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Johnson & Johnson (JNJ) Remains Committed to Troubled Consumer Unit



1/22/2013 10:01:49 AM

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 (SNY), 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. 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 generated dependable cash flow to smooth out the highs and lows caused by the unpredictable failures associated with prescription medicines and devices. 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 (back story). 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.

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