Wednesday, May 05, 2010
Trouble in the House that McNeil Built: Why Drug Company Silos are Useful
But I think of JNJ as a pharmaceutical holding company, by which I mean it holds several separate pharmaceutical companies under its corporate umbrella. Each one a "silo" of sorts.
The advantage of this type of organization is that the Johnson & Johnson name and brand remain untarnished among consumers even when one or more of its "units" breaks the law or fails to protect consumers from tainted products.
One such unit or division is McNeil. There's Ortho-McNeil Pharmaceutical LLC and Ortho-McNeil-Janssen Pharmaceuticals, which markets and sells Rx products such as Topamax. And there's McNeil Consumer Healthcare, which markets and sells over-the-counter products such as children's Tylenol, Motrin, etc.
Both of these J&J/McNeil "units" are in the news these days. Ortho-McNeil Pharmaceutical and Ortho-McNeil-Janssen Pharmaceuticals were fined a total of $81.5 million for misbranding and illegally marketing Topamax (see "J&J to Pay $81 Million, End Federal Cases on Topamax"). Topamax is approved only for treating epilepsy, but BNet author Jim Edwards, points out that the J&J companies "promoted Topamax for such a wild range of conditions [eg, weight loss], based on such thin evidence, that it was impossible not to notice that many of them were off-label" (see here).
Meanwhile, McNeil Consumer Healthcare has been cited AGAIN for bad manufacturing processes. I wrote about this in the past -- see "Social Media Vs. Social Responsibility: J&J Fails Crisis Management 101." McNeil apologized back in January, 2010 and is now apologizing again AFTER FDA issued a report (here and here).
Although news stories mention the J&J name in headlines, when all is said and done, the J&J brand image among consumers will remain unsullied for the most part, IMHO. Which suggests that "silos" works! Other drug companies may not have the same corporate structure as does J&J, but they are just as "siloed" -- by brand! So, consumers remember Vioxx, but often forget that it was marketed by Merck, which lately gets a lot of kudos for Gardasil.
I'm not sure what the point of this is other than that drug company silos can be a useful strategy. Of course, siloing also can lead to failures to communicate (see "Is Your Brand a Digital Genius or a Feeble-Minded Idiot?").