Could Johnson & Johnson’s tanking reputation be a warning sign for investors? Motley Fool says it might be. “Even if the business is not in danger today, things could get worse down the road,” the private financial and investing advice company said.
That’s because Johnson & Johnson, once a trusted name in consumer products, has been hit with a flurry of lawsuits over various products. One of the biggest risks to investors, Motley Fool says, is J&J’s role in the opioid crisis.
But another chink in J&J’s armor is from its iconic Johnson’s Baby Powder. Just last week, a Missouri appellate panel not only told the company it had to pay $2.1 billion to 22 women who claimed exposure to the talcum powder caused them to develop ovarian cancer, the court sided with plaintiffs who argued that the company was aware the talc it used in its products could become contaminated with asbestos — a known carcinogen — but it failed to alert regulators or warn consumers. The panel also squashed J&J’s bid to disregard the women’s expert scientific witnesses.
One of the more damning things about the $2.1 billion verdict is that $1.6 billion of it is related to punitive damages — a sure sign from the jury that Johnson & Johnson deserved to be punished for its wrongdoing. It was a finding the court backed up by saying, “viewing the evidence in the light most favorable to the verdict, we find plaintiffs proved with convincing clarity that defendants engaged in outrageous conduct because of an evil motive or reckless indifference.”
The verdict may sound steep, but it’s a financial hurdle that J&J can easily leap. In c2019, the company raked in $15.1 billion in profits and had an additional $19.9 billion in free cash flow, according to the report. But, Motley Fool warns, “that can change in a hurry, especially if the courts aren’t convinced that J&J has been doing a good job of protecting its customers, as the recent Missouri ruling suggests.” As of now, Johnson & Johnson faces more than 19,000 lawsuits over claims its talc is contaminated with asbestos and caused consumers to develop cancer.
Last October, Johnson & Johnson recalled thousands of bottles of its baby powder after testing by the Food and Drug Administration (FDA) turned up traces of asbestos in some of the bottles. In May, the company announced it would stop selling talc-based Johnson’s Baby Powder in the United States and Canada due to lagging sales it blamed on the product’s tarnished reputation from mounting lawsuits.
Beasley Allen lawyers Ted Meadows and Leigh O’Dell are heading up the team handling claims of ovarian cancer linked to talcum powder use for feminine hygiene. Our attorneys are also handling mesothelioma claims. They are looking at cases of industrial, occupational and secondary asbestos exposure resulting in lung cancer or mesothelioma as well as claims of asbestos-related talc products linked to mesothelioma.