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Johnson & Johnson on Tuesday said it expects its medical device business to begin recovering in the fourth quarter as elective medical procedures delayed by the coronavirus pandemic start to resume.

The U.S. health care conglomerate lowered its full-year 2020 forecast due to the hit to that business, with procedures like hip and knee replacements on hold. The division accounts for nearly 30 per cent of total sales.

However, investors appeared to take heart that J&J did not simply withdraw its 2020 forecasts over coronavirus uncertainty as the pandemic causes massive business disruptions around the world. It also raised the quarterly dividend to $1.01 per share, and its shares rose 4.4 per cent to $145.87.

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J&J’s 2020 adjusted earnings forecast of $7.50 to $7.90 per share – down from its prior view of $8.95 to $9.10 – assumes any return of the coronavirus outbreak in the fall will look much different than the current global health crisis.

“If the virus does return, the world should be much better prepared to test, identify and isolate it. There may also be therapeutic options available,” Chief Financial Officer Joseph Wolk said on a conference call.

Wolk said he expected elective procedures and doctor visits to largely resume in the second half of the year, with the business seeing a lingering impact but starting to stabilize in the third quarter.

Drugmakers and medical researchers are racing to develop treatments and vaccines for the novel coronavirus, which has infected some 2 million people globally and killed over 123,000.

J&J plans to start human trials of its vaccine candidate by September. It signed a vaccine deal with the U.S. government to jointly invest $1 billion and hopes to be able to manufacture more than 1 billion doses.

J&J said it is developing the vaccine on a “not-for-profit” basis.

“Being part of the solution to conquer the pandemic is good for all businesses, not just the business of Johnson & Johnson,” Wolk told Reuters in a phone interview.

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The company was not looking to recoup research and development costs and plans to price the vaccine to offset costs related to its manufacturing and distribution, Wolk said.

J&J, the first major U.S. drugmaker to report earnings since the outbreak, said medical device sales in the first quarter fell 8.2 per cent to $5.93 billion, with products used in high-margin orthopedic procedures and vision correction hit particularly hard.

Consumer health sales jumped 9.2 per cent to $3.63 billion, driven by a surge in demand for products like Tylenol and Motrin as consumers faced with an illness that causes fever and cough stocked up on essentials.

Pharmaceutical sales rose 8.7 per cent to $11.13 billion for the quarter.

Excluding items, J&J earned $2.30 per share, beating the average analyst estimate by 30 cents, according to IBES data from Refinitiv.

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