J&J beats forecasts as sales of new drugs shine
By Ransdell Pierson
(Reuters) - Johnson & Johnson (JNJ.N: Quote) reported quarterly earnings well above expectations, as strong sales of new drugs offset weak demand for consumer products and medical devices, and the company slightly raised its full-year profit view.
J&J on Tuesday said it earned $4.73 billion, or $1.64 per share, in the first quarter. That compared with $3.5 billion, or $1.22 per share, in the year-ago quarter, when the diversified healthcare company took a big litigation charge.
"Strong pharmaceuticals results showcased a very strong 2014 start for J&J," said Morningstar analyst Damien Conover, referring to sales growth of almost 11 percent for prescription medicines in the quarter. He cited particularly strong sales of immunology medicines and for the company's recently approved Olysio treatment for hepatitis C.
The hepatitis drug, a protease inhibitor, was approved by U.S. regulators in November and captured global sales of $354 million in the first quarter.
Olyzio is being paired with Gilead Sciences Inc's (GILD.O: Quote) new and widely used hepatitis C treatment, Sovaldi. But the J&J brand can expect competition over the next year from other hepatitis C drugs, including a second treatment from Gilead that will be combined with Sovaldi in a single pill.
J&J handily beat earnings forecasts because newer drugs have very high profit margins, Conover said. "They amplified the affect on the company's bottom line."
But J&J's other business units failed to impress. Sales of medical devices and diagnostics were flat at $7.06 billion, hurt by lower prices associated with competitive bidding in the U.S. Medicare insurance program for the elderly and disabled.
Company executives, in a conference call with analysts, said device and diagnostics sales were also hurt by a decline in hospital admissions and laboratory procedures during the quarter. Continued...