The Johnson & Johnson Tylenol Crisis of 1982
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Table of Contents
1.0 History and Background of Johnson & Johnson. 1
1.1 SWOT Analysis of Johnson & Johnson. 2
2.0 Description and Media Coverage of the Tylenol Crisis of 1982. 4
2.1 Public Relations Strategies Employed. 5
2.2 Media Coverage of the Crisis. 6
3.0 Critique of J&J’s Actions and the Media Coverage. 7
3.1 Why Has This Case Become a Classic PR Case?. 9
3.2 How I Would Handle the PR Today. 10
The Johnson & Johnson Tylenol Crisis of 1982
1.0 History and Background of Johnson & Johnson
Johnson & Johnson, abbreviated as J&J, is American transnational pharmaceutical and medical services manufacturing company whose headquarters are in New Brunswick, New Jersey. The Johnson brothers James Wood and Robert Wood and Edward Mead founded the company in 1886 (Harrison & John, 2013). The founders initially aimed to develop ready-to-use surgical dressings before starting the manufacture of other medical products in the subsequent years. Johnson & Johnson manufactured its first merchandise in 1886 and became incorporated the following year. Additionally, the founders developed the company’s logo that is among the world’s longest-used company logos. J&J’s mission statement is “To help people everywhere live longer, healthier and happier lives” (Johnson & Johnson. (n.d.).
The J&J Corporation is an immensely successful company. It comprises of 250 subsidiaries and has direct operations in 60 countries (Amason, 2011). J&J has the third biggest pharmaceutical agreement with the United States Department of Justice and made sales of around 70.1 billion dollars in the 2015 fiscal year. Additionally, the company’s products are consumed in more than 175 countries in the world. Some of J&J’s common brands are first aid medical products as well as household medications. Examples of the company’s popular products are Tylenol medications, the Band-Aid bandages, Acuvue contact lenses, Clean & Clear facial wash and the Neutrogena beauty products (Labitan, 2014).
The first subsidiary company of J&J is the McNeil Consumer Healthcare. A 23-year-old Robert McNeil founded this company in 1879, several years earlier than J&J (Laczniak& Harris, 2016). The McNeil Consumer Healthcare Company centered on direct marketing of drugs, mainly of acetaminophen components, to doctors, pharmacies and hospitals. Johnson & Johnson acquired the company in 1959, thus enabling it, for the first time, to sell Tylenol and without prescriptions. Another famous subsidiary to J&J is the Swiss company Cilag. It was also acquired in 1959 and engages in laboratory, pharmaceutical and research activities. However, the company kept its name even after acquisition.
Another famous company acquired by Johnson & Johnson is Janssen Pharmaceuticals, acquired in 1961 (Ansell, 2016). Janssen is a major company, with more than 28, 000 employees worldwide. Despite being a subsidiary of J&J, the company can acquire other companies on its own. For instance, Janssen Pharmaceuticals acquired Aragon Pharmaceuticals in 2013 and BioPharma in 2014 for an amount totaling to 1.75 billion dollars (Labitan, 2014). Other notable acquisitions of J&J are DePuy, acquired in 1998, Ethicon, acquired in 2008 and Actelion, acquired in 2017. Concerning their specialties, all subsidiaries are branched under either the Customer Healthcare Division, the Medical Devices Division or the Pharmaceuticals division.
1.1 SWOT Analysis of Johnson & Johnson
Like every business in every industry, Johnson & Johnson has its strengths, weaknesses, opportunities and opportunities. One of the strengths that the company enjoys is its numerous mergers and acquisitions. As mentioned in Ansell (2016) and Labitan (2014), J&J has 250 acquisitions of companies in the US and around the world. These acquisitions have made it possible to increase J&J’s operations in terms of manufacturing, marketing and sales. For instance, the acquisition of McNeil Consumer Healthcare Company in 1959 enabled J&J to manufacture Tylenol for the first time. Tylenol turned out to be the company’s bestselling product. Another strength lies in the company’s immense finances that make it difficult for new entrants to compete with the company. Additionally, the company enjoys a broad market both in the U.S. and in more than 175 countries globally.
One of J&J’s main weaknesses is the competition it faces from rival companies. Major competitors include Colgate-Palmolive Company, Nobartis AG and Pfizer Inc. An additional weakness is fluctuating market prices as influenced by economical changes in various countries around the world. Additionally, the company is heavily reliant on small molecule drugs. Consequently, a decline in sales of these drugs, such as in the period between 2000 and 2010, leads to losses (Carlson, 2010). This was portrayed between 2008 and 2012 when J&J’s sales of small molecule drugs declined leading to loss of billions of dollars in search of replacement products.
