Johnson & Johnson (JNJ) shares experienced a fall of more than 10% on Friday 14 December. The fall comes after doubts arose over the safety of its talcum powder. The result of the latest stories has been an ongoing battle of words between lawyers for Johnson & Johnson and Reuters who originally reported that the firm has allegedly been hiding the presence of asbestos in its talcum powder products since the early 1970s.
The report from Reuters is only the latest step in a ongoing journey of legal issues that Johnson & Johnson has faced this year, concerning the alleged potential carcinogenic effects of its talcum powder. This latest hurdle has had a dramatic effect on JNJ stocks.
Original US State of Missouri decision
Back in July 2018, a jury in the US State of Missouri found in favour of 22 women who had alleged that Johnson & Johnson products had been instrumental in them developing ovarian cancer. An award of $550m in compensation and $4.1bn in punitive damages was made to the women, six of whom have now died as a result of their illness.
This is just one of 9,000 legal cases that Johnson & Johnson has been fighting, concerning similar allegations. The firm is currently appealing the decision in the Missouri case, and it has been successful in defending other cases.
No quick solution to the current problems
The Reuters report contains information about its review of Johnson & Johnson papers which the news agency claims show that the pharmaceutical giant knew about the presence of asbestos in its products decades ago.
Johnson & Johnson has retaliated by issuing a statement in which it vehemently denies that its products are contaminated with asbestos. It has claimed that Reuters allegations are nothing more than “an absurd conspiracy theory.”
It seems that the US Food and Drug Administration (FDA) is on the side of the pharmaceutical company. It conducted comprehensive tests on Johnson & Johnson’s talc products from 2009-10 and found that there was no asbestos present in them. It’s these research results that Johnson & Johnson is attempting to push to the forefront of investor’s minds, in an attempt to stall the onslaught of the current issues it’s facing.
While opposing lawyers have questioned the processes involved in the FDA testing, and the validity of the results, representatives of Johnson & Johnson have continued to comment on the unfair coverage of “untrue” allegations.
The one thing which does seem certain at present is that JNJ stock is in turmoil. It remains to be seen whether the company is able to turn things around in the immediate future. Currently, this seems unlikely to happen. The future of Johnson & Johnson stocks is likely to be somewhat dependent on the results of outstanding legal actions. If these results go the company’s way, it’s possible that the faith of investors will start to be restored.