Big Pharma gets a lesson in trusting the science

Johnson & Johnson

28/07/2026 18:35

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own.
By Robert Cyran
NEW YORK, July 28 (Reuters Breakingviews) - Investors crave certainty, and litigation offers anything but. Yet courtroom risks offer lucrative opportunities for the brave, as healthcare giant Johnson & Johnson’s JNJ.N legal quagmires show.
The $640 billion company said Monday that it would pay an estimated $5.5 billion to settle tens of thousands of lawsuits alleging its talc-containing products caused ovarian cancer, which would resolve nearly all remaining claims. If 95% of claimants participate, the entire saga – which has dragged through courts for over a decade – should finally come to an end.
J&J has tried to find dubious shortcuts out of its troubles before, including three attempts to shuffle legal liabilities into a subsidiary that filed for bankruptcy. Recent developments have begun to favor the company, though: earlier this month, a judge said that plaintiffs must provide more evidence or risk having their lawsuits tossed. If boss Joaquin Duato’s latest gambit works, it will be a happy outcome compared to the nearly $9 billion the company had previously budgeted to settle claims.
Even if it wasn’t the plan, it also contrasts with a prior cut-and-run from legal worries. In 2023, J&J spun off its consumer division, Kenvue KVUE.N, which sold the likes of Listerine mouthwash, Neutrogena skincare, and – crucially – the painkiller Tylenol. By separating from and later fully exiting the unit, Duato also sidestepped lawsuits claiming that Tylenol use during pregnancy could cause autism.
Those woes intensified last year, when President Donald Trump said that children and pregnant women should not take the painkiller, linking it to autism at a press conference. Kenvue’s share-price tumbled as perceived pressure from the administration rose.
This fear allowed rival Kimberly-Clark to pounce. In November, it struck a $48.7 billion deal for Kenvue priced at $21 per share, below the unit’s original IPO price of $22. Assuming promised cost-cuts are delivered, it’s paying less than 9 times trailing EBITDA, or about a third less than Haleon HLN.L, a similar spinoff from GSK GSK.L.
Of course, if the courts side with plaintiffs, the buyer may regret the purchase. But large, well-run studies show no link between Tylenol and autism. If the talc case is anything to go by, the ultimate legal risk here seems even more remote. In retrospect, a drugmaker looks to have skipped over its industry’s core virtue: patience in the face of the unknown.
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CONTEXT NEWS
Johnson & Johnson said on July 27 that it would pay an estimated $5.5 billion to settle tens of thousands of lawsuits alleging its talc-containing products caused ovarian cancer. The deal is conditioned on 95% of remaining claims participating in the settlement.
In 2023, the healthcare company exited its consumer goods business, Kenvue, through an initial public offering, followed by a share exchange and equity-for-debt swap. In November, Kimberly-Clark agreed to buy Kenvue in a deal worth $48.7 billion including debt.

(Editing by Jonathan Guilford; Production by Pranav Kiran)
((For previous columns by the author, Reuters customers can click on CYRAN/robert.cyran@thomsonreuters.com; Reuters Messaging: robert.cyran.thomsonreuters.com@reuters.net))