J&J Shares Drop on Report Company Knew of Asbestos in Baby Powder

Justin Sullivan  Getty

Justin Sullivan Getty

"And while talc products contributed just $420 million to J&J's $76.5 billion in revenue past year, Baby Powder is considered an essential facet of the healthcare-products maker's carefully tended image as a caring company-a 'sacred cow, ' as one 2003 internal email put it".

The report by news agency Reuters sent company shares into a tailspin, suffering their worst sell-off in 16 years.

A report from Reuters on December 14 accuses pharmaceutical company Johnson & Johnson (J&J) of knowing about the presence of cancer-causing asbestos in its popular baby powder-for decades.

After releasing a statement in 1971 that claimed the company had never found any asbestos in their products, a Mount Sinai researcher wrote the company a letter, explaining that a "relatively small" amount of asbestos had been detected in its baby powder, according to Reuters.

The report stated that Johnson & Johnson had been sued by thousands of people, including many women, who claimed the powder was risky to their health and that the company didn't notify consumers.

Johnson & Johnson has been involved in a number of lawsuits alleging that its talc powder was the cause of various cases of ovarian cancer and mesothelioma, a rare lung cancer caused by asbestos exposure. But the Reuters report cites documents and other evidence that indicate company executives, mine managers, scientists, doctors and lawyers knew about the problem and failed to disclose it to regulators or the public.

Reuters states that the number includes thousands of women with ovarian cancer.

Justin Sullivan  Getty
Justin Sullivan Getty

In a statement posted on its website, Johnson & Johnson described the Reuters report as "one-sided, false and inflammatory".

According to Reuters, the company also tried, unsuccessfully, to block regulations that lower the maximum level of asbestos allowed in talc-based cosmetics.

The company added that it remained confident that its products do not contain asbestos or cause cancer.

Since the report has been released, share prices in J&J have plummeted by nearly 10%.

Johnson & Johnson says it will appeal the recent verdicts against it with lawyers telling Reuters: "Johnson & Johnson's baby powder is safe and asbestos-free". Still, J&J's Knewitz told the news service "any suggestion that Johnson & Johnson knew or hid information about the safety of talc is false".

"It is not surprising that an article from Reuters outlining years of potential knowledge regarding the perils of talc should agitate investors", BMO Capital Markets analyst Joanne Wuensch said.

Latest News