Shares of Johnson & Johnson fell 10 percent on Friday and were on track to post their biggest percentage drop in more than 16 years, after Reuters reported that the pharma major knew for decades that cancer-causing asbestos lurked in its Baby Powder.
The decline in shares erased about $40 billion from the company’s market capitalization, with investors worrying about the impact of the report as it faces thousands of talc-related lawsuits.
J&J was found to have known about the presence of small amounts of asbestos in its products from as early as 1971, a Reuters examination of company memos, internal reports and other confidential documents showed.
The report also said the company had commissioned and paid for studies conducted on its Baby Powder franchise and hired a ghostwriter to redraft the article that presented the findings in a journal.
In response to the report, the company said “any suggestion that Johnson & Johnson knew or hid information about the safety of talc is false.”
“This is all a calculated attempt to distract from the fact that thousands of independent tests prove our talc does not contain asbestos or cause cancer,” Ernie Knewitz, J&J’s vice president of global media relations, wrote in an emailed response to the report.
The company also said Baby Powder was asbestos-free and added it would continue to defend the safety of its product.
At least two Wall Street analysts said the stock appeared to be oversold on the news.
