J&J Rebounding after Inquiry Causes Fall-Off

Originally Published MX September/October 2002

BUSINESS NEWS

J&J Rebounding after Inquiry Causes Fall-Off

In July, share prices at medtech megacompany Johnson & Johnson (J&J; New Brunswick, NJ) dropped by more than 15% to a new 52-week low of $41.40, after a New York Times article revealed that the company is the subject of an investigation by the U.S. Department of Justice and FDA Office of Criminal Investigation.

The investigation, which centers on the company's Ortho Biologics plant (Manati, Puerto Rico), came about as the result of a lawsuit filed against the company by a former employee at the plant. The lawsuit concerns the employee's termination for cause in 1999 and includes allegations of improper record keeping at the plant, which produces bulk erythropoietin used in the formulation of Eprex, a drug used to stimulate production of red blood cells.

J&J's share price didn't spend long in the depths, however, rising above $50 by the middle of August—roughly in line with prices prior to the appearance of the Times story.

According to J&J, the government has not indicated any intention