Johnson & Johnson set aside $3 billion in fourth quarter charges for consumer product liability litigation, mostly concerning the extensive recall of DePuy Orthopaedics ASR metal-on-metal hip replacement devices, which were found to fail prematurely and shed metal particles into the body and cause disabling disabilities.
A worldwide recall of DePuy’s ASR Hip Resurfacing System and ASR Acetabular System was issued in August 2010, after data from the National Joint Registry of England and Wales showed that 1 out of every 8 patients (12%-13%) experienced failure of the implants within five years of receiving them.
The New York Times reports J&J forecasted 2012 earnings slightly below analysts’ estimates.
Gabelli & Company analyst Jeff Jonas said $800 million of the fourth quarter charges is for the medical costs for the DePuy hip replacement recall. “The hip recalls worry me because their eventual costs are unknown.”
J&J fourth-quarters were better than expected, earning the company $218 million, while global sales rose 3.9 percent to $16.26 billion.