(Reuters) - Johnson & Johnson on Tuesday reported sharply lower sales in the second quarter, and cited a stronger U.S. dollar, disappointing sales of its medical devices and plunging demand for a hepatitis C drug faced with strong competition.
But the company, whose shares were down 0.8 percent in early afternoon trading on the New York Stock Exchange, raised its full-year profit forecast, reflecting better-than-expected earnings in the quarter related to divestiture-related gains and lower taxes.
J&J Chief Executive Alex Gorsky acknowledged that sales of medical devices, one of the company's big three product lines, have disappointed in recent quarters, but in a conference call, he urged industry analysts to remain patient.
"We are absolutely committed to accelerating our growth in medical devices through innovation" and research, Gorsky said. "We don't think these are commodity businesses."
J&J said medical device sales fell 12.2 percent in the quarter to $6.36 billion, following the recent sale of the company's Ortho-Clinical Diagnostics business, which had generated annual sales of almost $2 billion.
"Investors would like to see the medical device business do better, but the company doesn't have enough products in development that are differentiated" from rival brands, said RBC Capital Markets analyst Glenn Novarro.
Novarro said J&J needs to buy cutting-edge medical devices and prescription drugs, whose revenue will be sorely needed to offset expected competition by 2018 from biosimilar forms of J&J's blockbuster Remicade arthritis drug.
Remicade, already facing cheaper generics in some overseas markets, saw sales fall 7.5 percent to $1.67 billion in the quarter.
The New Brunswick, New Jersey-based company's array of consumer healthcare products also struggled in the second quarter, with sales falling 7 percent to $3.48 billion.
Global sales of company prescription drugs fell 6.6 percent to $7.95 billion, but would have grown 1 percent if not for foreign exchange factors, it said.
Ashtyn Evans, an analyst with Edward Jones, cited strong sales of leukemia treatment Imbruvica and Invokana for diabetes, but disappointment with two older products - psoriasis treatment Stelera and blood-clot preventer Xarelto.
Sales of hepatitis C treatment Olysio plunged 68 percent to $264 million, as it became overshadowed by newer drugs, but Evans said it came in about $100 million above expectations.
J&J earned $4.52 billion, or $1.61 per share, in the second quarter, from $4.33 billion, or $1.51 per share, a year earlier. Excluding special items, it earned $1.71 per share, or 4 cents above Wall Street expectations.
Revenue fell almost 9 percent to $17.8 billion, in line with Wall Street forecasts, as the strong dollar crimped global sales by 7.9 percent. The company reported a currency drag of 7.2 percent in the prior quarter.
The healthcare conglomerate raised its full-year profit forecast to $6.10-$6.20 per share, from an earlier view of $6.04-$6.19. It had cut its profit forecast in April blaming the strong dollar, which lowers the value of sales in overseas markets.
Additional reporting by Vidya Nathan in Bengaluru, editing by G Crosse