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The talc crisis at Johnson & Johnson will last for years. On Friday, the company lost $ 40 billion worth of shares after Reuters announced that the US giant of personal care products had known for decades that its baby powder was contaminated with asbestos.
The company says that the story is an "absurd conspiracy theory", since "J & J, regulators and independent experts have used all available methods to check if J & J talc contains asbestos , and all these methods have revealed that our talcum powder is asbestos free. "
If we look back and look at similar situations, the market may have overreacted, but the complaints and damage to the brand are not easily dissipated.
J & J faces thousands of requests from users who claim that talcum powder has caused health problems. In July, a Missouri jury ordered the company to pay $ 4.7 billion to 22 women who claimed that their ovarian cancer had been caused by asbestos in the products NOT A WORD.
The market had paid little attention to this decision. Until last Thursday, the company's shares had risen nearly 5% since January, bringing the market capitalization to nearly $ 400 billion.
A 10% increase in this value can be exaggerated. Panic typically spreads among investors when it seems likely that an out-of-court settlement will reach billions.
Drug maker Merck lost $ 27 billion, or 27 percent of its market value, when it removed the Vioxx pain reliever in 2004 after studies linked it to heart attacks and strokes. The company eventually solved most cases for less than $ 5,000 million.
Similarly, according to Bank of America Merrill Lynch, investors have estimated on the stock market that Bayer will pay $ 15,000 million for lawsuits in which a herbicide manufactured by Monsanto, the US company that acquired this year, would have caused cancer The bank estimates that payments will likely be less than $ 5 billion.
Court fees will not be paid in the short term. Merck was still struggling with Vioxx litigation more than a decade after the drug's withdrawal from the market.
But the blow to the reputation of J & J can be the most difficult solution. In the 1980s, seven people died after taking Tylenol pain relievers that added cyanide. The company's response to this tragedy (31 million jars removed, advertisements to warn customers and tamper-proof packaging) has become a basic lesson for entrepreneurial faculties on how to improve their reputation.
While it is true that the company has done nothing worrisome about a baby product used worldwide, the case could also be used in universities, but as an example of what 39, do not do it.
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