The Johnson & Johnson's Tylenol Controversies
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THE FALL AND RISE OF TYLENOL
Tylenol received a major setback in late 1982 when it was found that many bottles of Tylenol extra strength capsules were laced with cyanide. The publicity about the poisoned capsules caused a nationwide panic. A hospital in Chicago received 700 telephone calls about Tylenol in just one day. People in cities across the US were admitted to hospitals on suspicion of cyanide poisoning. Within the first 10 days of the crisis, J&J received 1,411 telephone calls. |
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J&J acted immediately after the first reports of deaths came in. The
company immediately alerted consumers across the US, via the media, not
to consume any type of Tylenol product. The police drove through Chicago
where the incidents were first reported, announcing the warning over
loudspeakers, while all the three national television networks reported
the deaths on their evening news broadcasts. The company told consumers
not to use the product until the extent of the tampering could be
determined. It recalled all Tylenol bottles and publicized the recall
with full-page newspaper ads. Consumers were asked to return the bottles
to the stores and exchange them for Tylenol capsules that were not
subjected to cyanide tampering. The company shut down the production,
distribution and advertising of the medicine temporarily. A day later,
the Food and Drug Administration advised consumers to avoid taking
Tylenol capsules.
From the beginning, J&J worked with federal investigators. After eight
million recalled capsules were tested, it was determined that the
bottles had been tampered with on store shelves. The poisoned capsules
were placed on the shelves of six different stores in Chicago, IL, US.
Only 75 capsules from different eight bottles had actually been laced
with cyanide. Analysts opined that recalling all Tylenol products was
not an easy decision for J&J. There was a great deal of discussion on
recalling Tylenol at the national level. Some executives were worried
about the panic that could result in the industry over such a wide scale
recall.
A month after the crisis, J&J launched an aggressive campaign to
re-build (See Exhibit IV) Tylenol’s image. The then Chairman and CEO of
J&J, James E. Burke said, "It will take time, it will take money, and it
will be very difficult; but we consider it a moral imperative, as well
as good business, to restore Tylenol to its preeminent position." The
company decided to re-launch the product in a new
triple-tamper-resistant package by the end of 1982. It’s efforts paid
off and the company was able to recapture 32 of its original 37 percent
market share just six months after the cyanide poisoning.
According to analysts, the way J&J handled the crisis became the model
for crisis management. They said that the company’s response to the
crisis demonstrated its commitment to customer safety and the quality of
its product. Also, J&J’s openness and communication with the public
helped the company maintain a high level of credibility and customer
trust. Burke repeatedly assured the public of J&J’s commitment to
customer safety. Rather than thinking about the financial implications,
Burke followed the company’s Credo (See Exhibit V). He immediately sent
a team of scientists to find the source of tampering. R. David Pittle,
former commissioner for the US Consumer Product Safety Commission,
commented, "They did the right thing and they did it promptly. Putting
consumer safety above all else can help develop a loyalty from the
consumer." Though J&J’s stock declined in the initial weeks of the
crisis, it soon rebounded because of the company’s positive
communications.
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