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ethicon jan 29
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J&J To Fork Over $120m To Settle Thousands Of Vaginal Mesh Suits
Jan 28, 2016 | Fierce Medical Devices
By Emily Wasserman
Johnson & Johnson ($JNJ) is shelling out more than $120 million to settle thousands of lawsuits from women who claim that the company's vaginal mesh inserts caused them pain and injury, months after other companies facing related suits such as Boston Scientific ($BSX) and C.R. Bard ($BCR) announced similar settlement agreements. -
First Johnson and Johnson Ethicon Vaginal Mesh Injury Settlement
Jan 28, 2016 | The Legal Examiner
By Shezad Malik
According to a recent Bloomberg news article this week, Johnson & Johnson (J&J) has begun to settle thousands of personal injury and product liability lawsuits filed by women who blame the company’s vaginal-mesh inserts for causing severe injuries. First of Many Johnson and Johnson Ethicon Settlements ... -
Investor Urges J&J To Spin Out Poor-Performing Device, Consumer Businesses
Jan 28, 2016 | Fierce Medical Devices
By Stacy Lawrence
It's not a new argument, but it's back on the table again in a big way. Activist investor Artisan Partners is working to convince other investors to back splitting conglomerate Johnson & Johnson ($JNJ) into three separate businesses. The Financial Times reported in a Jan. 27 article that the firm's managing director Daniel O'Keefe made...
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J&J To Fork Over $120m To Settle Thousands Of Vaginal Mesh Suits
Jan 28, 2016 | Fierce Medical Devices
By Emily Wasserman
Johnson & Johnson ($JNJ) is shelling out more than $120 million to settle thousands of lawsuits from women who claim that the company's vaginal mesh inserts caused them pain and injury, months after other companies facing related suits such as Boston Scientific ($BSX) and C.R. Bard ($BCR) announced similar settlement agreements.
J&J's settlement will resolve 2,000 to 3,000 suits from women alleging organ damage and constant pain from the company's mesh products after implantation, Bloomberg reports. But the settlement is only the tip of the iceberg for J&J and its Ethicon unit, as the company still faces about 42,400 cases over the products. "From time to time we have appropriately agreed to resolve some cases," J&J spokesman Ernie Knewitz told the news outlet. "We will not discuss the terms, nor discuss our ongoing litigation strategy."
This is the first time J&J has stepped up to the table to resolve a substantial number of mesh cases, Bloomberg points out. The company is still refusing to join talks between plaintiffs' lawyers and other insert makers who are seeking a global resolution of litigation, University of Richmond law professor Carl Tobias told the news outlet. U.S. District Judge Joseph Goodwin, who is overseeing a number of mesh cases, has been pushing companies toward a global settlement.
J&J has traveled a long legal road over vaginal mesh litigation. Related cases started cropping up in 2011 and in 2012, the company decided to pull some lines of vaginal mesh products from the market. Juries across the U.S. have found J&J/Ethicon liable for injuries linked to the inserts. Even though the company has won some victories, it has also charted some sizable losses. Last month, a Philadelphia jury ordered J&J to pay $12.5 million to a woman claiming bladder damage from Ethicon's Prolift mesh.
J&J is not the only company trying to put its mesh-related problems behind it. In 2014, Endo ($ENDP) said it would add $400 million to its $1.2 billion stockpile to resolve "substantially all" of its remaining claims over mesh products. Last year, Boston Scientific said it would pay $119 million to wrap up more than 3,000 cases over the devices. In August, Bard agreed to fork over more than $200 million to put at least 3,000 cases to rest.
Meanwhile, the FDA is cracking down on vaginal mesh devices amid growing safety concerns. The agency earlier this month said that it would reclassify surgical transvaginal mesh devices for pelvic organ prolapse (POP) from Class II to Class III, a designation typically reserved for high-risk devices. Regulators are also requiring manufacturers to get premarket approval for new products.
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First Johnson and Johnson Ethicon Vaginal Mesh Injury Settlement
Jan 28, 2016 | The Legal Examiner
By Shezad Malik
According to a recent Bloomberg news article this week, Johnson & Johnson (J&J) has begun to settle thousands of personal injury and product liability lawsuits filed by women who blame the company’s vaginal-mesh inserts for causing severe injuries.
First of Many Johnson and Johnson Ethicon Settlements
The world’s largest medical-device maker has agreed to pay more than $120 million to settle an initial round of about 3,000 lawsuits where women suffered serious organ damage from erosion of their popular line of vaginal mesh surgical inserts.
Settlement “A Drop in the Ocean”
According to court documents and SEC regulatory filings, the company is exposed to than 42,400 injury and product liability lawsuits. The company has not disclosed the average individual injury settlement values. Settlement values will vary according to severity of the injuries and the number of corrective surgeries required to fix the problems. This settlement is the first of presumably many, that J&J and its Ethicon unit have agreed to settle.
Trans Vaginal Mesh Litigation Update
J&J is exposed to the most mesh injury claims, in the vaginal-mesh litigation, which began in 2011. According to experts it is estimated that the total number of claims exceeds 100,000 lawsuits against more than a 6 major mesh device manufacturers.
The mesh is still available and is still being used by many gynecologists to treat vaginal uterine prolapse and urinary incontinence. The vaginal mesh and bladder incontinence slings have not been withdrawn globally from the market, despite the tsunami of lawsuits.
