When we, as consumers, purchase a product we are placing a lot of both trust as well as an assumption in the fact that the product is safe for our use. However, as indicated in this story, that is not always the case.
Johnson and Johnson showed a very hefty drop in shares, to the tune of 8%, after a report released by Reuters claimed the company was aware for decades that its baby powder products did indeed contain asbestos.
Reuters investigation included the combing through of documents, trial documentation and individual depositions between the years of 1971 and 2000. The data showed that when tested, the baby powders and talcs sold by the company would at times actually test positive for small traces of asbestos.
Reuters reporter Lisa Girion stated:
“…company executives, mine managers, scientists, doctors, and lawyers fretted over the problem and how to address it while failing to disclose it to the regulators or the public.”
A spokesman for Johnson and Johnson’s legal litigation team told Reuters that the accusations were false and further dismissed cited tests results as false as well.
Johnson and Johnson, who also manufactures various medical devices, are not new to such allegations such as those they have come under fire for with their baby powder.
In July, twenty-two women banned together to sue the company, stating that the use of their baby powder was behind them contracting ovarian cancer. The group of women was awarded $4.69 billion by a St Louis ruling against Johnson and Johnson.
At that time, the ruling made by the St Louis court in favor of the twenty-two women was the sixth-largest recorded product-defect related award in all of US history.
From the way that the stock dropped when the Reuters report was released, it would seem that investors are walking a thin line when it comes to their continued confidence in the company.