J&J: No legal reserves needed for lawsuits

Johnson & Johnson won’t set aside any legal reserves for the more than 100,000 lawsuits it faces across its portfolio of drugs, consumer products and medical devices, saying it expects to fight and win many of the claims.

The company has spent $832 million on litigation expenses this year, and outside estimates of damages from lawsuits over opioids, psychiatric drugs, talc powder and medical devices range in the tens of billions of dollars. While several large verdicts attracted headlines, CFO Joseph Wolk said the company expects to fight and win many of the thousands of cases. “Some of the cases that are out there, they are likely subject to our prevailing on appeal,” he said. Setting aside legal reserves is an accounting matter, and companies don’t typically include them until they believe they can be reasonably estimated.

Lawsuits have overshadowed the company’s otherwise robust business results. J&J reported third-quarter earnings Tuesday and raised its full-year profit forecast after beating analysts’ estimates, thanks to growing drug sales and what it touted as strong medical devices results, but shares are still well off their 52-week high in December. Third-quarter adjusted earnings were $2.12 a share, the company said, topping the $2.01 average of analysts’ estimates. The company raised its 2019 adjusted earnings forecast to $8.62 to $8.67 a share, up from $8.53 to $8.63. Profit was up from a year before, with net quarterly earnings of $4.83 billion vs. $3.93 billion a year prior.

Last week, a jury ordered J&J to pay $8 billion for wrongfully pushing doctors to prescribe the anti-psychotic drug Risperdal to the elderly and to children. The company has also been accused of helping drive the U.S. opioid epidemic; in March it was ordered to pay $572 million for wrongfully marketing pain drugs. And more than 15,000 suits claim the company’s talc powder caused cancer.