Johnson & Johnson, a 5 billion settlement over claims relating to asbestos-contaminated talcum powder

Investors appear to be regaining confidence in Johnson & Johnson’s financial strength after the company agreed to pay $5.5 billion to settle legal disputes relating to allegations that its baby powder causes cancer. Johnson & Johnson rose by more than 3 per cent on Wall Street yesterday during trading, reaching an all-time high of $275.

This is one of the largest settlements in the history of product liability in the United States, bringing to an end a series of 76,000 lawsuits faced by the company over the last 15 years. The litigation concerns claims for compensation brought by women who accuse the company of being responsible for the presence of asbestos in baby powder and claim that this caused them to develop ovarian cancer. Last year, analysts had predicted that the number of lawsuits could rise to as many as 90,000 in the coming years. The company has consistently maintained its innocence regarding the allegations and denies that talcum powder could be harmful, but it ceased marketing the product in the United States in 2020 and in the rest of the world in 2023. On this occasion, the group clarified that the settlement represents ‘an efficient resolution’ but does not constitute an admission of guilt.

In June, J&J announced that it had set aside $11 billion to settle the legal dispute: according to Bloomberg analysts, if the number of lawsuits had exceeded 90,000, the company would have faced a payout of between $10 billion and $12 billion. Last October, J&J paid $966 million in a single settlement in California, but just last week a federal judge expressed doubts about the validity of the claims in over 69,000 cases. The first payment is not expected until early 2027, which eases the financial burden in the short term.

The move comes against a backdrop of financial strength for the company: in its 15 July results for the second quarter of this year, J&J reported adjusted earnings per share of $2.90, exceeding analysts’ expectations, and revenue of $25.31 billion, up 6.6 per cent year-on-year. The resolution of the legal dispute and the associated reputational damage, and the positive results for the quarter created the perfect conditions for the share price to hit new highs yesterday, following a 31 per cent rise since the start of 2026 and a total return for shareholders of 67 per cent over the past 12 months.