Johnson & Johnson knew for decades that its baby powder contained asbestos, Reuters said in a new report that drove the company's shares down more than 10 percent Friday.

Reuters based its report on a review of documents and deposition and trial testimony. It said the review showed that from 1971 to the early 2000s, J&J executives, mine managers, doctors and lawyers were aware the company's raw talc and finished powders sometimes tested positive for small amounts of asbestos. Those involved discussed the problem but they did not disclose it to regulators or the public, Reuters' examination found.

The company released a statement Friday calling the Reuters article "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," the company said in a statement.

Reuters stands by its reporting, a spokeswoman told CNBC.

The company has faced thousands of lawsuits alleging its talc baby powder products contain asbestos and caused ovarian and other cancers. Some juries have sided with J&J and others have been unable to reach verdicts. A Missouri jury in July ordered J&J to pay $4.69 billion in a case involving 22 women and their families. A judge affirmed the verdict in August, and J&J vowed to appeal it.

J&J has filed thousands of documents in court proceedings, though most have been designated as confidential.

By Friday's close, J&J stock had fallen 10.04 percent, its worst day in more than a decade, when its shares closed down 15.85 on July 19, 2002. The stock dropped as much as 11.9 percent Friday.