Johnson & Johnson (JNJ) has decided to permanently discontinue talc-based Johnson’s Baby Powder in both the US and Canada, citing declining demand and misinformation.
“Demand for talc-based Johnson’s Baby Powder in North America has been declining due in large part to changes in consumer habits and fueled by misinformation around the safety of the product and a constant barrage of litigation advertising” JNJ said.
However, Johnson & Johnson remains confident in the safety of talc-based Johnson’s Baby Powder. “Decades of scientific studies by medical experts around the world support the safety of our product” argued the healthcare giant, adding that it will continue to defend the product and allegations against it in the courtroom.
“All verdicts against the company that have been through the appeals process have been overturned” notes JNJ.
According to the statement, Johnson’s Baby Powder represents only approximately 0.5% of the total US Consumer Health business.
Going forward the company will wind down the commercialization of talc-based Johnson’s Baby Powder in the US and Canada in the coming months. Existing inventory will continue to be sold through retailers until it runs out.
Cornstarch-based Johnson’s Baby Powder will remain available in North America, JNJ says, and both the talc and cornstarch versions will still be sold in other markets where “there is significantly higher consumer demand for the product”.
In October, Johnson & Johnson announced a voluntary recall in the US of a single lot of its Johnson’s Baby Powder in response to a US Food and Drug Administration (FDA) test indicating the presence of sub-trace levels of asbestos in samples from a single bottle purchased from an online retailer.
Subsequently, the company reported that tests conducted by two third-party labs show asbestos was not present in the single bottle that FDA’s contracted lab, AMA Analytical Services, Inc tested.
JNJ concluded that the most probable root causes for the FDA’s reported results were either test sample contamination and/or analyst error at the AMA lab.
Overall the stock shows a cautiously optimistic Moderate Buy analyst consensus. That’s with a $163 average analyst price target indicating upside potential of 10%. Shares are currently trading up 2% on a year-to-date basis.(See JNJ stock analysis on TipRanks).