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 per cent 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 continuing reluctance of patients, strained by the weak economy, to undergo elective surgeries and other procedures. Division sales fell 2 per cent to $6.93-billion.
“The weakness in devices appears to be broad based, with not just one thing bringing them down,” said Edward Jones analyst Judson Clark, adding that the unit’s weakest category was medical diagnostics.
The diversified health care 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 year-earlier period.
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 per cent to $3.61-billion, hurt by recalls over the past three years of dozens of over-the-counter medicines, including painkillers Tylenol and Motrin.
The recalls have been of products made at 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 restock drugstore shelves with products made at other plants.
Overall company sales rose 3.1 per cent to $17.58-billion, above Wall Street expectations of $17.46-billion, but would have risen 4.7 per cent if not for the stronger dollar.
J&J said it expects earnings this year, excluding special items, of $5.44 per share 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.
Company shares were trading at $90.85, from their closing price on Monday of $89.80 on the New York Stock Exchange.