Last month saw a major ruling which shook up the big pharma sector. Johnson & Johnson (NYSE: JNJ) was found guilty for misleading potential customers through its marketing and sales tactics on how addictive its opioid drugs were.
Many major pharmaceutical companies are now worrying that they will be next to face prosecution in light of their role in producing and distributing opioid pills to the public. However, Johnson & Johnson made news once again today when it announced it managed to settle two Ohio lawsuits for $20.4 million while also managing to avoid further court trials.
The settlement would let the pharmaceutical giant skip an upcoming federal trial that is meant to hold health care giants accountable for their involvement in the opioid drug epidemic. This is a big deal for Johnson & Johnson, as other healthcare companies that were either distributors or producers of opioids such as Walgreens, McKesson, Cardinal Health, and many others will be present at the trial.
“The settlement allows the Company to avoid the resource demands and uncertainty of a trial as it continues to seek meaningful progress in addressing the nation’s opioid crisis. The Company recognizes the opioid crisis is a complex public health challenge and is working collaboratively to help communities and people in need,” read an official statement from Johnson & Johnson.
Between 1999 and 2017, over 400,000 overdose deaths from opioids have occurred, with over 70,000 of them dying in 2017 alone. In the vast majority of these cases, the fatalities involved either prescription or illegally obtained opioids.
Many pharmaceutical companies involved in the opioid epidemic are now worried that they will end up facing fines that cost tens of billions. Purdue Pharma ended up going bankrupt in September in light of recent lawsuits levied against the company. Overall, Purdue would have had to pay $12 billion in total and many companies that were much bigger players in the opioid market will likely face fines much larger than that.
In response to the news, shares of Johnson & Johnson jumped as much as 5% in after-hours trading while ending Wednesday up 1.6% overall. Over the past couple of months, the healthcare giant has seen its shares tumble over 10% following the original trial ruling.
The originally Oklahoma state case in late August fined Johnson & Johnson $572 million in initial damages, which will significant, was well under the $17 billion prosecutors had originally sought to claim from the healthcare giant.
Johnson & Johnson Company Profile
Johnson & Johnson is the world’s largest and most diverse healthcare company. Three divisions make up the firm: pharmaceutical, medical devices and diagnostics, and consumer. The drug and device groups represent close to 80% of sales and drive the majority of cash flows for the firm.
The drug division focuses on the following therapeutic areas: immunology, oncology, neurology, pulmonary, cardiology, and metabolic diseases. The device segment focuses on orthopedics, surgery tools, vision care, and a few smaller areas. The last segment of consumer focuses on baby care, beauty, oral care, over-the-counter drugs, and women’s health. Geographically, close to half of total revenue is generated in the United States. – Warrior Trading News