Categories Analysis, Retail

Johnson & Johnson will spend more time in court in 2019

The tainted talc has been snowballing into a gigantic threat since 2016, and things are not looking good as Johnson & Johnson (JNJ) heads into the new year. Though shares have been complacent for a long time about the lawsuits, investors started showing signs of paranoia following the $4.69 billion compensation slapped on the company in July.

Another bombshell was dropped two weeks back when Reuters reported that Johnson  & Johnson knew about the presence of cancer-causing asbestos in its talc products since 1971, citing unsealed court documents. The report wiped out $45 billion of the company’s market value as shares tumbled 11%.

Johnson & Johnson talc cases
Image: Wikimedia Commons

2019 is going to be even harder for the company as it awaits trial in over 11,700 claims. Johnson’s continue to strongly defend its products and appeal against the verdicts it has lost, but it faces an uphill task of restoring brand loyalty. Also, if the company continues to lose cases, more people would start approaching court against it.

Johnson’s has about $16 billion of funds allocated for any possible payouts, but the scale and number of suits have the potential to outstrip this amount. Bloomberg estimates the payouts could reach anywhere around $20 billion at an average of $1.67 million per case.

Compensations of this magnitude could significantly break the company, though there are numerous options to avert such a scenario.

In an unusual move earlier this month, Johnson’s agreed to a $1.5 million settlement in a Manhattan woman’s case. This had sparked speculations that the company may be mulling a global settlement program to put the whole issue to rest, though at a huge cost.

The company, however, clarified that a settlement plan was not in its pipeline.

Johnson & Johnson: Key points on the asbestos report and stock slide

Johnson & Johnson will defend its product in at least 21 trials on court calendars in 2019, including 15 in California courts, according to Bloomberg. In April, the company once again faces veteran lawyer Mark Lanier, who had won the $4.69-billion compensation for his clients, comprising 24 women suffering from ovarian cancer.

Asbestos is known to cause ovarian cancer and mesothelioma, a kind of lung cancer. Many countries have banned the use of asbestos, while the US allows it in a minuscule quantity of less than 1%. Johnson & Johnson claims that various tests conducted on the products – both by the company and third parties – have not found traces of asbestos in its talc products.

 

Follow our Google News edition to get the latest stock market, earnings, and financial news at your fingertips 

Most Popular

AVGO Earnings: All you need to know about Broadcom Q1 2021 earnings results

Broadcom Limited (NASDAQ: AVGO) reported first quarter 2021 earnings results today. Total revenue increased 14% year-over-year to $6.65 billion. GAAP net income was $1.3 billion, or $3.05 per share, compared

Infographic: Costco (COST) Q2 2021 sales up 15%; earnings miss

Retail giant Costco Wholesale Corporation (NASDAQ: COST) reported higher earnings and revenues for the second quarter of 2021. Earnings missed analysts’ expectations, while sales beat. Net profit was $951 million

Will shifting to as-a-service model help Hewlett Packard in emerging stronger from COVID?

With the corporate world rapidly shifting to cloud-native computing after the virus outbreak changed work culture and the way businesses operate, technology providers are aggressively innovating their offerings. Hewlett Packard

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top