Tuesday, July 16, 2013

Johnson & Johnson in the WSJ Today - Good Quarter

New Drugs Lift J&J's Quarter

Earnings More Than Double for the Quarter

  • Johnson & Johnson JNJ -0.02% said Tuesday that its second-quarter earnings more than doubled to $3.8 billion, as the health-products company benefited from fewer special charges and surging sales for new prescription drugs that the company is starting to roll out.
    The $17.9 billion in sales that the New Brunswick, N.J., company reported during the quarter, an 8.5% increase over the period a year earlier, was driven partly by the growth of new medicines, such as prostate-cancer treatment Zytiga and hepatitis C treatment Incivo. J&J has launched 11 new drugs since 2009, and says it expects to seek approval of 10 more by 2017.
    "The year is off to a strong start," J&J Chief Executive Alex Gorsky said.

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    J&J's medical-devices business, the company's largest segment by sales, benefited from the $21 billion acquisition last year of trauma-device maker Synthes. The device unit's sales grew 9.6% to $7.19 billion, though executives acknowledged that the business faced pricing pressures and other challenges in the U.S.
    Charges amounting to $2.2 billion related to the integration of Synthes, as well as funds reserved for litigation expenses, weighed down J&J's results for the second quarter last year.
    J&J's $3.8 billion profit in the current second quarter, or $1.33 a share, was up from $1.41 billion, or 50 cents a share, a year earlier. Excluding certain items—such as a gain related to the sale of Elan Corp.'s DRX.DB -1.07% American depositary shares, acquisition-related costs and litigation impacts—adjusted per-share earnings rose to $1.48 from $1.30.
    Analysts polled by Thomson Reuters had projected earnings of $1.39 a share on revenue of $17.71 billion.
    Shares of J&J rose 16 cents to $90.56 in late morning trading Tuesday. The stock is up about 29% this year.
    J&J has been struggling with the recall of iconic products like Tylenol pain and cold medicines, and the company announced more recalls in the quarter. Yet the company began returning recalled products to store shelves in the U.S., notching $290 million in over-the-counter sales in the U.S., a 17% increase from the year-earlier period.
    "We're making good progress restoring our over-the-counter products to store shelves," said Sandra Peterson, the J&J executive who oversees the company's consumer group. Overall, sales in the company's consumer unit grew 1.1% to $3.7 billion.
    Like its rivals, J&J has sought to move beyond the onset of generic competition for top-selling prescription drugs by restocking its portfolio. In the quarter, J&J reported $7 billion in pharmaceutical sales, a 12% jump from the year-earlier period.
    Executives said new drug launches made J&J the fastest-growing drug maker in the U.S., though the company has encountered setbacks, notably the failure of an infused version of an experimental treatment for Alzheimer's disease. J&J and partner PfizerInc. PFE +0.09% discontinued development of the remaining, injectable version of that therapy, bapineuzumab, J&J said Tuesday.
    Among the new drugs that J&J is counting on to drive further growth is ibrutinib, an experimental blood-cancer treatment that last week was submitted for U.S. approval. In an effort to complement Zytiga, J&J said last month that it would pay $650 million upfront to buy privately held Aragon Pharmaceuticals Inc. and its experimental prostate-cancer treatment in midstage development.
    —Tess Stynes contributed to this article.

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