CORRECT: 2nd UPDATE: J&J's 1Q Net Drops 2.5% On Falling Sales
15 April 2009 - 12:17AM
Dow Jones News
Johnson & Johnson's (JNJ) first-quarter profit declined
2.5%, with sales hurt by the stronger U.S. dollar, a slowdown in
consumer health-care product sales and generic competition for
prescription drugs.
The weak economy continues to hurt the health-care giant's
results, with sales coming in lower than Wall Street expectations
for the second quarter in a row. J&J's consumer unit, which had
posted strong sales growth for much of last year, is now seeing
sluggish sales.
To bolster profits, the New Brunswick, N.J., maker of Band-Aid
bandages and Tylenol pain reliever has offset some of the pressure
on the top line by cutting costs, including last week's disclosure
of the elimination of about 900 positions, or 6% of its U.S.
pharmaceuticals work force.
J&J said net income for the first three months of the year
was $3.5 billion, or $1.26 a share, compared with $3.6 billion, or
$1.26 a share, a year earlier.
The per-share earnings in the latest quarter exceeded the mean
estimate of analysts surveyed by Thomson Reuters of $1.22 a
share.
Sales dropped 7.2% to $15 billion for the quarter from $16.2
billion a year earlier, falling short of the Thomson estimate of
$15.4 billion. Unfavorable currency-exchange rates accounted for
six percentage points of the decline.
Shares of J&J rose 1.2% to $51.74 in pre-market trading.
J&J Chief Executive William Weldon acknowledged "challenging
economic and near term business pressures," but said in a press
release the company was in a good position for long-term
growth.
J&J's biggest unit, pharmaceuticals, had sales of $5.8
billion for the quarter, down 10.1% from a year earlier. While
sales rose for Concerta for attention deficit hyperactivity
disorder and the Remicade anti-inflammatory drug, sales of the
Risperdal antipsychotic nosedived due to last year's expiration of
U.S. patent protection. Also, anemia drugs Procrit and Eprex posted
a combined sales decline, continuing a two-year trend.
"Our results continue to be impacted by generic competition for
some of our products," Louise Mehrotra, vice president of investor
relations, said on a conference call with analysts Tuesday
morning.
The company's medical-device and diagnostics unit had sales of
$5.5 billion, down 2.9% from a year earlier. Surgical-care products
and joint reconstruction products were positive but lower sales of
drug-eluting stent devices contributed to the decline.
J&J's flagship coronary stent Cypher is fighting for market
share against Abbott Laboratories' (ABT) new Xience stent, which is
also marketed by Boston Scientific Co. (BSX) under the name Promus.
For the quarter, J&J drug-eluting stent sales tumbled about
37%, to $252 million from $400 million. Coated stents are tiny
scaffolds that prop open heart arteries and use medication to keep
scar tissue from closing them off again.
Consumer sales dropped 8.7% to $3.7 billion. Sales of
over-the-counter version of allergy drug Zyrtec, which had been
strong for much of 2008, suffered from comparisons to a
year-earlier period in which inventory was built up in connection
with the product launch.
The U.S. market for over-the-counter health products dropped by
2% to 3% in the first quarter, "and competition from private label
has intensified," said Mehrotra.
-By Peter Loftus, Dow Jones Newswires; 215-656-8289;
peter.loftus@dowjones.com
(Mike Barris contributed to this article.)