Johnson & Johnson posts 5% drop

Johnson & Johnson posted a 5 per cent drop in second-quarter earnings today, but profit and revenue beat analysts' forecasts…

Johnson & Johnson posted a 5 per cent drop in second-quarter earnings today, but profit and revenue beat analysts' forecasts thanks to surprisingly resilient pharmaceutical and consumer product sales.

Revenue took a hit from patent expirations on its drugs for schizophrenia and epilepsy, but sales of its blockbuster arthritis drug Remicade were better than expected. Analysts also cited the ability of the giant diversified healthcare company, shares of which rose slightly, to contain costs.

The New Brunswick, New Jersey-based company, which makes products ranging from Band-Aids to complex biotechnology medicines, earned $3.21 billion, or $1.15 per share for the second quarter. That compares with $3.37 billion, or $1.18 per share, in the year-earlier period.

Analysts on average had expected $1.11 per share, according to Reuters Estimates.

READ MORE

J&J's quarterly revenue fell 7.4 per cent to $15.24 billion, but was $190 million higher than analysts had expected.

Revenue would have been 6 percentage points higher if not for the stronger dollar, which hurts the value of overseas sales. Some analysts had expected a worse toll from currency.

The company reaffirmed its full-year profit forecast of $4.45 per share to $4.55 per share, excluding special items, which would be little changed from last year.

Sales of prescription drugs fell 13.3 per cent to $5.5 billion, as patients opted for cheaper generic forms of J&J's Risperdal schizophrenia treatment and Topamax, an epilepsy pill that lost US patent protection in recent months.

Topamax sales plunged 73 per cent to $182 million, while Risperdal's fell 66 per cent to $239 million.

Even so, analysts had been girding for an even bigger decline in the pharmaceuticals business amid the erosion of Risperdal and Topamax sales.

"It appears they underestimated how well other pharmaceutical products were doing," J&;J chief financial officer Dominic Caruso said in an interview.

Mr Caruso cited demand for Remicade, sales of which jumped 24 per cent to $1.1 billion, and cancer treatment Velcade, sales of which rose 12 per cent to $229 million.

Global sales of consumer products, including J&J's Aveeno skin care line, fell 4.5 per cent to $3.85 billion, but would have risen almost 5 per cent if not for the stronger dollar.

Mr Caruso said he could not yet endorse some analyst suggestions that growing demand for J&J's consumer brands indicate the worldwide recession is easing its grip.

Sales within the company's other major business - medical devices and diagnostics - slipped 3.1 per cent to $5.89 billion, hampered by by foreign exchange factors.

Growing demand for J&J's surgical and orthopedics products was partly offset by lower sales of stents, tiny devices used to prop open coronary arteries that have been cleared of plaque.

J&J shares were up 31 cents or 0.5 per cent to $58.03 in afternoon trading on the New York Stock Exchange.

Reuters