by James Corbett
April 12, 2016
Today let’s talk about Johnson & Johnson. You know, the iconic health care and pharmaceutical company? A beloved brand that’s trusted around the world but as American as apple pie.
Baby powder? What does baby powder have to do with it?
The name Johnson & Johnson probably brings to mind consumer health products like Neutrogena, Bengay, Band-Aid, Rogaine, and Listerine, or pharmaceuticals like Tylenol, Motrin, Sudafed, Benadryl and Imodium.
What are you talking about? What baby powder story? Look, I’m trying to report on an upstanding company here!
As I was saying, you probably know their famous health products and pharmaceuticals, but did you know they also manufacture medical devices? That’s right, Johnson & Johnson devices are used to treat a wide range of conditions, from cardiovascular disease and arrhythmia to hernias and sinusitis.
Alright, look, enough with the baby powder. Technically it’s talcum, alright. Talcum. And yes, it’s carcinogenic. But it’s no big deal, OK?
Well, I’m here today to tell you that Johnson & Johnson’s future is so bright you’ve got to wear shades! Just ask expert stock pickers like The Motley Fool. They’ll tell you that J&J has outperformed the S&P 500 all year long. And over the last 5, 10 and 45 years, too!
OK, OK! Enough already! Yes, Johnson & Johnson were just ordered to pay $72 million in punitive and compensatory damages to the family of a woman who died of ovarian cancer after using their baby powder on her private parts her whole life! I’ll even link to the story itself! There, are you happy?
But it’s not just motley fools who buy their stock. As Street Updates notes, 6 Reuters analysts are rating J&J a “buy,” 11 a “hold,” and 0 a “sell.” That’s right, zero. See? Everyone likes Johnson and Johnson!
Oh, really, this is getting to be too much! What do you want me to say? That there are now more than 1200 women suing J&J for covering up the talcum/cancer connection? That one of the jurors that awarded the $72 million told the St. Louis Post-Dispatch that “They [J&J] tried to cover up and influence the boards that regulate cosmetics”? That J&J have spent over $5 billion in legal fines and penalties over the last three years, including a $2.2 billion penalty for illegally marketing an anti-psychotic to children and the elderly, a $2.5 billion penalty for selling faulty artificial hips and $120 million in compensation who suffered organ damage and constant pain from the company’s horrific, internally eroding vaginal mesh inserts? OK, there. I said it.
What’s not to like about this company and its business prospects? Nothing, that’s what! Just look at this: Last week Johnson & Johnson’s pharmaceutical arm, Janssen Biotech, agreed to license a potential prostate cancer treatment from Tesaro for $50 million. The bold move will insure that J&J remains at the forefront of biopharmaceutical research and development.
I’ll admit it. The internal J&J memo that proves that Johnson and Johnson knew of the baby powder / cancer linkage in 1992 looks bad. It does. And the fact that the same memo also recommends targeting black and Hispanic women (including an” adult Hispanic media program” and an “adult black print effort”) looks bad. It does. But look at the numbers. Look at them!
And look at their fundamentals! Their Earnings Call Presentation for Q4 2015 is simply to die for! $4 billion of adjusted earnings on $17.8 billion of worldwide sales? Get out of here!
And yes, there’s the 1997 letter from the outside consultant that J&J hired to evaluate their talc/cancer research. The one that eviscerates that research and shows how it consistently tried to downplay and cover up the ovarian cancer risk from talcum powder. But look on the bright side! J&J removed the formaldehyde from their shampoo when that was found to be a carcinogen… Although they have no plans to do that with talc. Yet.
So as you can see, Johnson & Johnson is a wonderful and much-loved brand that is trusted by everyone and is making gobs of money everywhere it goes. In conclusion, buy J&J and always remember: Big Pharma Loves You To Death!