Identifying Indicators - J&J Dealt Federal Subpoena
By Chris on July 21, 2010
Drugmaker Johnson & Johnson tumultuous 2010 continued yesterday after announcing it has received a grand jury subpoena from the U.S. Attorney’s Office related to a series of recalls for its popular OTC medicines such as Tylenol and Motrin.
Troublesome product issues have increasingly plagued the company in recent months, and using Recorded Future we can quickly develop timelines and possibly identify indicators leading up to the federal subpoena.
Below we see a timeline of “Product Recalls” and “Product Issues” over the “Last 12 months” for J&J derived from Recorded Future’s media analytics:
As all data is tagged with both content publication time and actual event occurrence, we can quickly see that the company has been under close regulatory scrutiny for some time although media coverage of the significant product issues has taken time to emerge.
In a report published May 2010, we see reference from FDA data to J&J’s awareness of Motrin problems that led to a recall way back in 2008.
Separately in May, indications emerged that FDA inspectors discovered “lax testing” for product contamination at a Tylenol production site.
Indications of Impending Grand Jury Subpoena
Finally, just the month before the most recent product recalls took place (you can make out a sharp spike in online momentum behind the pop-up), a congressional committee held hearings over the J&J product issues. Several days of inquiry included testimony from former company contractors contractors to investigate their role in a ‘phantom recall’ of Motrin in 2008.
It is out of this congressional inquiry during the end of May and early June that we find the first hints of a subpoena. At the same time we see the stock price fall significantly before plummeting further after the recent earnings recall and subpoena announcements.
Several days after contractors were asked to testify, J&J reportedly missed a document submission deadline leading to reports such as this one on June 7:
Further coverage followed that included commentary from Representative Edolphus Towns, who is the chairman of the House Committee on Oversight and Government Reform, calling J&J “uncooperative” and suggesting that the company was “raising the prospect that new measures — like issuing of subpoenas to compel cooperation” would take place.
How Will the Rest of the Year Unfold?
While the company today also announced a lower expected earnings per share for 2010, one wonders what else lies ahead now for the company over the rest of the year.
Already set in motion are layoffs at the Pennsylvania production plant responsible for much of the recalled medication while a second plant in Lancaster, PA has reportedly missed standards in a recent FDA inspection (note the red data plots on the timeline indicating negative sentiment):
Can J&J quickly recover from what has so far been a year of public scrutiny? Does the company have big news waiting in the wings to take eyes off the product issues and federal inquiry?