After 50-plus product recalls in 15 months, the $60 billion company is fighting to clear its once-trusted name. “Not only is J&J bigger and more decentralized; it’s also much more profitable. Its operating margin in 1990 was 17.7 percent; in 2010 it was 26.8 percent. ‘Where did that increase in margin come from?’ asks Sucher, the Harvard business professor. When J&J acquired Pfizer’s consumer health-care division in 2006, it predicted cost savings of $500 million to $600 million. Sucher says numbers like that suggest cost-cutting may have gone too far.”

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