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If Only Johnson & Johnson (JNJ) Could Bottle This and Sell It

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I was just a kid in 1982 when Johnson & Johnson (NYSE:JNJ) was forced to recall its Tylenol capsules, but I remember it like it was yesterday. It wasn’t unusual to have boxes of the over-the-counter pain reliever on the shelves in my home back then. And then the scare happened, and those boxes quickly disappeared. But eventually, Tylenol made its way back onto the shelves and it wasn’t just a stroke of luck on the company’s part. It was a result of some extremely proactive, honest and quick behavior on the company’s part, not to mention a dose of some good PR.

Johnson & Johnson (NYSE:JNJ)

That was capsules tainted with cyanide. It cost more than half a dozen people their lives. Yet somehow the company managed to right its ship and keep its management team intact. Tylenol was back in tamper-proof packaging within a matter of a couple of months. The tragedy cost the company upwards of $100 million. The late James Burke, then chief executive and chairman, kept the calm throughout what could have been the beginning of the end of the pharmaceutical giant.

Burke would remain at the helm until the end of that fateful decade. If there were a manual for how to handle corporate upheavals, Johnson & Johnson (NYSE:JNJ) could write the book. Such a manuscript would have come in handy for some other companies facing lesser obstacles and yet buckling under pressure. Let’s take a closer look at J&J and two companies now facing PR pressures – and how differently they’ve chosen to handle them.

Today’s J&J

Today Johnson & Johnson (NYSE:JNJ) is led by Alex Gorsky. He remains true to the culture perpetuated by Burke, and speaks of him in the company’s most recent annual report.

The company had $14.9 billion in cash and cash equivalents for 2012, and a debt balance of $16.2 billion.

Johnson & Johnson (NYSE:JNJ) is a healthcare bellwether that investors should use in a portfolio for stability. The company has been raising its dividend consecutively for more than half a century. In the first quarter,  the company generated $17.5 billion in sales and is on track to meet its full-year EPS guidance.

Drug pipeline

J&J just acquired privately held cancer-drug company Aragon Pharmaceuticals. The deal has an estimated price tag of $1 billion, and is expected to strengthen Johnson & Johnson (NYSE:JNJ)’s cancer-drug R&D, particularly in prostate cancer.

J&J is filling up its drug pipeline as the market opportunity is ballooning. The global market opportunity in the pharmaceuticals segment is projected to grow from $963 billion in 2012 to $1.2 trillion in 2017, representing annual growth of about 4.5% each year, according to IMS data cited in J&J investor materials.

For J&J’s part, it expects to experience volume increases in emerging markets coupled with spending increases in the U.S. and Japan. The growth is being fueled by aging populations and a rising middle class in the emerging markets.

Is this stock a lemon?

The Lululemon Athletica inc. (NASDAQ:LULU saga has been well played out. Lululemon Athletica inc. (NASDAQ:LULU) had problems with its black luon that resulted in its highest-margin product, yoga pants, being too sheer. The pants were pulled from retail shelves in a recall and were returned to the racks in 90 days. Done deal, right?

Unfortunately not. The company suffered severe backlash from the incident, and the stock price has suffered about a 25% decline from the 52-week high. As a result, chief executive Christine Day is being shown the door.

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