John­son & John­son stocks rise de­spite opi­oid ver­dict

The Standard (St. Catharines) - - Business - LINDA A. JOHN­SON

John­son & John­son investors ex­haled in re­lief Tues­day, push­ing up shares after an Ok­la­homa judge im­posed a $572-mil­lion ver­dict for the health-care gi­ant’s role in the U.S. opi­oid cri­sis.

Dur­ing the seven-week trial state pros­e­cu­tors who sought up to $17 bil­lion de­scribed J&J as a “king­pin” in an epi­demic that’s killed more than 400,000 Amer­i­cans since 2000.

The mon­e­tary award an­nounced Mon­day, and J&J’s vow to ap­peal, re­as­sured investors — at least for now.

“The risk of a loss was al­ready baked into the stock price,” noted Erik Gor­don, an an­a­lyst and pro­fes­sor at Uni­ver­sity of Michi­gan’s Ross School of Busi­ness.

The ver­dict would do lit­tle dam­age to J&J, which recorded prof­its of $22.3 bil­lion last year.

And it set no prece­dent out­side Ok­la­homa, said Gor­don, as it’s based on a novel le­gal the­ory that J&J cre­ated a pub­lic nui­sance in mar­ket­ing its painkiller­s.

J&J ap­pears to have mul­ti­ple grounds for ap­peal, ar­gu­ing it only had a one per cent share of opi­oid sales in Ok­la­homa and the coun­try as a whole, and that the state didn’t prove it caused a pub­lic nui­sance, “which tra­di­tion­ally has been ap­plied to re­solve prop­erty dis­putes.”

J&J sub­sidiaries sell Dura­gesic, a pain patch con­tain­ing the pow­er­ful opi­oid fen­tanyl, and Nucynta pills.

Both carry the U.S. Food and Drug Ad­min­is­tra­tion’s strong­est warn­ings about risks of addiction, abuse and life-threat­en­ing res­pi­ra­tory de­pres­sion. J&J says it mar­keted the drugs ac­cord­ingly and didn’t mis­lead doc­tors about risks.

Two com­pa­nies that sold far more opi­oids — Teva and Pur­due Pharma, the maker of Oxy­Con­tin — have al­ready reached set­tle­ments to pay Ok­la­homa $85 mil­lion and $270 mil­lion, re­spec­tively.

Ray­mond James an­a­lyst Ja­son Bed­ford told clients that it’s likely an ap­pel­late court will re­duce the $572-mil­lion ver­dict.

Still, J&J says it’s been named in more than 2,000 law­suits brought by state and lo­cal gov­ern­ments re­lated to the mar­ket­ing of opi­oids.

“This is not a bat­tle. This is a war,” said an­a­lyst Steve Brozak, pres­i­dent of WBB Se­cu­ri­ties.

J&J can’t take a vic­tory lap un­til the law­suits play out or the par­ties reach set­tle­ments, Brozak said.


Judge Thad Balk­man reads a sum­mary of his de­ci­sion in the opi­oid trial in Norman, Okla. He ruled in favour of the state of Ok­la­homa and or­dered John­son & John­son to pay $572 mil­lion to a plan to abate the opi­oid cri­sis.

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