J&J shares nosedive on report it knew of asbestos in Baby Powder

Andrew Cummings
December 15, 2018

Shares of Johnson & Johnson (J&J) fell more than 6% on Friday, on track to post their biggest percentage drop in more than a decade, after Reuters reported that the pharmaceutical major knew that its baby powder was contaminated with cancer-causing asbestos.

After the publication of the bombshell report, the company's stock dropped by more than 10 percent on December 14.

Documents produced, as part of the trials and reviewed by Reuters, revealed that from at least 1971 to the early 2000's, the firm's internal tests sometimes found small amounts of asbestos in its raw talc and finished powders.

Talc is the main ingredient in Johnson's Baby Powder.

Johnson & Johnson strenuously rejected the claims made in the article, calling it "one-sided, false and inflammatory". Susquehanna litigation analyst Tom Claps said in an email that "today's Reuters story about J&J's talc litigation is not "new news". The Reuters investigation comes in the backdrop of the multiple lawsuits that the company is now facing - where more than 9,000 plaintiffs have alleged that its talc baby powder products contain asbestos and caused ovarian and other cancers.

Johnson & Johnson has denied the claims in the Reuters report, branding it "an absurd conspiracy theory".

Johnson & Johnson has been forced to share thousands of company memos and internal reports with lawyers for 11,700 people who have filed lawsuits claiming the talc has given them cancer.

Johnson & Johnson, meanwhile, has vowed to appeal all verdicts against it and maintains that its products are safe. A pair of cases in New Jersey and California saw significant awards for mesothelioma patients, and a "watershed" verdict in St. Louis expanded the company's potential liability.

"This is all a calculated attempt to distract from the fact that thousands of independent tests prove our talc does not contain asbestos or cause cancer", Ernie Knewitz, J&J's vice president of global media relations, wrote in an emailed response to the report. It added that "studies of more than 100,000 men and women show that talc does not cause cancer or asbestos-related disease".

A new report alleges that Johnson & Johnson knew about instances of its talc powder testing positive for asbestos, but failed to disclose the information. Fast forward to Friday, where the intraday move has wiped out more than $30 billion in market value. Talc cases make up fewer than 10 percent of all personal injury lawsuits pending against the company.

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