MORE PROBLEMS FOR J&J
By Todd Horwitz
Johnson & Johnson Problems Mount
Johnson & Johnson, facing lawsuits from more than 100,000 plaintiffs over its product safety and marketing tactics, has taken the aggressive strategy of battling many of the cases in court. And it is losing. A lot. Juries and judges have ordered the health-products giant to pay billions of dollars in several recent trials over claims that J&J’s signature baby powder and certain drugs and medical devices injured people, and that its marketing practices fueled the opioid-addiction epidemic.
Shares of J&J are down 12% from a peak, partly because there’s no end in sight for liability costs. Concern over litigation will be “an overhang on the shares for the foreseeable future,” with the company already discounted in value to reflect at least $20 billion of exposure, Chris Schott, an analyst at JPMorgan Chase & Co., said in a report. “J&J has been riding the litigation bronco over the past couple of years, and the ride is far from over,” Carl Tobias, a University of Richmond law professor who teaches about product liability. “I’m sure investors are tired of it.”
In August, Moody’s Investors Service changed its outlook for J&J’s bond rating to negative from stable, citing uncertainty over the outcome of litigation. Attention-getting verdicts also are hurting the company’s reputation for trustworthiness, amassed from decades of careful marketing to parents and its famous handling of a Tylenol scare. Recent legal losses have dropped J&J to 57th out of 58 companies in a pharmaceutical reputation index developed by Alva Group, which bases its scores on mentions in the news, social media and analyst reports. J&J was in the index’s top 10 in 2014.
A J&J spokesman said the company’s reputation remains strong because it has developed high-quality consumer products and treatments for cancer and HIV. He said the company’s victories at trial and reversals of losses on appeal don’t garner the same level of attention as high-dollar trial losses.
The company’s wins include two talc trials last week in which California juries sided with the company. And it has settled others.Some lawyers said the longer litigation continues, the easier the cases become for plaintiffs to win because more documentation is unearthed, and plaintiffs’ lawyers can refine their strategies based on earlier trials. “The cases only get better for plaintiffs, not worse,” said Richard Golomb, a Philadelphia attorney representing women who have sued over J&J’s baby powder.
Todd “Bubba” Horwitz