Investing.com – Johnson & Johnson plunged Friday as the Justice Department reportedly launched a criminal investigation into whether the company lied about the possible cancer risks of its talcum powder.
A grand jury in Washington is examining documents related to what company officials knew about any carcinogens in their products, Bloomberg reported. Johnson & Johnson (NYSE:JNJ) fell nearly 5%. That was enough to subtract 46 points from the Dow on an otherwise bullish day.
The company said in a statement that it is cooperating with the previously announced DOJ investigation and that there are no new developments. It also reiterated its previous denials of wrongdoing.
With Johnson & Johnson (NYSE:JNJ) already facing more than 13,000 talc-related lawsuits nationwide, the Justice Department probe will do little to ease investor fears the healthcare conglomerate could be on the hook to pay out hefty settlements to claimants, resulting in massive liabilities.
Last month, a California jury ruled in favor of a plaintiff who claimed her use of the company’s talc powder caused a rare cancer. In May, the company was ordered to pay out $300 million in punitive damages to women who also claimed the company’s talc powder caused asbestos-linked cancer.
Reuters said last year that an examination of internal company memos and other documents found the Johnson & Johnson was aware of the presence of asbestos in its products from as early as 1971 but failed to disclose that fact to regulators or to the general public.
The company called the Reuters report “one-sided, false and inflammatory” and has continually denied its Baby Powder talc causes cancer, stressing that numerous studies and tests by regulators worldwide have shown that it is safe.
While Baby Powder only makes up a small portion of total revenue, it is a core brand.
Johnson and Johnson is up about 4% this year. The company is set to report quarterly performance on July 16.