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Johnson & Johnson says asbestos report is 'one-sided, false and inflammatory'

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Johnson & Johnson says asbestos report is 'one-sided, false and inflammatory'

Johnson & Johnson has responded to a report from Reuters alleging that the healthcare giant covered up information regarding carcinogens in its baby powder, calling the report "one-sided, false and inflammatory."

Reuters reported Dec. 14 that the company was aware of the presence of asbestos in its talc powder as early as the 1950s. The company, according to Reuters, has eluded regulation from the U.S. Food and Drug Administration since the 1970s and continued to market the powder despite knowing the risks.

The company faces approximately 11,700 lawsuits from consumers who say the product led to ovarian cancer or mesothelioma.

"Simply put, the Reuters story is an absurd conspiracy theory, in that it apparently has spanned over 40 years, orchestrated among generations of global regulators, the world's foremost scientists and universities, leading independent labs, and J&J employees themselves," the company said in a Dec. 14 statement.

Analyst Vamil Divan from Credit Suisse said that Johnson & Johnson has been able to overturn most of the unfavorable rulings in the litigation that has been decided so far. The largest of the cases is one in which a St. Louis jury ordered the company to pay $4.69 billion in damages to 22 women who claimed the asbestos in the product led to their ovarian cancer. Johnson & Johnson is appealing the decision.

Divan noted that the documents in the Reuters article are being reported publicly for the first time, but Johnson & Johnson has stated that the documents have been used in previous court cases. The company asserts that the article contains no new information, and that the report "misrepresented the information," according to Divan.

Johnson & Johnson said in its statement that the article ignored tests that have been performed on the product, the cooperation of the company with the FDA and the quality of the tests they used, which Reuters said were intentionally underperformed.

Nevertheless, Johnson & Johnson's stock had dropped 9.37% as of 2:52 p.m. ET on Dec. 14, according to S&P Global Market Intelligence data.

Cowen analyst Joshua Jennings said that the move in shares was likely an overreaction. The drop eroded $25 billion from Johnson & Johnson's $369.9 billion market cap.

While the financial impact on Johnson & Johnson could be huge if the talc litigation does not land in its favor, Jennings noted the burden of proof that would be required to demonstrate that the onset of cancer was directly tied to the baby powder.