J&J Faces Setback as $10 Billion Talc Settlement Rejected

NEW BRUNSWICK, N.J. — Shares of Johnson & Johnson plunged over 5% on April 4, 2025, after a U.S. bankruptcy judge denied a $10 billion proposal aimed at resolving tens of thousands of lawsuits related to the company’s talc-based products that are alleged to cause ovarian cancer.

This marks the third unsuccessful attempt by J&J to resolve its talc-related legal challenges through bankruptcy court, with the company now facing more than 60,000 lawsuits. Many claim that J&J’s baby powder and other talc products contained asbestos, a known carcinogen.

According to Chief Financial Officer Joe Wolk, the settlement would have effectively concluded the ongoing lawsuits. “Considering this was our best and final offer, we are reversing $7 billion in the reserve previously held for the bankruptcy plan,” Wolk stated. He emphasized that the company aims to return to the regular tort system to litigate the claims, asserting that the lawsuits are meritless.

The rejected proposal was scrutinized by opposition parties, including attorneys representing victims and governmental bankruptcy watchdogs. They argue that J&J does not qualify for bankruptcy protection, as the company is not in financial distress.

The company previously ceased the sales of talc-based baby powder in the U.S. in 2020, switching to a cornstarch variant. Despite ongoing legal battles, J&J maintains that its products are safe, do not contain asbestos, and do not pose a risk of cancer. However, this position has not curbed the negative impact on its shares, which dropped to $156.82 in early trading following the ruling.

Data from LSEG indicates that J&J’s shares trade at a premium compared to rivals, at 15.51 times expected earnings over the next 12 months, compared to 14.9 times for Amgen and 9.7 for Merck. Nevertheless, the company has seen a 14.7% increase in share value since the beginning of the year, valuing its market capitalization at approximately $400 billion.

Despite the setback, J&J insists it will uphold its 2025 financial guidance and long-term business outlook. The implications of the judge’s ruling on future litigation and the company’s financial strategy remain to be seen as it prepares to navigate the complexities of multiple ongoing lawsuits.