(Adds J&J comment on weak medical device sales, updates shares)
By Ransdell Pierson
April 15 Johnson & Johnson reported
quarterly earnings well above expectations, as strong sales of
new drugs offset weak demand for consumer products and medical
devices, and the company slightly raised its full-year profit
J&J on Tuesday said it earned $4.73 billion, or $1.64 per
share, in the first quarter. That compared with $3.5 billion, or
$1.22 per share, in the year-ago quarter, when the diversified
healthcare company took a big litigation charge.
"Strong pharmaceuticals results showcased a very strong 2014
start for J&J," said Morningstar analyst Damien Conover,
referring to sales growth of almost 11 percent for prescription
medicines in the quarter. He cited particularly strong sales of
immunology medicines and for the company's recently approved
Olysio treatment for hepatitis C.
The hepatitis drug, a protease inhibitor, was approved by
U.S. regulators in November and captured global sales of $354
million in the first quarter.
Olyzio is being paired with Gilead Sciences Inc's
new and widely used hepatitis C treatment, Sovaldi. But the J&J
brand can expect competition over the next year from other
hepatitis C drugs, including a second treatment from Gilead that
will be combined with Sovaldi in a single pill.
J&J handily beat earnings forecasts because newer drugs have
very high profit margins, Conover said. "They amplified the
affect on the company's bottom line."
But J&J's other business units failed to impress. Sales of
medical devices and diagnostics were flat at $7.06 billion, hurt
by lower prices associated with competitive bidding in the U.S.
Medicare insurance program for the elderly and disabled.
Company executives, in a conference call with analysts, said
device and diagnostics sales were also hurt by a decline in
hospital admissions and laboratory procedures during the
Global sales of consumer products fell 3.2 percent to $3.56
billion, as many over-the-counter medicines remain unavailable
due to earlier product recalls in the United States.
J&J says it now expects full-year earnings of $5.80 to $5.90
per share, up from its prior forecast of $5.75 to $5.85 per
share given in January.
Excluding $300 million in gains from special items,
including a tax benefit, J&J earned $1.54 per share. Analysts,
on average, were expecting $1.48 per share, according to Thomson
"The earnings beat was clean, driven by higher gross
margins" and slightly lower spending for sales, general and
administrative expenses, said Glenn Novarro, an analyst with RBC
Company sales rose 3.5 percent to $18.1 billion in the
quarter, topping Wall Street forecasts of $18 billion. They
would have risen 5.3 percent if not for the stronger dollar,
which lowers the value of sales in markets outside the United
Global sales of prescription drugs jumped to $7.5 billion,
about $350 million above Wall Street expectations.
Sales of Simponi, for rheumatoid arthritis, rose 9.3 percent
to $259 million, while sales of psoriasis treatment Stelara
soared 32 percent to $456 million. Sales of Zytiga, a three-year
old drug used to treat prostate cancer, jumped 49 percent to
J&J shares were up 1 percent to $98.13 on the New York Stock
Exchange, amid a 0.6 percent decline for the ARCA Pharmaceutical
Index of large U.S. and European drugmakers.
(Reporting by Ransdell Pierson, Editing by Franklin Paul and