.5 billion during the same period in 2010.

In addition to the recall, millions of dollars in litigation costs also hurt profits. The company was forced to pay $223 million for litigation in cases involving patients who had dealt with the faulty hip replacement product. One such lawsuit was filed on behalf of a benefits fund based in New Jersey and alleged that DePuy knew about the devices’ shortcomings for two years. The lawsuit also pointed to further surgeries necessary due to the debris generated by the metal device that could infiltrate surrounding body parts.

The hip replacement recall isn’t the only challenge facing the company. McNeil Consumer Healthcare, the plant producing its consumer products in Pennsylvania was recently shut down by the government because the facility was deemed deficient, reports the Philadelphia Inquirer.

As a result, the company is producing less over-the-counter products and turning less profit. In the first quarter of 2011, Johnson & Johnson experienced a 23.2 percent dip in profits from the same period a year earlier. The Pennsylvania plant is expected to continue production next year

Johnson & Johnson’s pharmaceutical division has also been cited for allegedly marketing medications for illnesses without gaining approval from the U.S. Food and Drug Administration to run those campaigns.