J&J Hit Hard as Judge Dismisses $10B Talc Settlement Strategy

Johnson & Johnson’s plan to resolve tens of thousands of lawsuits tied to its talc-based baby powder has just collapsed—again. A Texas bankruptcy judge struck down the pharmaceutical giant’s third attempt at using bankruptcy to settle over 60,000 claims, saying the company used a flawed voting process that failed to give claimants enough time. The proposed $10 billion plan, aimed at shielding J&J from prolonged litigation, is now off the table—for now.

J&J shares fell more than 5% Tuesday morning following the court’s decision, underscoring investors' mounting concerns over both legal liability and the company’s strategy. This latest setback adds to growing scrutiny over J&J’s use of bankruptcy as a legal shield, a tactic typically reserved for companies on the brink of insolvency, not global healthcare giants. Despite halting U.S. sales of its talc baby powder in 2020, allegations of asbestos contamination and cancer links continue to haunt the brand.

Despite the ruling, J&J is standing firm. The company plans to return to civil court to "defeat merciless talc claims," while analysts like Leerink’s David Risinger still maintain an optimistic outlook, citing projected sales growth of 5% to 7% annually through 2030. But with this legal cloud lingering and public trust at stake, J&J faces a tough climb—one that won’t be solved by earnings alone.