Johnson & Johnson's baby-care business declined 14.4% stateside and 11.7% worldwide in the firm's fiscal 2016 first quarter, creating perhaps the biggest drag on overall results as the firm battles allegations linking its iconic Johnson's Baby Powder to cancer.

The New Brunswick-N.J.-based firm returned April 11 to Missouri Circuit Court, 22^nd Judicial District (St. Louis), for a second trial focused on the alleged role that perineal use of its talcum-based powder products played in a woman's ovarian cancer.

Plaintiff Gloria Ristesund claims that 40 years of applying J&J's powder for feminine hygiene purposes led to her 2011 diagnosis of ovarian cancer, and that the company has withheld related safety information from the public in order to protect its sales.

In February, a St. Louis jury ordered J&J to pay $72m in damages to the family of late Alabama woman Jacqueline Fox, who likewise attributed her ovarian cancer to daily use of Johnson's Baby Powder and Shower to Shower powder, a former J&J offering, for more than three decades Also see "J&J Talc Verdict Spells Opportunity For Plaintiffs, Talc-Free Powder Market" - HBW Insight, 29 February, 2016..

J&J has plans to appeal the ruling and continues to maintain the safety of its talc-based products, pointing to findings from FDA and other authorities that support the mineral's safe use. However, the firm has taken a significant PR hit, with many consumers vowing online to take their business elsewhere.

Meanwhile, more plaintiffs are lining up. Bloomberg reported in March that Beasley Allen, the law firm that represented Fox, is exploring as many as 7,000 similar cases, many of which presented following the national headline-making verdict.

Interested parties can view the Ristesund trial proceedings via "gave-to-gavel" webcasting from Courtroom View Network, a subscription service that offers live and on-demand video and editorial coverage of "high-stakes" civil litigation to an audience primarily consisting of attorneys, business professionals and investors.

In an April 11 blog post, CVN points out that the suit "could help predict whether the historic verdict reached in February was a fluke or the start of a trend."

According to the webcasting company, roughly 1,000 similar cases are pending in Missouri and another 200 in New Jersey.

"With J&J claiming roughly 19% of the nearly $18.8 billion baby power market in the United States, the products at issue represent a major business line for the company," CVN notes.

J&J's baby-care sales totaled $95m in the US and $451m globally, according to the firm's April 19 release. The worldwide result was heavily impacted by the devaluation of Venezuelan currency, company leadership suggested, citing women's health and oral care as other segments that also were particularly affected.

Reportedly, J&J has plans to re-launch its baby-care business, with details expected to be released in May.

Firm 'Squashes' Consumer Divestiture Chatter

During a same-day earnings call, J&J CFO Dominic Caruso dismissed once again the idea that J&J should spin off its consumer business and focus purely on pharmaceuticals and medical devices ([A#02160411002]).

On the contrary, J&J is committed to growing its consumer unit and capturing market share, he indicated.

“Just in general, we’re looking at M&A as an important additional growth driver in all of our businesses, including consumer,” the exec said.

“Consumer can generally benefit from taking very, very specific brands in certain regional categories. We’re in our sweet spot of skin care, baby, oral care, et cetera, where we think we could do better with a combination of the technology that we have and the overall market and distribution presence.”

Deutsche Bank analysts said in a report that they expect J&J to retain its current businesses while additionally eyeing acquisitions since it has cash on hand of about $17bn. "We don’t foresee a split. In our view it's part of its DNA," they said.

BMO Capital Markets analyst Joanne Wuensch said the firm’s performance in the consumer segment should put to rest suggestions on divesting.

“While investors have hammered for JNJ to split the company up, management squashed the idea on its [first-quarter] earnings call and delivered the goods to prove it. The rebound of the OTC franchise is firing on all cylinders,” Wuensch said.

In the January-March period, OTC product sales in the US grew 13.8% to $461m, but declined 5.1% internationally to $558m.

A "very, very soft flu season" weighed on OTCs' global performance, according to Caruso, but the segment benefited from modest market-share gains from the Tylenol and Motrin franchises as the brands continue rebounding from a sales dive associated with recalls more than five years ago.

Skin-care product sales for the quarter were flat in the US and down 9% internationally, for a worldwide total of $862m in the quarter, representing a global decline of 4.5%. Oral-care sales advanced 7.6% to $170m in the US thanks to a strong performance from Listerine products, but dipped 12.2% internationally to $215m.

Overall consumer sales in international markets slumped 9.6% to $1.84bn, while worldwide consumer sales of $3.2bn were down 5.8% from the year-ago quarter.

J&J's total revenue grew 3.9%, excluding currency effects, to $17.48bn.

J&J Baby-Care Sales Down With Second Talc Cancer Trial Underway

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