Johnson & Johnson Falls Following Baby Powder Asbestos Report

Johnson & Johnson JNJ stock tanked more than 11 percent Friday morning after an investigative piece by Reuters alleges the company knew one of its most popular products was dangerous for decades.

What Happened

Reuters published a story claiming Johnson & Johnson has been aware its raw talc and finished baby powders have periodically tested positive for small amounts of carcinogen asbestos since 1971. Reuters alleges company management has discussed the issue in the past, but never disclosed it to the public or regulators.

Why It’s Important

Johnson & Johnson denied the claims in the Reuters report, which the company says is focused on “outlier results.”

“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,” Johnson & Johnson said in a statement.

Earlier this year, however, Johnson & Johnson was ordered to pay a $4.9 billion settlement with 22 women and their families who sued the company over claims its baby powder caused ovarian and other cancers. Johnson & Johnson has said it plans to appeal the decision.

Another couple was also awarded a $25.75 million earlier this year in California in a lawsuit involving a bowler who developed cancer after using Johnson & Johnson baby powder on her hands and feet for years.

What's Next

If the Reuters’ findings are accurate, Johnson & Johnson may face a massive wave of additional lawsuits and could be dealing with nearly a half century of potential liabilities.

Investors will be watching closely to see if the latest Reuters report results in additional lawsuits or potential regulatory action against Johnson & Johnson. They will also be keeping an eye on J&J’s appeal of the $4.9 billion court ruling earlier this year.

Johnson & Johnson's stock traded around $130.36 per share at time of publication, down 11.8 percent.

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Photo credit: Mike Mozart, Flickr