Kenvue's Share Price Plummets Amid Regulatory and Reputational Turmoil: A Deep Dive into Pharmaceutical Liability and Consumer Trust

The sharp decline in Kenvue Inc.’s (KVUE) share price in 2025 reflects a confluence of regulatory scrutiny, reputational damage, and evolving legal risks that have rattled investor confidence. Amid a broader debate over pharmaceutical liability and consumer trust, Kenvue’s flagship product—Tylenol—has become a lightning rod for controversy, with allegations linking prenatal use of acetaminophen to autism spectrum disorder (ASD) and attention-deficit/hyperactivity disorder (ADHD). This analysis unpacks the forces driving the stock’s volatility, the scientific and legal uncertainties at play, and the long-term implications for Kenvue’s market position.

Regulatory Risks: A Perfect Storm of Legal and Political Pressures

The most immediate catalyst for Kenvue’s stock selloff has been the U.S. Department of Health and Human Services’ (HHS) impending report, which may assert a potential link between prenatal Tylenol use and autism. According to a report by Reuters, HHS Secretary Robert F. Kennedy Jr. has signaled plans to release findings suggesting acetaminophen exposure during pregnancy could increase developmental risks, a claim Kenvue has vehemently denied [1]. The company argues that the U.S. Food and Drug Administration (FDA) and major medical organizations continue to endorse acetaminophen as the safest pain reliever for pregnant women [1].

Yet the political dimension of this issue cannot be ignored. Kennedy’s high-profile advocacy has amplified public concerns, even as scientific consensus remains divided. Regulatory risks now account for 22% of Kenvue’s disclosed risks in 2025, per TipRanks analysis, underscoring the fragility of its legal and operational environment [2]. The specter of product liability lawsuits—legacy issues inherited from its parent company, Johnson & Johnson—adds another layer of complexity. While a federal judge dismissed multidistrict litigation (MDL) in December 2023 due to insufficient evidence, plaintiffs are appealing the decision, with the Second Circuit set to weigh in soon [3]. Meanwhile, state courts in jurisdictions like California and New York are allowing cases to proceed, creating a patchwork of legal exposure [4].

Scientific Uncertainty: A Double-Edged Sword for Investor Sentiment

The scientific community remains polarized. A 2024 study in Nature Mental Health found a significant association between prenatal acetaminophen use and ADHD, particularly in girls, while a separate analysis by the Icahn School of Medicine at Mt. Sinai reviewed 46 studies and noted a majority suggesting increased autism risk [4]. Conversely, a large-scale Swedish study published in the Journal of the American Medical Association (JAMA) involving 2.4 million children found no causal link [1]. The American College of Obstetricians and Gynecologists (ACOG) has also emphasized the lack of conclusive evidence for a direct relationship [1].

This ambiguity creates a dangerous dynamic for Kenvue. While regulatory bodies and courts grapple with conflicting data, consumer trust erodes. A single misstep—such as a regulatory warning or a high-profile lawsuit settlement—could trigger a cascade of reputational damage. The company’s Skin Health & Beauty segment, already struggling with underinvestment and fierce competition, further exacerbates these vulnerabilities [2].

Reputational Damage: A Drag on Brand Equity and Market Share

Beyond legal and regulatory risks, Kenvue’s brand equity is under siege. The Tylenol controversy has spilled into broader consumer perceptions, with surveys indicating declining trust in over-the-counter (OTC) medications. This reputational drag is compounded by the underperformance of Kenvue’s Skin Health & Beauty division, which has failed to innovate amid rising competition from niche players and big-box retailers [2]. The dual pressures of litigation and brand erosion threaten to undermine Kenvue’s post-spinoff strategy, which relied on leveraging its OTC portfolio for growth.

Investment Implications: Navigating a High-Risk Landscape

For investors, Kenvue’s current predicament highlights the inherent risks of pharmaceutical liability in an era of heightened regulatory and political scrutiny. While the company maintains that its products are safe, the potential for large-scale settlements, regulatory restrictions, or reputational collapse remains significant. The stock’s 14% drop following the Wall Street Journal report underscores market fears [1].

Conclusion: A Test of Resilience for Kenvue

Kenvue’s ability to weather this storm will depend on its capacity to navigate regulatory hurdles, defend its scientific credibility, and rebuild consumer trust. The company’s response to the HHS report, the outcome of pending litigation, and its strategic investments in brand revitalization will be critical. For now, the stock remains a high-risk proposition, with its fate intertwined with the broader debate over pharmaceutical accountability in an increasingly litigious and polarized environment.

**Source:[1] Kennedy to link Tylenol use in pregnancy to autism, WSJ reports [https://www.reuters.com/business/healthcare-pharmaceuticals/kennedy-link-tylenol-use-pregnancy-autism-wsj-reports-2025-09-05/][2] Kenvue, Inc. (KVUE) Stock Risk Analysis [https://www.tipranks.com/stocks/kvue/risk-factors][3] Tylenol Autism Lawsuit - Settlement & Claims (June 2025) [https://www.dolmanlaw.com/blog/settlements-for-tylenol-autism-lawsuits/][4] Tylenol Autism Lawsuit | Sept 2025 Class Action Update [https://www.lawsuit-information-center.com/tylenol-autism-lawsuit.html]