Replies to post #28924 on Decision Diagnostics Corp (DECN)

[Giovanni]

JNJ does this all of the time.

It is part of their cost of doing business.

No heads rolling, bonus being paid.

CEO should be arrested
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MAR 10, 2015 @ 08:38 AM 957 VIEWS

Here Is How Much Lawsuits Cost J&J Every Year:

See our complete analysis for Johnson & Johnson

J&J’s litigation expenses have averaged roughly $1.28 billion annually, and there is a clear pattern in the lawsuits filed against the company. Most of them seem to be related its medical devices & diagnostics subsidiaries. However, J&J has been divesting its medical devices & diagnostics assets. Last year, the company sold its diagnostics unit, Ortho-Clinical Diagnostics, to the Carlyle group for around $4 billion. The divestitures may continue and this year it could be Cordis that is to go. In fact, the wheel was set in motion last year when The Wall Street Journal reported that Cordis’ sale process is at an early stage. Medical devices & diagnostics business’ growth has slowed down significantly due to strong pricing pressure and competition from lesser known names. As J&J further streamlines its operations and focuses more on growing pharmaceuticals segment, we expect medical devices related litigation expenses to reduce significantly.


Johnson & Johnson was recently asked by a jury in the state of California to pay $5.7 million in damages to settle a lawsuit pertaining to transvaginal meshes. Less than a month ago, it was announced that Boston Scientific will pay $600 million to J&J to settle a lawsuit related to the acquisition of Guidant Corp. At the end of 2013, a court ruled that J&J will have to pay $2.5 billion in damages to settle hip implant lawsuits. While in some cases the company has won, its financial statements suggest that the net outflow of cash pertaining to litigation expenses is significant. We usually don’t price in the impact of future lawsuits while estimating future cash flows for a company, or in this case J&J, due to the unpredictable nature of court cases. However, if history were to repeat itself and the lawsuits continue, pricing their impact would imply chipping off 7% to 8% of J&J’s value. Clearly, these lawsuits are expensive. However, we believe that their incidence, and net costs may go down going forward.
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