January 22, 2008 / 1:33 PM / 11 years ago

UPDATE 4-J&J profit jumps, boosted overseas by weak dollar

(Adds analyst comment, tax-credit help to results)

By Ransdell Pierson

NEW YORK, Jan 22 (Reuters) - Johnson & Johnson (JNJ.N) said on Tuesday its fourth-quarter earnings rose almost 10 percent, beating estimates, helped by lower taxes and by a weak dollar that propelled overseas sales of its drugs, medical devices and consumer products.

Investors are girding for patent expirations this year on the company’s blockbuster Risperdal treatment for schizophrenia and next year on its widely used Topamax medicine for treating epilepsy.

But Chief Executive Officer William Weldon told analysts increasing demand for J&J’s vast array of existing products and launch of new J&J brands will help cushion the coming blow of generic competition for Risperdal and Topamax.

“We feel we’ve gotten ahead of it and will power through it,” he said of the looming patent expirations on the two products.

J&J expects full-year 2008 earnings of $4.39 to $4.44 per share, reflecting growth of up to 6.9 percent, in line with Wall Street expectations.

The diversified health-care company earned $2.37 billion, or 82 cents per share, compared with $2.17 billion, or 74 cents per share, in the year-earlier period.

Excluding special items, J&J earned 88 cents per share. Analysts polled by Reuters Estimates, on average, had expected 86 cents per share. The items included a charge of $441 million related to its poorly selling heart-failure drug Natrecor and a $267 million tax credit.

“Fourth-quarter results do not change our outlook for J&J, as we saw few surprises,” said Morgan Stanley analyst Glenn Reicin, who noted that the one-time tax credit contributed 8 cents per share to earnings.

Company global sales jumped almost 17 percent to $15.96 billion, well ahead of the Reuters Estimates forecast of $15.37 billion. Growth would have been 4.7 percentage points less if not for the weak dollar, which boosted overseas sales.

Overseas sales surged 26 percent, with favorable foreign exchange factors accounting for 10.5 percentage points of that growth.

Quarterly global sales of prescription drugs rose 7.5 percent to $6.4 billion. Anti-psychotic medicines, including Risperdal, rose 15 percent to $1.22 billion, despite strong competition from rival products such as Bristol-Myers Squibb Co’s (BMY.N) Abilify schizophrenia drug.

Sales of Concerta, for attention deficit disorder, rose 12.5 percent to $289 million, while sales of injectable arthritis treatment Remicade jumped 16 percent to $908 million. Topamax sales grew 23 percent to $652 million, helped by increasing use of the medicine to also treat migraine headaches.

Sales of anemia medicines Eprex and Procrit, however, continued to suffer from safety concerns, falling 20 percent to $628 million.

Medical device sales in the fourth quarter rose 11.3 percent to $5.75 billion, helped by higher sales of the company’s DePuy orthopedic products and J&J’s diagnostics and vision care brands.

But global sales of J&J’s Cypher stent, used to prop open arteries that have been cleared of plaque, plunged 31 percent to $415 million as rival products wrested away market share and doctors continued to perform fewer stent procedures due to concerns that such devices can increase risk of dangerous blood clots.

Revenue from consumer products jumped almost 49 percent in the quarter to $3.81 billion, largely due to a large number of products recently acquired from Pfizer Inc (PFE.N), including Listerine mouthwash.

Shares of J&J fell 97 cents, or 1.4 percent, to $65.32 on the New York Stock Exchange, amid declines for the drug sector and the broad stock market. (Additional reporting by Lewis Krauskopf) (Reporting by Ransdell Pierson; Editing by Gerald E. McCormick and Dave Zimmerman)

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