J&J Shares Fall After Judge Rejects Settlement

Johnson & Johnson shares fell more than 3% after a U.S. bankruptcy judge rejected its $10 billion proposal to settle tens of thousands of lawsuits alleging that its baby powder and other talc products cause ovarian cancer, Manas Mishra reported for Reuters.

J&J has maintained that its products are safe, do not contain asbestos, and do not cause cancer. I Photo: Johnson & Johnson Innovation

This marks the third time the healthcare conglomerate’s bankruptcy strategy has failed in court. J&J announced it would “return to the tort system to litigate and defeat these meritless talc claims” and does not plan to appeal the ruling.

The company is expected to hold a conference call later on Tuesday to discuss the decision.

Opponents of the settlement, including attorneys representing cancer victims and a government bankruptcy watchdog, argued that the third bankruptcy filing—like the first two—should be dismissed, as J&J is not in “financial distress.”

J&J has maintained that its products are safe, do not contain asbestos, and do not cause cancer.

The company stopped selling talc-based baby powder in the U.S. in 2020, replacing it with a cornstarch-based alternative.

J&J’s shares were down 3.5% at $160.08 in premarket trading. According to LSEG data, they trade at 15.51 times their expected earnings over the next 12 months, compared to 14.9 times for rival Amgen and 9.7 times for Merck.

Despite Tuesday’s drop, J&J’s shares had gained approximately 14.7% this year as of Monday’s close, bringing its market capitalization to roughly $400 billion.