The company said the story was "an absurd conspiracy theory" because "J & J's regulators or independent experts have used all available methods to test J & J's talc powder for asbestos and all of these methods have found that cosmetic talc powder is free asbestos. "
The market may have been too responsive (stock dropped by 10% on Friday), but lawsuits and trademark damages do not easily break.
J & J has to face thousands of claims by the user who claim that the talc powder caused health problems. In July, the Missouri Jury ordered the company to pay $ 4.7 billion for 22 women who claimed ovarian cancer causing asbestos J & J products. The market had been rid of this decision. On Thursday, the company's total number of shares had increased by nearly 5 percent since January, with a market value of almost $ 400 billion.
Cutting 10 percent of it may be overreactive. Investors are panic when billions of dollars are likely to be dealt with. Merck lost 27 billion dollars or 27 percent of its market value when it withdrew from the pain reliever Vioxx in 2004 when studies related to heart attacks and strokes. The company ended up solving most of the cases to less than $ 5 billion.
Similarly, investors have reduced Bayer's treasury bill by $ 15 billion, as lawsuits claiming Monsanto's herbicide, which was acquired in the United States this year, caused cancer according to Bank of America Merrill Lynch. The bank believes that the payment is likely to be less than $ 5 billion.
Statutory invoices will not be reduced in the short term. Merck continued to handle Vioxx trials more than ten years after the withdrawal of the drug.
But the blow to J & J's reputation may be the hardest to solve. In the 1980s, seven people died after Tylenol cyanide had been spotted with analgesics. Responding to this tragedy, rescuing 31 million bottles, giving customer declarations, and importing non-smokeless packaging became an elementary school lesson to improve reputation.
If the company really sat down with bad information related to products used for babies around the world, it might be an unprecedented example.
Reuters Office: Robert Cyran