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NEW YORK (Reuters Breakingviews) – Johnson & Johnson’s talc crisis will linger for years. Investors erased $40 billion of its market value on Friday, after Reuters revealed the U.S. healthcare giant knew for decades its baby powder was sometimes tainted by asbestos. The company says the story is an “absurd conspiracy theory” as “every method available to test J&J’s talc for asbestos has been used by J&J, regulators, or independent experts, and all of these methods have all found that our cosmetic talc is asbestos-free.” If history is a guide the market may have over-reacted, but lawsuits and brand damage don’t easily dissipate.

J&J faces thousands of lawsuits from users that claim the company’s talc resulted in health problems. In July, a jury in Missouri ordered the company to pay $4.7 billion to 22 women who claimed their ovarian cancer was caused by asbestos in J&J’s products. The market had shrugged off that decision. The company’s stock by Thursday had risen nearly 5 percent since January, giving it a market capitalization of almost $400 billion.

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