The largest threat to Johnson & Johnson’s operations is the risk of harmful ingredients that can lead to recalls and litigation. An example is the 1982 case of potassium cyanide poisoning of Tylenol capsules. The subsequent recall cost the company more than 100 million dollars. The other threat is presented by the immense competition facing the company, which expectedly reduces sales and profits. The company also has had to fight numerous lawsuits, such as the 2007 patent-infringement case against Abbott (Lewis, 2010). The company has also lost vast amounts of money paying damages to states such as Arkansas, Louisiana and Texas due to illicit marketing of Risperdal.
Despite the threats and weaknesses facing Johnson & Johnson, there are numerous opportunities for increased operations and advancement of its systems. For instance, sustained research presents the possibility of discovering new drugs and products. There are also opportunities available for more merging and acquiring more companies that will increase the corporation’s ability to satisfy customer needs and stay competitive in the industry. Moreover, there are opportunities to increase the markets of J&J’s products in more countries. The market for medical products, additionally, is expected to increase as the world population increases. Top of Form
2.0 Description and Media Coverage of the Tylenol Crisis of 1982
The Tylenol crisis happened in Chicago on September 29th, 1982. The crisis was highlighted by the deaths of 7 people who had taken Tylenol capsules contaminated with the highly toxic potassium cyanide (ABC News, 1982). The first death was of a 12-year-old female, Elk Grove Village’s Mary Kellerman after she took an Extra-Strength Tylenol capsule. Second was the death of Adam Janus from Arlington Heights, whose death was also a result of taking the Tylenol capsules. Adam’s brother and sister in law also passed away after taking the capsules, albeit unknowingly, from the same bottle Adam had. The deaths of Mary McFarland and Paula Prince followed the initial deaths the same day.
A subsequent investigation by the police revealed that all seven deaths had a similarity; all the victims had taken Extra-Strength Tylenol just before their demises. This led to the scientific investigation of the Tylenol capsules recovered from the victims’ homes. Each of the Tylenol bottles was found to have been tampered with and each capsule laced with an excessive amount of potassium cyanide. The police then embarked on warning the public within the Chicago metropolitan area from consuming any Tylenol drugs. This was done by releasing urgent warnings through the local and national media sources as well as loudspeakers mounted on vehicles (Rehak, 2002).
Further investigations revealed that the manufacturers of the drug were not to be blamed for the deaths as all the deaths had only been from the Chicago metropolitan and the tampered bottles had been sourced from various pharmaceutical companies. Law enforcement agencies theorized that a malicious suspect had purchased the Tylenol from local retailers, contaminated the pills with cyanide and discretely returned the bottles to shelves of various retailers (Knight, 1982). After word went out about the issue, three more bottles of contaminated Tylenol were discovered.
2.1 Public Relations Strategies Employed
The police, on discovering that all the victims had consumed Extra-Strength Tylenol capsules laced with potassium cyanide, urgently informed the public about the risk (Rehak, 2002). As mentioned earlier, this was done using local and national media outlets as well as using loudspeakers on vehicles around the city and its suburbs. This was key in avoiding further deaths. Although this information generated fear and hysteria among the Chicago residents and American citizens around the country, it was vital in reducing the damage.
Johnson & Johnson has also been commended for the Public Relations strategies that the company employed in the aftermath. While it would have been easy to deny any connection between the company and the murders, J&J’s approach towards the crisis was unexpectedly valiant despite the potential financial loss. The company, in its press release, expressed its condolences and horror and at the deaths and quickly employed strategies to track the poisoned Tylenol bottles. The company also offered a reward of one hundred thousand dollars for information that would lead to the arrest of the perpetrator (ABC News, 1982). In addition to this, Johnson & Johnson created a command and customer service center that would handle all concerns relating to the Tylenol poisoning.
More significantly, J&J recalled more than 31 million Tylenol bottles that were in circulation all around the country (Malcolm, 1982). This cost the company more than 100 million dollars, the retail value of those drugs. The company advised the public on national television not to consume any products with acetaminophen. Physicians, hospitals and distributors were all warned and the advertisement of the product halted immediately. Additionally, J&J halted the production of all Tylenol products and promised not to commence production until they discovered means to pack the drugs in tamper-proof bottles. The company also allowed people who wished to exchange Tylenol capsules with Tylenol solid tablets to do so for free.This cost the corporation an additional 30 million. These PR strategies helped to eliminate the risk of more deaths as a result of cyanide contamination and to promote its brand as being socially responsible.
2.2 Media Coverage of the Crisis
The Tylenol crisis, expectedly, was subjected to a lot of media coverage due to the sensitive nature of the deaths. Major media houses reported the deaths, with television houses reporting the issue the same day. ABC News reported the warning by the Food and Drug Administration (FDA) warning to the public not to take any Tylenol medication due to possible poisoning (ABC News, 1982). Ted Koppel of ABC News announced the 100, 000-dollar reward by Johnson & Johnson to anyone with information related to the killings. Max Robinson of ABC also reported live from Chicago on October 1, 1982.
