Johnson & Johnson is on track for its biggest one-day drop in 16 years, with shares dropping more than 10 per cent on Friday after a media report said the healthcare company knew for decades about the presence of asbestos in its baby powder.

The sharp move wiped $42.2bn from the market capitalisation of the company, one of the biggest in the world, reducing its valuation to $354.3bn.

The issue of asbestos in one of J&J’s most well-known products has already been the subject of numerous personal injury lawsuits against the company, but the most recent revelation could make it more difficult for the group to avoid liability.

Following the examination of legal documents and testimony from plaintiffs in trials, Reuters reported on Friday that “from at least 1971 to the early 2000s, the company’s raw talc and finished powders sometimes tested positive for small amounts of asbestos”. Despite this being known to employees from the executive level down, the company failed to disclose this to regulators or consumers.

J&J, in an emailed response to the Financial Times, said its baby powder was “safe and asbestos-free” and described the Reuters article as “one-sided, false and inflammatory”. The company said it would continue to defend the safety of the product.

Asbestos is a naturally occurring mineral that saw wide historical application in fireproofing and building insulation, but inhalation of its fibres or dust can cause serious fatal illness.

J&J shares were down 10.2 per cent just before midday on Friday, putting them on track for their biggest one-day drop since July 19, 2002. Shares had been down as much as 11.9 per cent earlier today.

The move has also seen J&J shares take out their 50-, 100- and 200-day moving averages, which are closely watched momentum levels. Until today, J&J had been one of the most resilient stocks in the S&P 500 in the wake of the tech-led sell-off that started in October.

At Thursday’s close, J&J was the seventh-biggest company in the S&P 500, with a market cap of $396bn.

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