Business

J&J spent $1.4bn on legal move to shield it from talc cancer claims

Johnson & Johnson spent $1.4bn on a contentious legal manoeuvre that created a subsidiary to manage multibillion-dollar claims relating to its talc and placed it into Chapter 11 bankruptcy, the company’s chief financial officer Joseph Wolk said on Tuesday.

The world’s biggest health products company has faced tens of thousands of lawsuits from plaintiffs alleging that its cosmetic talc product causes cancer. Critics’ argue that the legal move is aimed at limiting future payouts.

Defending the manoeuvre, which has become known as the “Texas two-step”, Wolk reiterated that the company rejects claims its product is carcinogenic.

“While we believe the cases lack merit . . . What we’ve done is acknowledged that there’s an established process that allows companies facing, you know, abusive tort systems to resolve claims in an efficient and equitable manner,” he said.

Carl Tobias, professor of law at University of Richmond, noted that there was little legal precedent for J&J’s “Texas two-step” manoeuvre. “I think the 35,000 plaintiffs and their lawyers are likely to challenge this in the bankruptcy court,” he said.

The disclosure came as J&J increased its 2021 profit forecast following strong third-quarter earnings growth driven by a broad recovery across its main healthcare divisions, as Covid-19 restrictions ease worldwide.

The company, which sold $502m of its Covid-19 vaccine during the quarter, said sales of the jab are on track to reach $2.5bn in 2021, despite facing manufacturing challenges that had led to delays.

The company said it was gearing up to apply to US regulators for full approval for its vaccine ahead of a shift away from not-for-profit sales pricing to more commercial pricing.

J&J added that double-digit growth in sales of its cancer medication Darzalex and several other treatments had helped push third-quarter adjusted earnings per share to $2.60 beyond analysts’ consensus estimates of $2.36.

“Our third-quarter results demonstrate solid performance across Johnson & Johnson, driven by robust above-market results in pharmaceuticals, ongoing recovery in medical devices, and strong growth in Consumer Health,” said Alex Gorsky, chair and chief executive officer.

Shares in J&J jumped by about 3 per cent to $165 following the company’s updated guidance.

The upbeat forecasts come at a turbulent time for J&J, which is also undergoing a leadership transition with Gorsky due to step down as chief executive in January to become executive chair. He will be replaced by Joaquin Duato, vice-chair of J&J’s executive committee.

J&J disclosed net legal expenses jumped to $1.9bn in the third quarter 2021, up from $1.2bn in the same period a year earlier.

J&J expects annual earnings to be between $9.77 and $9.82 per share, up from a previous estimate of $9.60 to $9.70 per share, when adjusted for the impact of acquisitions and divestments.


Source link

Related Articles

Back to top button