Pharmaceutical giant Johnson & Johnson (NYSE:JNJ) was hit with a hefty court order this month to pay victims who allege the company’s talc baby powder contains asbestos and caused their cancer.
A jury in Missouri initially awarded $550m in compensation and added $4.1bn in punitive damages.
Johnson & Johnson, who is battling roughly 9,000 legal cases that involve its baby powder, had said it was “deeply disappointed” by the court order and had said it would appeal.
The company released its second quarter earnings days after the court order and made a vow during the earnings call that it would fight back.
Johnson & Johnson (NYSE:JNJ) CEO and chairman Alex Gorsky stated, “As you know our baby powder is a trusted product that we have sold to families for over 100 years, and Johnson & Johnson is deeply disappointed in this verdict. We remain confident that our products do not contain asbestos and do not cause ovarian cancer. We intend to pursue all available appellate remedies.”
He also said on a call with analysts, “We are confident that there are multiple grounds for reversal of this jury verdict and that, ultimately, the case will be reversed.”
According to Gorsky, Johnson & Johnson’s products do not contain asbestos or cause ovarian cancer.
Damien Conover, an analyst with Morningstar, has said that he expects J&J to aggressively fight the lawsuits and “the final related payments will not cause a major impact to its valuation.”
The trial, which took six weeks, had women and their families talking about how they developed ovarian cancer after using the company’s baby powder and other talc products for decades. Twenty two women were represented in the case, but six had died from ovarian cancer.
Attorneys for the victims alleged that Johnson & Johnson had knew that its talc had been contaminated with asbestos since the 1970’s. They called it “unfair process” for not alerting consumers about the risks.
J&J has defended itself by saying that several studies have shown its talc to be safe and said the verdict was a product of a “fundamentally unfair process”.
The FDA had also commission a study using a variety of talc samples that included J&J’s from the year 2009 to 2010. No asbestos had been found.
According to the prosecution lawyer, the FDA as well as J&J had used flawed testing methods.
For the second quarter Johnson & Johnson reported a profit of $2.10, which was three cents higher than the $2.07 that analysts had expected. Total sales saw a growth of 10.6 percent and hit $20.83 billion. Analysts were only expecting $20.39 billion.
For 2018, the company is now forecasting adjusted earnings in the range of $8.07 to $8.17 a share. Previously this forecat had been in the range of $8.00 to $8.20.
The company’s (NYSE:JNJ) full-year sales forecast has been cut to $80.5 billion to $81.3 billion from $81.0 billion to $81.8 billion.