The report by the Reuters news service sent the company’s shares into a tailspin, suffering their worst one-day sell-off in 16 years.

Reuters cited documents released as part of a lawsuit by plaintiffs claiming that the product can be linked to ovarian cancer.

The New Brunswick, New Jersey company has battled in court against such claims and on Friday called the Reuters report “one-sided, false and inflammatory.”

According to the investigation, which used papers dated from 1971 to the early 2000s, Johnson & Johnson staff — including executives and scientists — knew that the powder sometimes contained small amounts of asbestos.

In the report, Reuters noted documents show consulting labs as early as 1957 and 1958 found asbestos in J & J talcum powder. Further reports by the company and outside labs showed similar findings through the early 2000s, according to the Reuters story.

The report also said the company had commissioned and paid for studies conducted on its Baby Powder franchise and hired a ghostwriter to redraft the article that presented the findings in a journal.

In its statement Friday, Johnson & Johnson said “thousands of independent tests by regulators and the world’s leading labs prove our baby powder has never contained asbestos”.

The company also said “any suggestion that Johnson & Johnson knew or hid information about the safety of talc is false.

“This is all a calculated attempt to distract from the fact that thousands of independent tests prove our talc does not contain asbestos or cause cancer,” Ernie Knewitz, J & J’s vice president of global media relations, wrote in an emailed response to the report.

The company also said Baby Powder was asbestos-free and added it would continue to defend the safety of its product.

The company has been battling more than 10,000 cases claiming its Baby Powder and Shower to Shower products cause ovarian cancer. The products have also been linked with mesothelioma, a rare and deadly form of cancer that affects the delicate tissue that lines body cavities.

“We believe it is highly unlikely the company’s exposure to this talc issue will even come close to the $40 billion in lost market cap today,” J.P. Morgan analysts said.

Johnson & Johnson’s stock fell $14.84, or 10 per cent, to close Friday at $133, its most severe single-day decline since 2002.

Johnson & Johnson provided a full statement to news.com.au, outlining where they beleive the Reuters report was wrong.

“The Reuters article is one-sided, false and inflammatory. Simply put, the Reuters story is an absurd conspiracy theory, in that it apparently has spanned over 40 years, orchestrated among generations of global regulators, the world’s foremost scientists and universities, leading independent labs, and J&J employees themselves.

“Johnson & Johnson’s baby powder is safe and asbestos-free. Studies of more than 100,000 men and women show that talc does not cause cancer or asbestos-related disease. Thousands of independent tests by regulators and the world’s leading labs prove our baby powder has never contained asbestos.

“J&J attorneys provided Reuters with hundreds of documents and directly responded to dozens of questions in order to correct misinformation and falsehoods. Notwithstanding this, Reuters repeatedly refused to meet with our representatives to review the facts and refused to incorporate much of the material we provided them.

According to a spokesperson for Johnson & Johnson, the Reuters article is wrong in three key areas:

1. The article ignores that thousands of tests by J&J, regulators, leading independent labs, and academic institutions have repeatedly shown that our talc does not contain asbestos.

2. The article ignores that J&J has cooperated fully and openly with the U.S. FDA and other global regulators, providing them with all the information they requested over decades. We have also made our cosmetic talc mines and processed talc available to regulators for testing. Regulators have tested both, and they have always found our talc to be asbestos-free.

3. The article ignores that J&J has always used the most advanced testing methods available to confirm that our cosmetic talc does not contain asbestos. 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.

— with Reuters