Shares in Johnson & Johnson have plunged more than 10 percent, after Reuters reported that the US pharmaceutical giant had known about asbestos tainting its talcum powder for decades.
The report comes as the company faces thousands of lawsuits claiming that its talc products caused cancer.
J&J was found to have known about the presence of small amounts of asbestos in its products from as early as 1971, a Reuters examination of company memos, internal reports and other confidential documents showed.
The report also said the company had commissioned and paid for studies conducted on its Baby Powder franchise and hired a ghost-writer to redraft the article that presented the findings in a journal.
J&J lawyers said: "Johnson & Johnson's baby powder is safe and asbestos-free.
"The Reuters article is one-sided, false and inflammatory. Simply put, the Reuters story is an absurd conspiracy theory."
Attorney Peter Bicks told Reuters in an email: "The scientific consensus is that the talc used in talc-based body powders does not cause cancer, regardless of what is in that talc.
"This is true even if - and it does not - Johnson & Johnson's cosmetic talc had ever contained minute, undetectable amounts of asbestos."
Reuters reviewed Johnson & Johnson documents produced as part of the trials, many of which had been shielded from view by court orders.
The documents revealed that from at least 1971 to the early 2000s the firm's internal tests sometimes found small amounts of asbestos in its raw talc and finished powders.
Most of the firm's tests did not find asbestos, and it did not disclose the tests that did to regulators, Reuters found.
Mr Bicks said the tests cited by Reuters article were "outlier" results. In court, the firm has argued that some of the documents referred to industrial talc products.
The investor reaction wiped 10 percent off the firm's market value at one point, making it the biggest loser on the Dow.
Legal cases against Johnson & Johnson have had mixed results.
In July, Johnson & Johnson was ordered to pay £3.6 billion in damages to 22 women who alleged that its talc products caused them to develop ovarian cancer.
The verdict marked the largest payout the firm has faced over the allegations. The firm is appealing against the decision.
- BBC/ REUTERS