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Short-term Headaches,
Long-term Vision

Pharmaceuticals & Profit

Do your employees sweep problems under the rug, or do they think of hurdles as stepping stones? Priorities related to short-term or long-term profits made all the difference in times of crisis for two major pharmaceutical companies.

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Bausch & Lomb

Bausch & Lomb was founded in Rochester, New York in 1853 by — you guessed it — John Bausch and Henry Lomb. Over the years, Bausch & Lomb’s product line grew from monocles to microscopes, binoculars, projectors, and other lens products, and in 1971, the company introduced the world’s first soft contact lens. Although it remains one of the world’s largest and oldest suppliers of contact lenses, pharmaceuticals, and eye-care products today, the company somehow managed to blindside itself with a crisis while celebrating 150 years of helping others see clearly.


In March of 2006, New Jersey-based ophthalmologist Dr. David Chu reported to Bausch & Lomb that three of his patients using the contact lens cleaner ReNu with MoistureLoc, a Bausch & Lomb product, had developed keratitis, a rare fungal infection of the eye that can cause corneal scarring and vision loss. As it turned out, similar warnings stemming from July 2005 prompted Bausch & Lomb to stop carrying ReNu with MoistureLoc in Hong Kong and Singapore, but the company didn’t disclose this information in the United States — the first poor judgement in a string of decisions that would jeopardize the company’s financial footing for years.


Five days after alerting Bausch & Lomb, Dr. Chu reported his findings to the U.S. Centers for Disease Control and Prevention (CDC), which in-turn announced in April 2006 that it would investigate 109 U.S. patients suspected to have keratitis. Within 24 hours of investigating, the CDC found a high correlation between keratitis and ReNu with MoistureLoc, and Bausch & Lomb finally halted product shipments. What could have been handled as a quick, quiet, short-term loss instead resulted in the largest stock drop in Bausch & Lomb’s history, and the company paid out over $250 million to settle more than 600 lawsuits related to keratitis and ReNu with MoistureLoc through 2009.

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Johnson & Johnson

Johnson & Johnson, which was actually founded by three Johnson brothers, incorporated in New Brunswick, New Jersey in 1887. Originally it only sold surgical dressings, but today the organization operates more than 250 companies which sell products in consumer healthcare, medical devices, and pharmaceuticals. One of the brand’s most popular products is Tylenol, a pain-relieving and fever-reducing drug developed in 1955 by McNeil Laboratories, a Johnson & Johnson company since 1959. But when seven people in Chicago died after consuming extra-strength Tylenol capsules in 1982, the nation flew into a panic that would come to be known as the “Tylenol scare.”


Johnson & Johnson faced a tough choice during the scare: leave Tylenol on store shelves or recall approximately $100 million worth of its most profitable product. It was a hard pill to swallow, but the company quickly recalled all 31 million bottles of Tylenol, halted all Tylenol advertisements, and made public announcements about the crisis. With Tylenol accounting for 37 percent of the pain-and-fever drug market, the recall devastated Johnson & Johnson’s revenue in the short-term, but it helped it in the long-term. 


A few months after authorities discovered that an individual had contaminated the capsules once they’d hit store shelves, Johnson & Johnson reintroduced Tylenol, upgraded  with triple-seal, tamper-resistant packaging, a $2.50-off coupon, and tablets instead of openable capsules. Tylenol made a remarkable comeback, regaining 70  percent of its market share within five months and all of its market share within a year.

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Long-term vision keeps companies profitable, but many employees can’t see the forest for the trees. Johnson & Johnson, thinking of its future, took $100 million worth of pills to avoid a long-term headache. Bausch & Lomb, shortsighted about its profits, lost an eye-care product, $250 million on MoistureLoc settlements, and much more on sales, inventory, stock, and goodwill — the company went private in 2007 and changed owners again in 2013.


To avoid a MoistureLoc-like disaster, focus on how your actions help or harm your company’s objectives. Deal with the short-term headaches quickly to turn them into stepping stones toward accomplishing your long-term vision.

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