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After closing yesterday with a 1% loss, JNJ stock was 0.34% down further in the pre-market today but is 0.72% up now. Johnson & Johnson announces that it will stop selling its talc baby powder in the U.S. and also in Canada.
Johnson & Johnson (NYSE: JNJ) stock was down 2.50% in the past month to trade at around $150 at the time of writing. If we compare the current price with the previous trading, we will see a 0.72% rise.
However, it has gained a proportionally equal amount since the beginning of the year. The slow growth coincides with the news that the company will not be selling its talc baby powder in the United States and also in Canada.
The company has been accused of producing the powder, which has been a catalyst to several cancer patients according to different lawsuits. According to Reuters, the company is cumulatively facing more than 19,000 lawsuits from its consumers and their survivors.
Most of the plaintiffs claim the product is contaminated with asbestos, a known carcinogen. However, most of them are still pending before a United States district judge in New Jersey.
The company said in a statement that it is steadfastly confident in the safety of talc-based Johnson’s baby powder, citing decades of scientific studies. As a result, investors remain wary of its stock, but on the other hand, motivated that the company is developing a possible Covid-19 vaccine. The confusion makes analysts not rate the pharmaceutical’s shares as high as the rest in the market, like Moderna Inc (NASDAQ: MRNA), for example.
Fundamentals Affecting JNJ Stock
Apart from the individual lawsuit cases, the company has been a target of a federal criminal investigation into how forthright it has been about its talc product safety. Around 41 U.S. states are investigating its baby powder sales.
“My subcommittee’s 14-month investigation revealed that Johnson & Johnson knew for decades that its product contains asbestos,” said U.S. Representative Raja Krishnamoorthi. He described the decision to stop selling J&J’s talc baby powder as a major victory for public health.
The company has come out to disclose that it has been named as a defendant along with other drug-makers in more than 2,900 lawsuits. In one of the cases, an Oklahoma judge ordered the company to pay $572.1 million to the state for its part in fueling an opioid epidemic by deceptively marketing addictive painkillers.
However, Johnson & Johnson is appealing the Oklahoma Judge’s ruling, in bid to save the huge penalty. In a statement to the press on Tuesday, the company said that it had stopped shipping talc baby powder when the coronavirus crisis led to limits on shipping and manufacturing.
“Demand for talc-based Johnson’s Baby powder in North America has been declining due in large part to changes in consumer habits and fueled by misinformation around the safety of the product and a constant barrage of litigation advertising,” J&J said in a statement.
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