Pharmaceutical giant Johnson & Johnson (NYSE: JNJ) was hit by a surprising piece of bad news today. While the company already is in the crosshairs of prosecutors around the country for its involvement in the opioid epidemic hurting the country, the company was hit by a whopping fine recently over its antipsychotic drug. A jury ruled that Johnson & Johnson should award a family $8 billion in punitive damages over allegations that the drug in question, Risperdal, gave him gynecomastia.
A Philadelphia jury ordered on Tuesday that the pharmaceutical company needed to pay a staggering multi-billion-dollar sum to an individual who claims J&J’s antipsychotic medication Risperdal, which he used as a child, gave him enlarged breasts and that the company had failed to warn users of this risk. Nicholas Murray, the man in question, says that his use of Risperdal between 2003 and 2008 caused him gynecomastia, an argument that he’s already won before back in 2015 when a Philadelphia jury gave him $1.75 in damages, although a judge later reduced this to $680,000 a bit later.
However, the judge had prevented the jury from awarding punitive damages back in 2015, something an appeals court later overruled and cleared the way for this particular trail to begin in September and concluded with Tuesday’s final decision.
Out of the 13,000 lawsuits brought against Johnson & Johnson specifically for Risperdal as a potential cause of gynecomastia, this was the largest award given out to date. The company responded to the verdict by stating they would attempt to immediately move to reduce the amount awarded as well as the verdict. Considering that the initial compensation was just $680,000, the current $8 billion fine seems largely over the top.
This is quite a bad piece of news for Johnson & Johnson, not just due to the size of the fine but because the company has been facing a number of legal threats as well. The most obvious of which has been the ongoing opioid scandal, where the company was found guilty of deceptive marketing of its opioid medications and charged $572 million in legal fines. Just the year before, a jury in St. Louis found the company responsible for a line of baby powder products which led to the outbreak of ovarian cancer in a number of patients, resulting in a $4.7 billion fine spread out between 22 women.
Overall, this development couldn’t come at a worse time for both Johnson & Johnson as well as the industry at large.
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