The New York Times also reported the recalling of all Tylenol capsules by Johnson & Johnson on October 5, 1982 (Malcolm, 1982). According to the article, J&J declared the countrywide recall of both the Extra-Strength and Regular capsules.The article by Andrew Malcolm also reported the absence of any leads concerning the investigations of the murders. Moreover, other nations that form the market of Johnson & Johnson products also issued a recall of the products. The article specified the Philippines and Guatemala, which had banned the painkiller drug on October 4th. Moreover, the New York Times reported that Britain, Italy and Poland had warned tourists of the danger while the United States Army posted in the Korea Republic had removed all Tylenol products from shops.
Several media outlets praised Johnson & Johnson for its ability to handle the Tylenol crisis. For instance, the Washington Post published an article on October 11, 1982, that appreciated J&J’s participation is responding to the crisis (Knight, 1982). According to their article, businesses should emulate Johnson &Johnson’s ability to manage a disaster despite the “hysteria and frustration” that would “have often obscured the company’s actions”. The New York Times also readdressed the crisis on January 15, 1984, after the arrest and conviction of a person who had been a suspect during the 1982 crisis. Roger Arnold, however, was jailed for an entirely different murder; a shooting of a man outside a tavern (The New York Times, 1984).
3.0 Critique of J&J’s Actions and the Media Coverage
Johnson & Johnson’s actions during the crisis have been commended and identified as a reference for all companies handling crises. The company released an announcement explaining the company’s regret and condolences to the bereaved families on hearing the police reports following the investigation of the killings (ABC News, 1982). The company also warned residents of Chicago and the American population against purchasing and taking any Tylenol drugs due to the risk of cyanide poisoning. These actions are commendable since the company forewent its sales and profits for the sake of public safety. Moreover, J&J was punctual in its warning so that no more people were victims of the poisoning.
The recalling of all Tylenol capsules by Johnson & Johnson is also recommendable. As discussed before, the corporation recalled more than 31 million bottles of both Extra-Strength and Regular Tylenol capsules that were of more than 100 million dollars in value (Malcolm, 1982). This was a major financial setback for J&J in a hugely competitive market. However, James E. Burke, the corporation’s chairman at the time, did not hesitate in recalling the drugs and shouldering the short-term expenses for the sake of the public’s safety and the future of the company. The company’s excellent public relations can also be portrayed by their commitment to set up a customer care desk that would handle all inquiries regarding the crisis.
The company also did right to offer an exchange of all Tylenol capsules for Tylenol tablets for its customers. This exchange was free-of-charge and a further example of how effectively Johnson & Johnson handled the crisis. This portrayed the company’s commitment to ensuring the safety of the consumers of its products despite the fact that the crisis had originated from third parties and not due to the company’s fault. Moreover, the company offered a $100,000 reward for the capture of the culprit. Although the case was not solved, these Public Relations activities depicted the company’s goodwill. This eventually benefited the company as Tylenol once again became America’s most purchased over-the-counter painkiller.
The only fault evident in Johnson & Johnson’s actions was the belated recall of Tylenol products. The corporation announced a nationwide recall of all Tylenol products on 5th October 1982, about six days since the day of the murders. This six-day gap between the first reported cases and the recall might have resulted in more deaths. However, the company had successfully issued warnings against the purchase and use of any Tylenol drugs during the first day. Moreover, the previously described public relations activities that Johnson & Johnson had conducted helped reduce the risk of more deaths.
The media can also be commended and critiqued for its role in reporting the crisis. The most beneficial role the media played was in ensuring that the public was informed about the threat of poisoning due to consumption of Extra-Strength Tylenol capsules. After the police conducted the investigations of the 7 deaths on September 29, 1982, the media was called upon to warn the public against using Tylenol medication. The media conducted this role promptly, unequivocally and satisfactorily. In less than a day, Chicago residents and the larger American population was aware of the issue.
The media also played a crucial role in appreciating and praising Johnson & Johnson’s efforts in solving the crisis. This appreciation is conspicuous since the media commonly seeks to correct the faults of functions in the societies rather than praising actions. For example, the Washington Post depicted J&J as a reference for other companies on how to deal with crises (Knight, 1982). In collaboration with the International Herald Tribune, Judith Rehak praised Johnson & Johnson’s decision to recall the capsules, something that no company had ever done before (Rehak, 2002). J&J, however, deserved all the praise due to its unselfish actions that helped in solving the crisis and ensuring no further deaths followed the seven experienced on day one.
