Johnson & Johnson to stop selling its talc-based baby powder. Here's why

Global pharma company Johnson & Johnson is going to stop selling its global legacy product: the talc-based baby powder. In 2020, Johnson & Johnson (J&J) had stopped selling baby powder in the US after thousands of consumer safety lawsuits were filed against the company for selling talcum powder despite knowing that it was contaminated with asbestos, which leads to lung cancer. 

As part of its worldwide portfolio assessment, the company has decided to stop selling its talc-based powder and transition into an all cornstarch-based baby powder from 2023. J&J says that the transition is because the demand for its talc-based baby products fell due to product misinformation and a barrage of legal challenges.

Remember those times when mom would use Johnson & Johnson's baby powder on you as a kid every day? She would rub the soft white powder after your bath to keep you dry and no day would pass by without you being smothered with a ton of baby powder. The brand ''Johnson & Johnson'' has been synonymous with words like ''white baby powder'', ''every mother should have it'', 'best for baby'', 'baby's silky soft skin'' etc, and this has been the reality for decades now. The brand has enjoyed the trust of parents globally, who have for decades used the products to keep their babies ''clean and dry''. Also, as a young Indian girl, how many times has your aunt told you: "Why don't you put on some powder? You'll look fresh!''  

But, in the last few years, J&J has been facing a cruel twist of fate, thanks to its own actions. 

Why is J&J closing down its legacy product: J&J's popular talc-based baby powder was found to contain impurities like asbestos. If the body is exposed to asbestos over a period of time, it leads to cancer. J&J's baby powder is used across all ages, especially by women for cosmetic purposes. Since news broke that J&J's talcum powder contains asbestos, more than 40,000 cancer lawsuits have been filed as of date against J&J. 

J&J is accused of selling contaminated talcum powder and messing with the health of customers for decades since customers now have to deal with ovarian cancer, asbestosis, and lung cancer.

The courts seem to side with the complainants looking at the facts: 

• J&J has been in the 'baby-powder' business for decades and has a monopoly of sorts.
• A Reuters report found that J&J knew that its talcum powder had dangerous traces of asbestos.
• The effects of asbestos are not visible in the short term, but only become visible after a long time. Since customers have used the powder for decades, the probability of a powder causing cancer though could be difficult to establish but cannot be ruled out. 

Hefty lawsuits: In 2017, the Los Angeles court ordered J&J to pay $70 million (about Rs 557 crores) in compensatory damages and $347 million (about Rs 2764 crores) in punitive damages to a woman for her illness. The Rs 557 crores were to compensate the woman for her cancer illness while the Rs 2764 crores were because J&J had covered up that their baby powder was toxic over the years. 

This started a slew of lawsuits against the company and many other loyal customers who were suffering from ovarian cancer, filed lawsuits against J&J. Since the liabilities that J&J may now have to pay are limitless, J&J has now decided to stop selling its talc-based baby powder and shift to cornstarch-based products. It has also found a cure.   

But how did the powder get contaminated?

Baby powder is made of talc, which is a soft clay mineral found under the earth. The mineral itself is safe to use on human bodies since it can heal abrasion, which can help in healing rashes from diapers. But the problem begins when talc is mined from the earth since asbestos is usually found around talc in mines. When talc is mined, it is possible that asbestos can get mixed with tremolite, a form of asbestos. Thus miners have to make sure that their procedures to sort and clean talc are sufficient to ensure that any traces of asbestos are removed, lest it creates diseases like mesothelioma and lung cancer.

J&J seems to have messed up here. Various lawsuits have found that J&J knew since 1957 that their powder had traces of asbestos and still continued to sell it globally. But as per J&J, their geologists have never found profound traces of asbestos in their products and since J&J's powder has always received FDA approvals, for years now, they are not responsible.

 

So J&J has a cure: Not for its customers. But for its own legal battles. 

Just like every person in legal trouble follows the past precedent, J&J followed the same strategy. In 2021, J&J pulled a legal loophole to save itself from the consequences of lawsuits. Remember, Johnson & Johnson is based in New Jersey, USA. 

• They opened a new company called LTL in another state, Texas, USA. 
• They gave a $2 billion fund to LTL to pay for these lawsuit claims.
• They dumped all their legal liabilities that came from this talc-based baby powder into LTL.
• LTL then filed for bankruptcy protection under Chapter 11.  

Companies normally file for Chapter 11 bankruptcy to protect and shield their assets and limit liability against claims. But in the last few years, many companies are using this litigation to save themselves from violations of business ethics. ( Perdue Pharma had used Chapter 11 to save itself from 3,000 lawsuits against one of its drugs. The Roman Catholic Church too has used this to declare itself bankrupt and save its assets so that they do not have to compensate the abuse victims that had filed complaints against the Church).

J&J announced in November 2021 that it planned to split into two companies - to separate the consumer products business and pharma business. This would help J&J  keep the valuations high, and its pharma investors would remain untouched by the consequences of the lawsuits that happened in its consumer products business.