Health01 Jul 2009 09:00 am
On September 29, 1982, the first of seven people (including three members of the same family) died in the Chicago area after taking Extra Strength Tylenol contaminated with cyanide, setting off a “Tylenol Scare” across the nation. Sales of the popular headache medication plummeted overnight, with widespread reports of panicked people literally rushing home to dispose of all of the Tylenol in their cabinets. Johnson & Johnson, facing a publicity crisis of epic proportions, immediately went on the offensive in an effort to salvage its severely tarnished image.
The company promptly distributed warnings to hospitals and distributors, halted Tylenol production and advertising, issued a nationwide recall of Tylenol products (a rare move at the time) and offered a reward of $100,000 for information about the perpetrator. With an estimated 31 million bottles in circulation (with a combined retail value of $100 million), Johnson & Johnson took a massive financial hit in defense of their brand; many financial experts at the time expressed serious doubts that the company would ever be able to salvage its reputation and recoup its losses.
The subsequent FBI investigation ruled out the possibility of sabotage during production of the capsules, when it was discovered that all of the tampered bottles had come from different factories. Investigators came to believe that the saboteur had stolen packages of Tylenol from area stores, poisoned their contents and then returned the bottles to the supermarkets. Despite the concerted efforts of the investigators, the Tylenol murders were never solved. However, Johnson & Johnson’s good deed did not go unnoticed: sales of Tylenol almost fully rebounded in less than a year, thanks to the company’s widely praised handling of the crisis. In what would prove to be a masterstroke of genius, Joseph Chiesa (who was later promoted to Chairman), convinced Johnson & Johnson to hire new product consultants Calle & Company to help rescue the brand. Calle & Co. rose to the challenge, inventing the first tamper-proof capsule, Tylenol Geltabs. Thus, thanks to its quick thinking, Johnson & Johnson was able to recapture an astonishing 92% of the capsule market it had lost after the scare. Moreover, the company now consistently ranks as one of the most trusted companies in America, coming in at #5 in 2008 (only American Express, eBay, IBM and Amazon polled better).
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