Johnson & Johnson (NYSE: JNJ) is slowly starting to breathe again — without fear of asbestos.
Studies by two independent labs found no asbestos in the company’s recalled crates of Baby Powder or in the exact bottle that sparked initial regulatory concerns, the company announced late Tuesday.
Johnson & Johnson had recalled 33,000 Baby Powder bottles this month after the U.S. Food and Drug Administration discovered traces of chrysotile asbestos in one bottle bought online. Retailers had also halted sales of the 22-ounce bottles.
The company’s hired labs ran 15 tests from the bottle tested by the FDA and another 48 tests from the recalled batch. Results were negative.
“Rigorous and third-party testing confirms there is no asbestos in Johnson’s Baby Powder,” the company said in a statement. “We stand by the safety of our product.”
Regulators were unconvinced.
“They [J&J] would say the product is free of asbestos based on their testing, and we would say the opposite for that sample,” Steve Musser, deputy director for scientific operations in the FDA’s Center for Food Safety and Nutrition, told Reuters.
Why It’s Important
Johnson & Johnson has won multiple lawsuits alleging harm by its talcum powder. However, management was recently ordered to pay $4.7 billion in damages in a class action linking contaminated products to ovarian cancer.
The lab results offer a path toward vindication.
"This finding underscores the importance of investigating any positive test result," Johnson & Johnson said. "Even when careful safeguards are followed, asbestos contamination may be introduced during sample division, storage, preparation and analysis."
The findings may help reshape the Johnson & Johnson narrative.
“The independent analysis is an incremental positive that should help to reverse recent share pressure but admittedly still leaves some unanswered questions suggesting a solid, but not full, recovery,” Morgan Stanley analyst David Lewis wrote in a note.
Whether the studies will convince retailers to restock baby-powder bottles is unclear, but Lewis said the product represents such a small portion of total sales that the question is not financially relevant. The impact on the corporate story is more meaningful.
“Given the FDA has used the same lab for a myriad of tests across other manufactures (AMA Analytical Services), it’s unlikely the agency is going to conclude their labs results were technically flawed,” Lewis wrote. “In our view, J&J is likely to work with the FDA on greater understanding of testing protocols, chain of custody and sample authenticity but we have no visibility into this process.”
An appellate decision on Johnson & Johnson’s $4.7 billion payout is expected next year.
The stock traded higher by 3.3% to $133.32 at time of publication.
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