Johnson & Johnson (JNJ.N) reported higher-than-expected quarterly results on sizzling sales of its new Olysio treatment for hepatitis C, but company officials cautioned the pill will lose steam later this year as newer rivals come to market.
Global company sales jumped 9.1 percent in the second quarter to $19.5 billion, beating Wall Street expectations of $18.99 billion.
But while overall pharmaceutical sales soared, helped also by treatments for blood clots and prostate cancer, the company's medical devices and consumer products posted weak sales gains.
Olysio, which U.S. regulators approved in November, chalked up sales of $831 million for the second quarter and $1.19 billion for the year to date.
Many doctors use the pill with Gilead Sciences Inc's (GILD.O) Sovaldi, which was approved in December to treat the hepatitis C liver virus and has achieved even higher sales than Olysio.
But industry analysts believe Olysio's strong sales growth will level off later this year if Gilead wins approval for a pill that combines Sovaldi with another of the company's treatments.
Jefferies analyst Jeffrey Holford said Olysio drove J&J's profit beat, but cautioned, "(L)ittle credit will be awarded long term as new competing therapies enter the market" later this year and compete with the new J&J pill.
Joaquin Duato, head of J&J pharmaceuticals, in a conference call with analysts on Tuesday, said Olysio's "(sales) run rate is unlikely to continue in 2015."
J&J only slightly boosted its full-year earnings forecast despite its outsized second quarter results, to between $5.85 and $5.92 per share - from its earlier outlook of $5.80 to $5.90.
Leerink analyst Danielle Antalffy said she believed the new 2014 profit forecast is conservative, but that "the lack of a more meaningful guidance raise" would weigh on shares on Tuesday.
The diversified healthcare company said it had earned $4.33 billion, or $1.51 per share, in the second quarter. That compared with $3.83 billion, or $1.33 per share, a year earlier.
The company took charges for litigation and acquisitions in both periods.
Excluding special items, J&J earned $1.66 per share in the latest quarter. Analysts on average were expecting $1.55, according to Thomson Reuters I/B/E/S.
Global company pharmaceutical sales surged 21 percent in the quarter to $8.5 billion, with U.S. sales surging almost 37 percent - fueled by demand for Olysio, blood clot preventer Xarelto and prostate cancer treatment Zytiga.
Sales of the company's wide array of medical devices and diagnostics languished, by comparison, edging up 0.7 percent to $7.2 billion.
Company Chief Executive Alex Gorsky said the segment's weak performance was largely due to a disappointing number of surgical procedures and hospital admissions, a longstanding trend related to the weak global economy.
Consumer products, including over-the-counter medicines such as painkiller Tylenol, also put on modest performance, with sales rising 2.4 percent to $3.7 billion.
J&J shares were down 1.2 percent in morning trading on the New York Stock Exchange.
(Reporting by Ransdell Pierson; Editing by Lisa Von Ahn and Nick Zieminski)