Boston, MA 08/05/2014 (wallstreetpr) – Johnson & Johnson (NYSE:JNJ), a maker and seller of a wide range of products that serve the health care field, announced the withdrawal of one of its products that has apparently generated more heat than light in recent times. From the usefulness to the risks associated with its usage, medical professionals, regulators and the consumers have been debating JNJ’s uterine surgery tool.
However, the company made a surprise and now a pleasant move to withdraw the product from the market. It cited the high risks in the spreading of cancerous tissue. Johnson & Johnson (NYSE:JNJ) asked that the devices be returned as it promised to address the problem. Initially, it had only announced a halt to the sale of the devices but critics wanted more than that and when the company eventually announced a recall, there was a sigh of relief among the critics.
Repairing the image
In the withdrawal of the power morcellators from the market, Johnson & Johnson (NYSE:JNJ) has something to lose and something to gain. As for the gain, the move will help the company repair its battered image in the sense of slow response to public outcry over its products. From pelvic mesh to other body implants, the company has been criticized for its slow response to address health concerns touching on its products. In fact, it has also lost billions of dollars in settlements because of the same. However, the company has already won many praises, even from critics, for its move to withdraw the controversial uterine surgery tool from the market.
Lost revenue
Coming on to the loss, being the leader in power morcellators market, the company obviously has revenue to lose. Although the company does not report on the revenue from the sale of the uterine surgery device separately, it is still a revenue contributor that it has been looking up to as it seeks to bolster its performance.
Investor takeaway
As concerns the latest development in which Johnson & Johnson (NYSE:JNJ) moved to remove the product from the market over risk concerns, the benefits of repairing the image outweighs any potential revenue loss and that means the company has made the right move.
