By Ransdell Pierson
Oct 15 Johnson & Johnson reported
better-than-expected third-quarter results, as strong growth for
prescription drugs overshadowed weaker contributions from its
medical device and consumer products businesses.
"The company's pharmaceuticals division is really well
placed with lots of new drug launches at a time when the company
is not facing many patent expirations on its other medicines,"
Morningstar analyst Damien Conover said. "And we expect to see
more of this strength in the next several quarters."
Global drug revenue jumped almost 10 percent to $7.04
billion, repeating the strong performance seen in the prior
quarter, on soaring sales of its Simponi and Remicade treatments
for rheumatoid arthritis, Stelara for psoriasis, its Zytiga drug
for prostate cancer and other medicines.
But sales of the company's medical devices were hurt by
patients' continuing reluctance to undergo elective surgeries
and other procedures in a weak economy. Division sales fell 2
percent to $6.93 billion.
"The weakness in devices appears to be broad based, with not
just one thing bringing them down," Edward Jones analyst Judson
Clark said, adding that the unit's weakest category was medical
diagnostics. All things considered, Clark said J&J is one of the
best-performing companies in healthcare.
J&J's shares have risen almost 30 percent for the year to
date, compared with a 17 percent gain for the ARCA
Pharmaceutical Index of large U.S. and European
Chief Financial Officer Dominic Caruso, on a conference call
with industry analysts on Tuesday, said there has been a pickup
in overall economic activity, "but certainly not to the level we
Caruso said J&J was interested in acquiring or licensing new
prescription drugs to sustain strong growth of its
top-performing business. He said J&J was also on the hunt for
new medical devices, including those that treat structural heart
defects, if they can be bought at reasonable prices.
The diversified healthcare company on Tuesday reported net
earnings of $2.98 billion, or $1.04 per share, for the quarter.
That compared with $2.97 billion, or $1.05 per share in the
Excluding special items, J&J earned $1.36 per share.
Analysts on average, had expected $1.32 per share, according to
Thomson Reuters I/B/E/S. The company took special charges of
about $900 million in the quarter, related largely to legal
expenses and merger-related costs.
Sales of consumer products edged up 0.8 percent to $3.61
billion, held back by disappointing demand for oral care and
wound-care products. Within the consumer division, sales of
over-the-counter medicines rose 6.4 percent to $975 million, as
recalled brands such as Tylenol and Motrin began returning to
U.S. drugstore shelves.
J&J over the past three years has recalled dozens of OTC
products made at its plants in Pennsylvania and Puerto Rico that
were shown to have foreign particles or incorrect concentrations
of active ingredients. Costly plant upgrades are still under
way, as J&J strives to make the affected products at other
Overall company sales rose 3.1 percent to $17.58 billion in
the quarter, above Wall Street expectations of $17.46 billion,
but would have risen 4.7 percent if not for the stronger dollar.
J&J said it expects earnings this year, excluding special
items, of $5.44 to $5.49 per share, up from its prior view of
$5.40 to $5.47. The company earned $5.10 per share last year.
J&J's stock rose 35 cents to $90.15 in midday trading on the
New York Stock Exchange, amid a moderate decline for the drug