The companies under fire in this massive mesh debacle include Boston Scientific Corp. and C.R. Bard Inc. who have settled some cases while setting aside more than $1 billion to deal with claims over inserts. Vaginal mesh inserts are used to surgically treat vaginal prolapse and urinary incontinence.
Women allege that Ethicon’s inserts shrink once implanted, causing internal organ damage, erosion, recurrent prolapse, urinary incontinence and constant pain. J&J agreed in June 2012 to pull some lines off the market.
FDA Labels Mesh as “High Risk”
The U.S. Food and Drug Administration (FDA) in 2012 ordered J&J, Boston Scientific, Bard and others to report rates of organ damage and complications linked to the implants. Recently, the FDA tightened regulations involving mesh inserts after finding they should be classified as higher-risk products when used to treat vaginal prolapse.
Multi Million Dollar Jury Verdicts
State juries in Texas, New Jersey, and California have found J&J and Ethicon liable for injuries associated with the vaginal inserts. A Philadelphia state jury recently hammered J&J and Ethicon to pay $12.5 million to a woman who said Ethicon’s Prolift mesh damaged her bladder.
J&J and Ethicon company has also won several trials, including a 2014 case brought in West Virginia over mesh used to treat incontinence.
Federal MDL Consolidation
U.S. District Judge Joseph Goodwin in Charleston, West Virginia, is overseeing mesh cases, which has been consolidated in Charleston, West Virginia federal court since 2012.
Boston Scientific faces 30,000 mesh suits, according to a November SEC regulatory filing. In April, Boston Scientific agreed to pay $119 million to settle 3,000 cases in its first substantial settlement.
Bard in an October SEC filing disclosed that it faced 12,850 mesh suits after settling about 6,400 cases. Bard agreed in August to pay more than $200 million to resolve at least 3,000 cases.
The case is In Re Ethicon Inc. Pelvic Repair System Products Liability Litigation, 12-MDL-2327, U.S. District Court, Southern District of West Virginia (Charleston).
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Investor Urges J&J To Spin Out Poor-Performing Device, Consumer Businesses
Jan 28, 2016 | Fierce Medical Devices
By Stacy Lawrence
It's not a new argument, but it's back on the table again in a big way. Activist investor Artisan Partners is working to convince other investors to back splitting conglomerate Johnson & Johnson ($JNJ) into three separate businesses.
The Financial Times reported in a Jan. 27 article that the firm's managing director Daniel O'Keefe made a presentation last year to the board and execs at J&J to lobby for a split into three separate companies for its biopharma, consumer and medical device businesses. The last has been performing poorly and was just the focus of a restructuring announced earlier this week.
Artisan Partners followed up with an open letter from O'Keefe to the J&J board on Jan. 28 that details the firm's objections to J&J's existing structure. The firm, which has roughly $100 billion under management, had a $445 million stake in J&J at Sept. 30.
The chief complaint from Artisan was of poor M&A execution, with the $19 billion acquisition of medical device player Synthes in 2012 as the chief example. Despite that deal, the $8 billion in profits generated by the medical device business remains roughly the same as in 2010, noted the letter. On the whole, J&J spent $150 billion from 2006 onward on M&A, integration, restructuring, capital expenses and R&D--but has only increased its profits by $7 billion.
The letter also noted the more than $8 billion in product liability and expenses. This shareholder action comes, ironically, at the same time as the conglomerate also makes its first major vaginal mesh settlement of $120 million.
Summed up O'Keefe on J&J's failings, particularly on the medical device and consumer groups, "Two of the three businesses are among the worst-performing participants in their industry. In my view, separation of the three businesses would create immediate near and long-term value as greater focus and accountability is brought to bear."
He called on the board to conduct a review of J&J's M&A history and a restructuring of its capital allocation. O'Keefe also advocated for the company to adopt a "return on capital" approach to executive incentives; he complained that CEO compensation was $200 million for 2007 through 2014.
Finally, he asked the company to offer publicly financial targets for the "faltering medical devices and consumer businesses." O'Keefe continued, "Absent their return to industry-leading performance, the board should commit to spin those businesses off to shareholders so that new, focused and accountable management teams can lead them into the future."
At last year's presentation, O'Keefe reportedly made the case that such a split would boost the enterprise value of the company by almost $90 billion. That would be substantial given that the current enterprise value is almost $270 billion. Unlike market cap, another measure of valuation, enterprise value takes debt into account.
J&J's share price is almost unchanged compared to a year ago, adding fuel to the fire for investors. But over the last 5 years, the stock was up by more than two-thirds.
Sell-side analyst Jami Rubin of Goldman Sachs started advocating for a J&J split years ago--dating back at least to 2012. Just last summer, CNBC stock market commentator Jim Cramer took another run at a similar argument.
The recently disclosed medical device restructuring was aimed at trimming the dead weight from its poorest performing group, but the conglomerate subsequently said on its annual earnings call on Jan. 26 that it planned to reinvigorate the unit by making new deals along the lines of last year's robotic surgery JV with Google Life Sciences (now Verily under parent company Alphabet) and its acquisition of atrial fibrillation startup Coherex Medical. The company also said it planned to further support its top performing existing medical device products.
J&J's global medical device sales were down 8.7% in 2015 from the prior year to $25.1 billion; pharmaceutical sales fell 2.7% to $31.4 billion, while consumer sales dropped 6.8% to $13.5 billion.
For 2016, J&J guided to $70.8 billion to $71.5 billion in sales. That would be a meager increase--or perhaps not even a gain at all--since the company reported $70.1 billion in sales in 2015.
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