Johnson & Johnson’s stock slammed after report it knew of asbestos in baby powder

Shares of Johnson & Johnson tumbled Friday, after a Reuters report that the drug and consumer-products firm knew for many years that its baby talcum powder was contaminated with asbestos, a identified carcinogen, that’s alleged to have prompted most cancers in 1000’s of its prospects.

The stock

JNJ, -10.04%

ended 10% decrease on Friday, marking its largest one-day proportion decline in 16 years and lowest shut in practically 4 months, in keeping with FactSet knowledge. It led decliners on the Dow Jones Industrial Average and the S&P 500 on the day, and accounted for about 101 factors of the Dow’s 497-point loss.

CFRA downgraded the stock to carry from purchase on the information.

“We expect significant damage will unfold for JNJ’s valuable brand name in consumer products and medical devices, which has been built over decades,” analyst Colin Scarola wrote in a word.

Eric Schiffer, Chief Executive of The Patriarch Organization and Reputation Management Consultants, agreed.

“The news decimates J&J’s brand trust and loads it with colossal liabilities from blistering mad parents and users of its baby powder,” he stated in emailed feedback. “It won’t be the death knell, but it will bring them to their knees with those who trusted J&J.”

Reuters stated an examination of inside firm memos and different paperwork discovered the New Jersey–primarily based firm was conscious of the presence of small quantities of asbestos in its merchandise from as early as 1971 however did not disclose that reality to regulators or to most of the people.

The paperwork confirmed that, internally, executives, mine managers, scientists, docs and attorneys had been anxious about the issue of its uncooked talc and completed powders testing constructive for the substance. But they denied all claims till they had been compelled to share 1000’s of pages of paperwork with attorneys, representing some 11,700 plaintiffs who declare the talc gave them most cancers, together with 1000’s of girls with ovarian most cancers, the report discovered.

Johnson & Johnson stated the Reuters report was “one-sided, false and inflammatory” and that it ignored 1000’s to assessments by regulators and impartial labs that discovered its talc asbestos-free. The report ignores the corporate’s cooperation with the authorities over a long time, it stated, and that it has at all times used probably the most superior testing attainable.

“Plaintiffs’ attorneys out for personal financial gain are distorting historical documents and intentionally creating confusion in the courtroom and in the media,” Ernie Knewitz, J&J’s vp of international media relations, reportedly instructed Reuters by e mail. “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. Any suggestion that Johnson & Johnson knew or hid information about the safety of talc is false.”

In 1976, the corporate instructed the U.S. Food and Drug Administration that no asbestos had been detected in its talc in assessments performed between December 1972 and October 1973, however three assessments by totally different labs performed between 1972 and 1975 had discovered asbestos, one of them in a amount described as “rather high,” Reuters reported.

At the time, the regulator was contemplating limits on asbestos in beauty talc merchandise.

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In two instances in 2018, juries awarded giant sums to plaintiffs who blamed asbestos-tainted J&J talc for his or her mesothelioma. A 3rd jury in St. Louis discovered for 22 plaintiffs claiming it prompted ovarian most cancers, a much more frequent illness than mesothelioma. Other juries have rejected claims, and nonetheless others have failed to achieve verdicts.

CFRA’s Scarola stated the corporate’s shopper and medical gadgets section accounts for about 39% of revenue and the model identify—and the belief it evokes—are crucial for his or her success.

“We see today’s news potentially impacting sales of everything from baby shampoo to prosthetic hips,” he stated. “Given these elevated dangers, we now not really feel JNJ shares are enticing at latest costs.

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Johnson & Johnson shares are down 4.8% in 2018, whereas the Dow

DJIA, -2.02%

has declined by 2.5% and the S&P 500

SPX, -1.91%

has fallen 2.8%.

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