July 15 (Bloomberg) -- Johnson & Johnson, the world's largest maker of health-care products, said earnings rose 8 percent, beating analysts' estimates, as overseas sales increased and consumer items defied the weak U.S. economy.

J&J, based in New Brunswick, New Jersey, rose in New York trading after the company said in a statement that second- quarter net income climbed to $3.33 billion, or $1.17 a share. Adjusted earnings beat analysts' estimates by five cents, and the drugmaker raised its 2008 forecast.

Chief Executive Officer William Weldon pursued growth abroad to counter sluggish U.S. sales and competition from low- cost generic drugs. Rising revenue from a favorable foreign exchange rate and sales of consumer goods, led by baby-care products and Zyrtec allergy pills, offset slumps for the anemia drug Procrit, the antipsychotic Risperdal, and the unit that makes Cypher heart stents.

``The fundamentals at Johnson & Johnson, they're OK,'' said Les Funtleyder, an analyst with Miller Tabak & Co. in New York, in a telephone interview. ``They're not great, but they're OK. And OK looks pretty good in a market where a lot of stocks are not doing OK.''

J&J rose $1.13, or 1.7 percent, to $67.54 at 9:43 a.m. in New York Stock Exchange composite trading. The drugmaker has lost 29 cents since the start of the year. The Standard & Poor's 500 Pharmaceuticals Index of J&J and 13 other drugmakers has dropped 13 percent this year.

Raised Forecast

The company increased its forecast for 2008 earnings to $4.45 to $4.50 a share, from the $4.40 to $4.45 predicted in April. Second quarter revenue rose 8.7 percent to $16.5 billion, beating analysts' estimates of $16 billion.

In the year-earlier quarter, net income was $3.08 billion, or $1.05 a share. Excluding a $40 million charge for an acquisition, profit was $1.18 a share, beating the average $1.13 estimate of 14 analysts surveyed by Bloomberg.

``Healthcare is generally not correlated with the economic cycles, and our business in particular has not been correlated with the economic cycles,'' Dominic Caruso, the company's chief financial officer, said during a call with analysts and investors today. ``We feel confident about our outlook for the remainder of the year.''

Exchanging currencies from foreign sales into weak U.S. dollars accounted for about two-thirds of the company's revenue growth. The currency boost helped turn a 1.3 percent decline for the company's drug unit, its biggest division, into a 4.4 percent gain.

Drug Sales

Sales increases for the anti-inflammatory drug Remicade and migraine treatment Topomax helped balance drops in Procrit and Risperdal.

Sales of medical devices and diagnostic equipment climbed 12.1 percent to $6.07 billion. Consumer products, the division that sells Listerine mouthwash, Tylenol painkillers and Neutrogena skin cleansers, jumped 13.2 percent to $4.04 billion.

Like other big drugmakers, J&J faces the loss of sales as top-selling medicines including Risperdal and Topamax lose patent protection, allowing competition from low-priced generic copies. J&J said last year it would cut as many as 4,820 jobs, or about 4 percent of its workforce, which stood at 119,200 at the end of last year.

J&J has ``substantially implemented'' the cost-cutting it announced last year and expects to save $1.3 billion to $1.6 billion this year, Caruso, the chief financial officer, said during today's call.

Foreign Sales

While U.S. sales increased 2.1 percent, international sales jumped 16.2 percent. Total foreign sales exceeded U.S. sales by $30 million, the company said.

Two years ago, the company paid $16.6 billion for Pfizer Inc.'s consumer unit, picking up Zyrtec along with Listerine and Nicorette stop-smoking gum.

That approach ``looks like a strategic success, although the final analysis is still a few years off.'' Said Miller Tabak's Funtleyder,

Rising manufacturing costs pressured J&J to raise prices for some goods, and the slumping U.S. economy didn't affect the company as much as rivals, Colleen Goggins, worldwide chairwoman for J&J's consumer units, told analysts at a June 5 conference.

A ``nice currency tailwind'' provided much of J&J's sales growth in the quarter, Michael Weinstein, a J.P. Morgan analyst in New York, said in a note to clients before today's report.

Generic competition will make for ``tough times'' until the company's new drugs win U.S. approval, Weinstein said.

``The company's diversity and focus on operating efficiency gives us confidence that it will be able to manage through this difficult period better than Street expectations,'' he said.

To contact the reporter on this story: Alex Nussbaum in New York anussbaum1@bloomberg.net.

Last Updated: July 15, 2008 10:11 EDT