In the health care industry, there are few brands more well known than Johnson & Johnson. The maker of consumer staples ranging from Band-Aids to baby shampoo has faced a number of controversies in its 133-year history. Now it is contesting charges that it contributed to the nation’s opioid epidemic.
Stock in Johnson & Johnson took a beating last week, as a trial got underway in Oklahoma. State officials there allege the giant company sparked a deadly public health crisis. The company’s shares fell 4% last Wednesday and regained less than 1% the following day.
The state of Oklahoma has accused the company of creating a “public nuisance” by oversupplying prescription painkillers.
“If you oversupply, people will die,” said attorney Brad Beckworth, who is representing the state.
Johnson & Johnson denies any wrongdoing.
Wednesday’s stock drop knocked about $20 billion off J&J’s market value — a sizable decline for the company.
Credit Suisse analyst Vamil Divan thinks the market overreacted. He noted that J&J was responsible for a tiny fraction of the prescription painkillers sold in Oklahoma, and the company’s drugs were mainly prescribed to patients who were already using other opioids.
“Obviously, the opioid epidemic is a major epidemic,” Divan said. “I’m certainly not trying to minimize that. And I don’t think the company is either. But the role that Johnson & Johnson specifically played here seems to be relatively limited.”
Divan said Johnson & Johnson could have more exposure from a different series of lawsuits involving its baby powder. Last year, a jury in St. Louis ordered Johnson & Johnson to pay $4.7 billion to women who developed ovarian cancer after using its talcum powder. The company is appealing.
