Johnson & Johnson’s (JNJ) stock tumbled 10% on Friday — wiping out close to $40 billion of its market value — after a Reuters report said the company knew for decades that asbestos was in its baby powder.
The company has been grappling with lawsuits alleging some of its talcum powder products caused cancer. But the Reuters report cites documents and other evidence that indicate company executives, mine managers, scientists, doctors and lawyers knew about the problem and failed to disclose it to regulators or the public.
It was J&J’s worst day since 2002.
The plunge in J&J’s shares rippled across Wall Street. J&J is among the most widely held stocks and it’s also a member of the Dow.
Reuters said it examined documents, including depositions and trial testimony, that show that from at least 1971 to the early 2000s, J&J’s raw talc and finished baby powders sometimes tested positive for small amounts of asbestos, a human carcinogen that can cause cancer.
According to Reuters, the documents also depict successful efforts to influence US regulators’ plans to limit asbestos in cosmetic talc products and scientific research on the health effects of talc.
“The Reuters article is one-sided, false and inflammatory,” Johnson & Johnson said in a lengthy statement about the report. “Johnson & Johnson’s baby powder is safe and asbestos-free.”
The company said that “thousands of tests” by Johnson & Johnson, regulators, independent labs, and academic institutions have shown that its talc does not contain asbestos. The company said that it has fully cooperated with the Food & Drug Administration and other global regulators over decades, and used the “most advanced testing methods available” to ensure that its cosmetic talc is asbestos-free.
On July 19, 2002, shares of Johnson & Johnson tumbled 16% as federal regulators investigated a former employee’s allegations of false record-keeping at a plant that made an anemia drug linked to serious side effects.
CNN’s Matt Egan contributed to this report.