NEW YORK (Reuters) - Johnson & Johnson (JNJ.N) is unlikely to see a return of double-digit profit growth any time soon due to global economic hurdles, but it still might happen longer-term, Chief Executive Officer William Weldon said.
“I don’t see it in the near future, but I don’t rule it out by any stretch of the imagination,” Weldon said in an interview, just hours after J&J announced plans to bolster its medical device business by paying $21.67 billion for Synthes Inc SYST.VX.
The company has consistently reported double-digit percentage profit growth over its 125-year history, but that enviable record has faltered over the past three years — as patent expirations, product recalls and anemic demand for its heart stents battered results.
Weldon said double-digit profit growth has become harder, in large part because of macroeconomic factors, including sovereign debt in Europe and costs of U.S. healthcare reforms.
“All these things are playing an important role and will continue; it’s a different world we’re playing in today and we have to be cognizant of that.”
But J&J’s pharmaceuticals and consumer products segments, like medical devices, are poised for escalating growth following tough challenges for all three units in recent years, Weldon said.
The hardships have included generic competition for J&J’s schizophrenia drug Risperdal and anti-seizure drug Topamax, as well as quality-control problems that have sparked recalls of more than 300 million packages of Tylenol, Motrin, Benadryl and other over-the-counter medicines in the past 16 months.
J&J, under close federal supervision, is upgrading three plants in Pennsylvania and Puerto Rico to fix the quality lapses. By next year, Weldon said he expects dozens of recalled medicines to return to store shelves.
“That will add significantly to the trajectory of the consumer business,” Weldon said.
U.S. revenue of consumer products fell 14 percent to $1.35 billion in the first quarter. But that was an improvement from a 29 percent decline in U.S. sales in the prior quarter.
Global prescription-drug sales rose 7.5 percent in the quarter, suggesting a turnaround from anemic growth since 2007. Weldon said a wave of potential breakthrough new medicines is on the near-horizon, including treatments for prostate cancer, hepatitis C, blood clots and HIV that will fortify the drug segment.
“People would say we have one of the best, if not the best, drug pipeline in the industry,” Weldon said. He described the company’s experimental treatment for Alzheimer’s disease, bapineuzumab, as a potentially “huge” game changer in treatment of the memory-robbing condition.
Reporting by Ransdell Pierson; Editing by Lisa Von Ahn, Bernard Orr