A story released by Reuters recently alleges that “the world’s most trusted company”, Johnson & Johnson, knew that their talc-based baby powder products contained asbestos for decades and did not take appropriate action. The article includes personal accounts from the thousands of lawsuits (some have the number at over 11,500) that the consumer products company faces over claims of tainted talcum in their signature product.
The Reuters investigative reporting on this controversial topic has everyone buzzing from Main Street to Wall Street. The report makes claims that the company knew of the asbestos in the product and withheld that information to the regulatory bodies as well as the public. That is a hefty claim aimed at a company that is certainly polarizing in the public view.
Johnson & Johnson, for all the good they have done both within healthcare and within communities throughout the world, has not been without their own problems. They have had quality control issues with Tylenol, wound care products, and other related personal care products over the years. It can be argued that it is an unfortunate production reality that a company that enormous would have some QA/QC issues over the years.
However, the flipside to that argument could be made that the issues speak to a larger problem within the corporate culture. The insinuation here by Reuters, a well-respected news source which is known throughout the world, is that the executives in charge there now are knowingly acting without integrity. The public seems to be split on this corporate vision of Johnson & Johnson as well.
Some Americans have taken the view that the allegations in the Reuters report are true and that J&J is a big corporate titan that acted inappropriately to spare the image of the company. Then, others feel that the report is inaccurate, and that the company would never withhold that type of information because of the damage it could do to the entire company, the public, and the shareholders.
The Reuters report is very thorough and should be read by anyone who reads this because it will certainly help provide insight into this very contrasted point of contention regarding a product that is world renowned: Johnson & Johnson Baby Powder. The company maintains that they did not withhold information from anyone regarding the claims surrounding the talc-based powder.
The exposure to asbestos, even for a small amount of time or a small amount of the carcinogen, is one of the leading causes of ovarian cancer as well as mesothelioma which effects the lining of the lungs, heart, and liver. These are aggressive forms of cancer that can cause harm to a mother and child, the exact target market consumer of the J&J Baby Powder.
The mining of talc makes it very plausible to have asbestos present because of the proximity of the two substances to one another. The testing methods for asbestos and the definition of what is asbestos are two other key components of the case against J&J at this point. The article does a complete and thorough explanation of that which will not be a part of this commentary.
The impact that this type of incident can have on the brand image and public perception of a prominent company like J&J is the focus of the commentary. The court documents, emails, and other correspondence that suggest that the company knew that at least trace amounts of a carcinogen were present in the product and the ethical imperative to report that information is also at issue.
The use of the product by women for hygiene purposes and the link to ovarian cancer is a difficult connection to make for the plaintiffs in many of these cases. The way that J&J clearly mishandled this situation instead of “coming clean” about it raises the specter regarding what other situations have they potentially betrayed the public trust.
Johnson & Johnson does not want to become another Merck or Philip Morris, or Monsanto when it comes to incorrectly handling the litigation strategy for these cases. The sales of the powder compared to the entire value of the portfolio of the company are insignificant, but it caused their stock to drop like a rock on Monday.
These lawsuits can cripple a company and can damage their reputation as a leader in the consumer healthcare and personal care marketplace. The allegations if they can be proven to be true or find that J&J was negligent with these products is a terrible situation and outcome for everyone involved.
The company had the trust of the public, Wall Street, and the regulators. This major issue with the most iconic product they sell threatens to unravel all of that trust. The defensive nature with which they have responded to this situation is also unsettling and is not a sound long-term public relations strategy. It serves to make them look guilty in the eyes of the average person.
J&J is not the first company to fall victim to the “cover up is worse than the crime” scenario. They will, sadly, not be the last company to do so either. In my view, what is so unsettling about this whole tragic situation is that it effects mothers and babies. That is going to hit straight to the hearts and minds of many people. The other component that is so unnerving is that in a time of transparency, this well-regarded company seemingly and allegedly acted in secrecy to subvert data from testing done on their best -selling product.
It should also be noted that Johnson & Johnson produces a baby powder product that is corn-starched based. It has been mentioned by several industry analysts in the thought process of why the company has not recalled the talc based powder from store shelves and gone with the corn-starch based alternative.
The fallout will be interesting to watch, the opportunists on Wall Street were leveraging the sell off yesterday to buy the stock at a lower price, greed in the benefit of someone else’s misfortune.
It remains to be seen whether Johnson & Johnson will weather the storm here because the 11,500 lawsuit settlements will not be their downfall. The loss of the trust, the subversion of information, and acting in a way that is unethical if all that is proven– once that trust is broken, it can never be repaired. That loss of trust is what would become the demise of a once dominant corporation.