In the days following the Tylenol crisis, the media can be faulted for its role in perpetuating erroneous identification of suspects. For instance, the New York Times reported the conviction of a man who had been linked with the Tylenol killings. This happened in 1984, around 2 years since the Tylenol crisis of 1982. Additionally, the Daily Herald speculated a connection between the Tylenol killer and the Unabomber, Ted Kaczynski. Ted was an American domestic terrorist known as the Unabomber. The Daily Herald speculated Ted to be the Tylenol killer in 2011. This accusation, however, was without proof and is thus an example of a media failing decades after the crisis.
3.1 Why Has This Case Become a Classic PR Case?
The ways J&J Corporation handled its biggest crisis has made it a reference Public Relations case for other companies over the years (Knight, 1982). The company prioritized the safety of its customers over the prospect of increased sales and profits. As discovered, the company lost over a hundred million dollars during the recall of all Tylenol drugs and the exchange of Tylenol capsules with tablets. While the corporation, under James Burke, realized the consequences of recalling the drugs, they went ahead with the move with the wellbeing of the public in mind. This exertion was rewarded soon after the incident, as Tylenol was America’s bestselling painkiller within a year. Had J&J not handled the crisis as it did, the company would most likely not have been this successful.
The Systems Theory can explain how Johnson & Johnson handled its public relations activities. This theory emphasizes the focus on the customers, media, neighbors, governments and financial performance (Theaker, 2013). In the case of J&J, the company considered the impact of its actions on its environment as dictated by the Systems Theory. The parties affected by the crisis were the customers, the government and the company itself. By being honest with the media and the public, recalling drug merchandise and exchanging Tylenol capsules for tablets and collaborating with the police, Johnson & Johnson satisfied the media, the government and the customers with its public relations endeavors. Moreover, the company benefited from this as its product became the most popular in the States within two years after the incident. This is an explanation of how this case became a classic PR case.
3.2 How I Would Handle the PR Today
It has been more than three decades since the Tylenol Crisis happened. With the change in times, so do social, economic and technological cultures consequently influencing how the crisis would be handled. The most significant issue that has changed on the social front is population growth. The population of Chicago has reduced over the years. Chicago had a population of around 3 million as per 1980 census (Iceland, 2014). In the 2010 census, the population had dropped by half a million. This decrease in demographics reduces the number of people that would be affected if a similar crisis happened in modern times. This would reduce the time I would spend in relaying the information about the crisis using various outlets.
In economic terms, monetary value has reduced. For instance, the 100,000-dollar reward that Johnson & Johnson offered would be higher today due to, among other reasons, inflation. The same applies for the losses incurred by J&J because of the recalling and exchange of Tylenol capsule drugs. In addition to this, competition in the medical and pharmaceutical industry has also increased as the industry accommodates new entrants. Due to this, the company would probably reconsider recalling Tylenol capsules in a nationwide campaign. This would certainly not happen as it did in 1982; 6 days after the seven deaths that all occurred in the Chicago metropolitan (Malcolm, 1982). I would have initially recalled the drugs in Chicago and surrounding states depending on the deaths being reported.
Finally, technological advancement over the years has seen the popularity of internet use. New platforms have emerged, such as social media services such as Twitter, Facebook and Instagram. If the Tylenol Crisis happened today, I would use these platforms to complement media sources such as Newspapers and television. Social media would additionally be faster and far-reaching as compared to traditional media outlets as most people use the same.
4.0 Summary
Johnson & Johnson, apparently, has developed into one of the greatest companies in the world due to effective management that realizes the need for efficient Public Relations. This has been manifested severally, especially in the company’s handling of the Tylenol Crisis of 1982 (Knight, 1982). This crisis seriously jeopardized the corporation’s ability to compete and stay in the market for a substantial amount of time. However, the company handled the crisis exemplarily such that it has been a reference PR case ever since. In addition, the company pioneered efforts to make drugs tamper-proof during manufacturing. This was done using foil seals on medicine bottles and the use of new pill versions called caplets that were more difficult to tamper with as compared to the earlier capsules.
More significantly, this case motivated the U.S. Congress to pass the Tylenol Bill in 1983, a law that required all manufacturers to make their wares tamper-proof (Markel, 2014). Tampering with packaged goods was also made a federal crime. Evidently, the Tylenol Crisis not only benefitted consumers by setting a PR example for companies but also by influencing legislation on drug packaging.
5.0 References
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Malcolm, A.H. (1982, October 6). TYLENOL MAKER RECALLS CAPSULES AFTER STRYCHNINE INCIDENT IN WEST. The New York Times. Retrieved from http://www.nytimes.com/1982/10/06/us/tylenol-maker-recalls-capsules-after-strychnine-incident-in-west.html?pagewanted=all
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