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$45 Billion Wiped Off J&J Market Value Over Fears Of Asbestos In Baby Powder

$45 Billion Wiped Off J&J Market Value Over Fears Of Asbestos In Baby Powder
After the publication of a report by news agency Reuters which claimed that Johnson & Johnson had been for decades aware of the often presence of asbestos in its baby powder, there was a drop of 11 per cent in the shares of the company. 
In September 2017, there was a report published by Bloomberg News which claimed the company had been aware of the sometimes presence of asbestos fibres in its talc products for decades. The report was based on documents unsealed in a lawsuit. The report also claimed that exposure to such material could result in ovarian cancer.
It was back in February this year that a similar drop had taken place in the shares of the New Brunswick, New Jersey-based drugmaker because of concerns over asbestos even then following the circulation of a blog post by traders which were focused on worries about what might be uncovered during litigation. At that point in time, there was a drop of 11 per cent in the shares of the company despite such concerns being called as overblown by Wells Fargo. That call was echoed by analyst Lawrence Biegelsen on Friday, who also added that if the current number of cases were to double, just $6.5 billion would be the financial liability of the company because of the court cases.
This the most recent drop saw about $45 billion being wiped out of the market value of J&J.
“Today’s Reuters story about JNJ’s talc litigation is not ‘new news,”’ said Susquehanna litigation analyst Tom Claps to the media. The company was ordered in July this year by a court to pay in fines $4.69 billion to women who had filed a case claiming that she had developed ovarian cancer because of exposure to the asbestos present in the baby powder.
There are some other legal challenges for J&J. The company has begun a process of settlement of thousands of cases hat claimed that the artificial hips sold by the company were defective and resulted in pain and discomfort for the patients. According to reports, the cases relate to its Pinnacle line of hip-replacement devices and the company is reportedly engaged in settlement of about 3,300 of the 10,000 law suits for which it would have to cough up about more than $400 million.
“JNJ has been facing talc/asbestos litigation for years,” Claps wrote in response to questions. He put up examples of a number of trials where evidence that the company knew and had intentionally concealed the risks were placed by plaintiffs. “Interestingly,” he said, “JNJ’s stock has taken a bigger hit today than it did after that $4.7B verdict.”
According to some analysts, the settlement charges for J&J could be anywhere between $10 billion and $20 billion for settlement of cases that can be as high as 110000 in number.

Christopher J. Mitchell

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