Core Insights - Johnson & Johnson (JNJ) is facing significant challenges, highlighting that even large corporations are not immune to market fluctuations [1][8] - The company is currently dealing with a talc crisis, with a projected 73,570 lawsuits expected by October 2025, marking a 17% increase since December 2024 [7] - Financial performance indicators show a revenue growth of 5.1% over the last twelve months and a 6.1% average over the last three years [7] Legal and Regulatory Challenges - JNJ has announced a voluntary recall of 33,000 bottles of baby powder due to trace amounts of asbestos found in a single bottle [3] - The company is engaged in litigation on a case-by-case basis following failed settlement proposals ranging from $8 to $10 billion, which adds to financial and reputational risks [7] - Emerging product liability issues include UK talc lawsuits and new claims involving Tylenol, further complicating the company's legal landscape [7] Financial Performance - Sales of Stelara, a drug for various conditions, have declined by 40% in the first nine months of 2025, with Q1 2025 sales dropping by 33.7% to $1.08 billion [7] - JNJ's free cash flow margin stands at 20.3%, and the operating margin is at 26.2% for the last twelve months [7] - The stock is trading at a P/E ratio of 18.2, indicating a lower valuation compared to the S&P, while exhibiting higher three-year average revenue growth and superior margins [7] Market Volatility Impact - Historical data shows that JNJ's stock declined approximately 35% during the Dot-Com Bubble and the Global Financial Crisis, and around 27% during the Covid sell-off [8] - Lesser downturns, such as the 2018 correction and last year's inflation crisis, resulted in declines nearing 18%, demonstrating the vulnerability of even strong companies during market shifts [8]

Core Viewpoint - Johnson & Johnson's $10 billion proposal to settle lawsuits related to its talc products has been rejected by a US bankruptcy judge, marking the third failure of the company's bankruptcy strategy in court [1][2][3]. Group 1: Bankruptcy Court Decision - US Bankruptcy Judge Christopher Lopez stated that Johnson & Johnson did not belong in bankruptcy and criticized the proposed settlement for lacking sufficient support from women alleging cancer caused by J&J products [2][3]. - The judge noted that the proposal improperly sought to release legal claims against entities that had not filed for bankruptcy, including retailers and Kenvue, a consumer health business spun off by J&J [3][10]. - Lopez highlighted serious flaws in the voting process conducted by J&J, indicating that many votes collected from plaintiffs' attorneys should not be counted [6][7][9]. Group 2: Company Response and Future Actions - Johnson & Johnson announced it would not appeal the ruling but intends to litigate the claims in court, asserting that the talc claims are meritless [4][11]. - The company faces lawsuits from over 60,000 claimants alleging that its talc products contained asbestos and caused ovarian cancer, with the proposed settlement aimed at resolving these lawsuits [11][12]. - J&J had previously estimated that ovarian cancer patients would receive between $75,000 and $150,000 under the settlement, depending on injury severity and the number of claims [13]. Group 3: Historical Context - Johnson & Johnson has been attempting to resolve these lawsuits through bankruptcy since its first attempt, which has now failed three times [1][5]. - The company stopped selling talc-based baby powder in the US in 2020, switching to a cornstarch product, amid ongoing litigation and safety concerns [11][14].