Johnson & Johnson is not taking a nearly $40 billion hit to its stock market value lightly. The company is out Monday with a national ad campaign denying a new report that, while touting its Johnson's Baby Powder as safe.
The company's stock tanked 10 percent on Friday after Reuters reported that the company's baby powders at times tested positive for asbestos, a carcinogen, from at least 1971 to the early 2000s. Shares of J&J fell another 3 percent Monday as the company stepped up efforts to stem damage to its famous brand and overall worth.
Beyond wanting to safeguard its standing with consumers, J&J is waging the same fight on the legal front, with more than 10,000 claiming in courts its powders caused their cancers. The cases include thousands of women with ovarian cancer.
The New Brunswick, New Jersey, company is reiterating past public claims that there is no science to back alleged links between its powder and cancer. J&J has won several recent court cases alleging liability and damages, and is appealing other judgments, including $4.6 billion awarded in July to 22 women who claimed its product caused their ovarian cancer.
"Studies of tens of thousands of women and thousands of men show that talc does not cause cancer or asbestos-related disease," the company said in its lengthy response, appearing Monday in major online and print news outlets. J&J's baby powder has for decades tested as asbestos-free, it added.
In addition to issuing a statement calling the wire-service report "one-sided, false and inflammatory," J&J had an outside public relations firm compile and send to news outlets including CBS MoneyWatch several analysts' reports labeling the Reuters story as "old news" and investor concerns overblown.
While calling Friday's bashing of J&J's shares "overdone," the Reuters report "brings these talc cases back to the forefront as an overhang just as the company had been gaining some momentum" in either winning the litigation or getting the cases dismissed, wrote UBS analysts Carter Gould and Andrea Brettler.
If one assumes a potential settlement could cost the company $2 million to $5 million per case, Friday's stock move implies roughly 8,000 to 20,000 cases getting settled by J&J, added the UBS analysts. Last quarter, there were 11,700 plaintiffs with talc-related cases against the company, up from 9,100 in the prior period, they noted.