Children's Tylenol medicine produced by Shanghai Johnson & Johnson Pharmaceuticals Ltd Photo: CFP
US healthcare producer Johnson & Johnson (J&J), known for its popular brands such as Tylenol, has become a hot topic recently in China. However, it was not because of a new product or any positive news, but a media report about its double standards over product recalls.
The Beijing-based Health Times newspaper reported on June 9 that the company has launched at least 51 global recalls of products since April 2005, ranging from mouthwash to blood glucose monitors, but 48 of the products were not recalled from the Chinese mainland market.
The report came after an announcement from J&J on April 23 that it would recall around 1.7 million bottles of Children's Tylenol it manufactured and sold in South Korea, due to a high level of acetaminophen, which may cause liver damage.
Shanghai Johnson & Johnson Pharmaceuticals Ltd, the company's unit in the mainland, said that the products being recalled from South Korea were not sold in the mainland.
But the Health Times report disputed this, and said the same products are sold in the mainland. It also noted that the domestic market has again not been included in the recall.
Regulator promises action
China's food and pharmaceutical watchdog said it held a meeting with J&J Thursday, following the company's recall in South Korea.
There may be defects in the company's quality management system, given its frequent recalls of drugs and health devices, the China Food and Drug Administration (CFDA) said in a statement on its website Thursday.
It urged J&J to improve its management to ensure products' quality, but the statement did not mention anything about the double standards.
The CFDA also vowed to strengthen its supervision to ensure timely recalls and pledged to take severe measures if firms are found to be responsible for late or secret product recalls, such as stopping their production or sales in the mainland.
Drug manufacturers must recall products, report to drug supervisors and publicly disclose details of a recall whenever quality defects or problems are discovered, the watchdog said, noting that "drug producers must launch simultaneous recalls in the mainland whenever they issue global recalls."
It was the first time that the CFDA has held talks with a multinational company over quality problems, indicating that China's watchdog is increasing its attention to drug safety, which will benefit Chinese consumers, Liu Baocheng, director of the Center for International Business Ethics at the University of International Business and Economics, told the Global Times.
J&J issues rebuttal
J&J, meanwhile, said that it adheres to the same quality standards and utilizes the same product recall standards in China as it does in all other countries or regions, in a statement posted on its website Thursday following its meeting with the CFDA.
Its mainland subsidiaries have reported all product recalls conducted in the mainland in accordance with the CFDA's rules, the statement said.
J&J said the reasons why some recalls have happened elsewhere in the world but not in the mainland are because the recalled products were not registered or sold in the mainland at the time of the recall; or the products sold in mainland were produced by different units of the company from the ones that made the recalled products; or the particular recalled product lots were not sold in the mainland.
However, China Times cited industry insiders as saying Saturday that the quality standards of J&J in the mainland are lower than in other markets.
Why no recall?
J&J recalled more than 2 million OneTouch blood glucose meters in March worldwide, following two previous recalls of the product in April 2005 and September 2005. Four models of the meters are currently sold domestically, and none of the three recalls included the mainland, the Health Times report said.
Even when J&J's domestic unit stopped sales of the Velcade injection in December 2011 after an order from the CFDA, the product had already been recalled in the US, UK and Japan a year before, according to the report.
The company was criticized in November 2011 by nonprofit US organization Campaign for Safe Cosmetics for selling baby shampoo that contained carcinogenic ingredients in Australia, Canada, China, Indonesia and the US while selling carcinogen-free products in other markets such as the UK and Japan.
Continuous recalls have brought adverse affects to J&J's business and profits. In 2010, when J&J initiated 20 global recalls, the company saw a slight fall of 0.5 percent in its annual operating revenue to $61.6 billion, the first drop since it went public in 1944.
J&J said the recalls of branded medicines such as Tylenol caused a drop in sales in the third quarter of 2010 to $1.3 billion, down from $1.7 billion in the same period the year before. The New York Times reported that the company suffered a loss of as much as $600 million due to recalls in 2010.
A survey by domestic financial information provider eastmoney.com on June 9 found that 91.4 percent of 4,652 respondents said they would no longer buy any J&J products.
In explaining why they wouldn't buy them, 34.1 percent said the reason was the continuous quality problems in recent years, while 50.7 percent said the reason was the company's different attitude toward the mainland market for recalls.
Multinational companies should not have double standards toward consumers in different markets, especially China, which has huge market potential for J&J and other firms, Liu said.
"J&J's consumers are mostly well-informed, so the company should collect as much information as possible related to media reports and strengthen communication with both the government and the public to restore confidence," Liu said.
Light punishment for illegal practices is one reason behind some multinational companies' double standards, Wang Yong, secretary general of Brand China Industry Union, was quoted by China Times as saying Saturday.
For example, a Chongqing outlet of US retailer Wal-Mart Stores Inc was fined 2.69 million yuan ($439,277) in 2011 for selling ordinary pork that was labeled as organic pork. The figure was roughly equivalent to three days of revenue for the outlet.
All markets are gradually raising their standards for food and drugs, so producers need to attach greater importance to their quality management systems, said Yu Mingde, president of the Chinese Pharmaceutical Enterprises Association.
Liang Jialing contributed to the story