Founded in 1886 and headquartered in New Brunswick, New Jersey, Johnson & Johnson
However, now more than 1,000 women are suing Johnson & Johnson over claims of negligence, conspiracy, and failure to warn consumers of the risks of using their talc-based baby power (especially in the genital area), which has been linked to ovarian cancer. In 2014, sales of J&J talcum powder products totaled approximately $374 million, about 70% of which was purchased for adult use. The first case was brought forward by the family of Jacqueline Fox, who died in October 2015 of advanced ovarian cancer (presumably brought on by daily use of Johnson's baby powder since her teen years). There are also claims that, despite being aware of the product's health risks, the company increased its efforts in the 1990's to market the powder to black and Hispanic women, among whom the product was already popular; such claims understandably have a profound impact on juries, especially in cases where the plaintiff is a member of one of the aforementioned communities. The jury ruled in Fox's favor, and in a 10-2 vote awarded her family $10 million in compensatory damages, and called for an additional $62 million in punitive damages. Carol Goodwich, a spokeswoman for Johnson & Johnson Consumer, nevertheless specified, "Jury verdicts should not be confused with regulatory rulings or rigorous scientific findings. The overwhelming body of scientific research and clinical evidence supports the safety of cosmetic talc." J&J's stock price fell 0.3% to $112.41 in the wake of the verdict.
Fox's case, however, is not the only public health lawsuit that the company has had to face in recent years. Johnson & Johnson has also agreed to pay $2.8 billion to resolve lawsuits over its artificial hips, and an additional $120 million to compensate for defective vaginal-mesh inserts. Since 2013, the company has spent over $5 billion to resolve legal claims filed over its drugs and medical devices; this year alone, it has paid out $2.2 billion, one of the largest health fraud penalties in American history, in settling civil and criminal investigations into claims that it illegally marketed Risperdal -- an anti-psychotic drug -- to children as well as the elderly. In 2015, even with the talc-powder cases excluded from the tally, more than 75,000 individuals filed product liability claims against Johnson & Johnson.
If this trend continues (J&J's litigation expenses have averaged roughly $1.28 billion annually), seven to eight percent of the company's value will be eroded. At every new public scandal, the stock price of the company suffers on Wall Street. And J&J is not the only company to struggle under the weight of class action lawsuits-Procter and Gamble's
Johnson & Johnson has had a key reason for protecting their baby powder: its distinctive smell, which is etched into many people's memories as being synonymous with babyhood and a parent's care, is associated with the company and thus with its other products as well. Buying baby powder from the company makes it far more likely that a consumer will go on to buy other products with the same brand name. The value of the powder is thus more than its sales revenue alone. Yet as Julie Hennessy, marketing professor at Northwestern's Kellogg School of Management, has stated, "Whether or not the science indicates that Baby Powder is a cause of ovarian cancer, Johnson & Johnson has a very significant breach of trust. The price of its stock has decreased In trying to protect this one business, they've put the whole J&J brand at risk." Public trust in the company has steadily declined, opening up opportunities for its major competitors in the baby product market. Pfizer Inc.
