Reports state that Johnson and Johnson’s knew about the presence of asbestos in their talcum powder

Reports state that Johnson and Johnson’s knew about the presence of asbestos in their talcum powder

Talc is a mineral in clay and is the softest mineral used in a wide range of industrial as well as consumer products. Talc is mined from underground deposits.

Veins of Asbestos found underground are often found in talc deposits, leading to a risk of cross-contamination, geologists say.

A  recent report from Reuters confirmed that Johnson and Johnson knew for decades that its baby talcum powder was contaminated with asbestos. Asbestos is a carcinogen and is alleged to have caused cancer in thousands of its consumers.

The stock JNJ, -0.95% ended 10% lower on Friday, marking its largest one-day percentage decline in 16 years and lowest close in nearly four months, according to FactSet data. It led decliners on the Dow Jones Industrial Average and the S&P 500 on the day, and accounted for about 101 points of the Dow’s 497-point loss.

CFRA downgraded the stock to hold from buy on the news.

“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 note.

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 said in emailed comments. “It won’t be the death knell, but it will bring them to their knees with those who trusted J&J.”

Reuters said an examination of internal company memos and other documents found the New Jersey-based company was aware of the presence of small amounts of asbestos in its products from as early as 1971 but failed to disclose that fact to regulators or to the general public.

Around 12,000 women recently sued Johnson & Johnson claiming that the talc in the Johnson’s Baby Powder product had caused their ovarian cancer and thus forced the company to reveal documents that showed that, internally, executives, mine managers, scientists, doctors, and lawyers were worried about the problem of its raw talc and finished powders testing positive for the substance. But they denied all claims until they were compelled to share thousands of pages of documents with lawyers. Reuters said an examination of internal company memos and other documents found the New Jersey-based company was aware of the presence of small amounts of asbestos in its products from as early as 1971 but failed to disclose that fact to regulators or to the general public.

representing some 11,700 plaintiffs who claim the talc gave them cancer, including thousands of women with ovarian cancer, the report found.

Johnson & Johnson said the Reuters report was “one-sided, false and inflammatory” and that it ignored thousands to tests by regulators and independent labs that found its talc asbestos-free. The report ignores the company’s cooperation with the authorities over decades, it said, and that it has always used the most advanced testing possible.

“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 vice president of global media relations, reportedly told Reuters by email. “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.”

“We see today’s news potentially impacting sales of everything from baby shampoo to prosthetic hips,” he said. “Given these elevated risks, we no longer feel JNJ shares are attractive at recent prices.

Featured Image: BBC