J&J Vows to Overcome Baby Powder, Opioid Liability Claims Against It

By | July 17, 2019

Johnson & Johnson said that the health-care conglomerate will come out on the winning side of thousands of legal claims over its baby powder and opioid products.

Last week, Bloomberg reported that the U.S. Justice Department was pursuing a criminal investigation into whether J&J lied about possible cancer risks of its talcum powder. The company, which is facing more than 14,000 lawsuits over the products, shed more than $15 billion in market value Friday in the wake of the news.

J&J Chief Financial Officer Joseph Wolk on Tuesday called the talc litigation “big business for the plaintiffs’ attorneys to target companies seeking large settlements,” in a interview with Bloomberg TV. “We know that the Department of Justice is an astute organization and we trust that they’re going to come to the same conclusion that we have, and that’s that the company acted responsibly,” he said.

J&J has underperformed the broader market this year, as investors have raised concerns over the company’s growing legal risks. The shares were down 1% to $133.36 at 10:39 a.m. in New York

“While litigation continues to be an overhang for the company, we view the risk as manageable given JNJ’s strong financial position,” Edward Jones & Co. analyst Ashtyn Evans said in a note to investors. “We believe shares are attractively valued.”

The company reported second-quarter adjusted earnings Tuesday that beat analysts’ estimates. It also said it had set aside $190 million for talc-related defense costs in the second quarter. Bloomberg Intelligence estimates that civil settlements could cost J&J as much as $15 billion overall, though the company says it has no liability because the products are safe.

J&J also faces more than 1,900 local U.S. government lawsuits against drugmakers and distributors over the opioid epidemic. The New Brunswick, New Jersey-based company is in the middle of a trial in Oklahoma, which has sued under the state’s public-nuisance law, in a bellwether case that could affect a far larger, consolidated set of lawsuits by states and local governments.

Wolk told said during a call with analysts Tuesday that J&J’s opioids account for only a sliver of the total market.

“This is not about Johnson and Johnson products. It’s about the opioid epidemic,” Wolk said.

J&J also raised its revenue guidance for the year, as strong sales in its pharmaceutical unit helped cushion a decline in the consumer and medical technology businesses.

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