J&J Raises Annual Forecast After Selling Elan Stake

Photographer: Scott Eells/Bloomberg

Second-quarter net income was $3.83 billion, or $1.33 a share. Close

Second-quarter net income was $3.83 billion, or $1.33 a share.

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Photographer: Scott Eells/Bloomberg

Second-quarter net income was $3.83 billion, or $1.33 a share.

Johnson & Johnson (JNJ), the world’s biggest maker of health-care products, more than doubled its earnings in the second quarter after selling its stake in Elan Corp. The company also boosted its profit forecast.

Earnings excluding one-time items for 2013 will be $5.40 to $5.47 a share, the New Brunswick, New Jersey-based company said in a statement today. Second-quarter net income was $3.83 billion, or $1.33 a share. Profit of $1.48 a share beat by 9 cents the average of 20 analyst estimates compiled by Bloomberg.

J&J sold its share of Elan in April and June for $1.26 billion, ending the relationship started with the Irish biotechnology company to develop an Alzheimer’s drug. This was the second consecutive time J&J benefited from a one-time gain, after first-quarter results were helped by reversal of a payment to the U.S. Medicaid insurance program for the poor.

“This quarter reinforces our belief that growth will continue to accelerate,” said Judson Clark, an analyst with Edward Jones & Co. in Des Peres, Missouri. “The results were distorted by the sale of biotech company Elan. As such, we are not concerned by the lack of a larger guidance bump, and view the guidance raise as a clear positive.”

Prior Forecast

In January, J&J had forecast profit of $5.35 to $5.45 a share for 2013.

Second-quarter sales rose 8.5 percent to $17.9 billion, helped by demand for the company’s newer pharmaceutical offerings including the blood thinner Xarelto and the prostate cancer medicine Zytiga. The company reported net income of $1.41 billion, or 51 cents, a year earlier, when results were hurt by acquisition costs.

J&J shares closed unchanged at $90.40 in New York trading. They have increased 32 percent in the 12 months.

The U.S. company had bought 18 percent of Elan for $1 billion in 2009.

Revenue from J&J’s pharmaceutical products grew 12 percent to $7 billion, helped by a 9.8 percent increase in sales of the rheumatoid arthritis treatment Remicade to $1.67 billion. Sales were also helped by the addition of newer products, including a 70 percent increase in sales of the prostate cancer treatment Zytiga to $395 million and a more than three-fold increase in sales of the anti-clotting drug Xarelto to $189 million.

Eight of the company’s therapies introduced since 2011 generated $4.4 billion last year, propelling J&J to the fastest growth among large drugmakers.

Sales of consumer goods and over-the-counter medicines, including Tylenol and Motrin, climbed 1.1 percent to $3.66 billion as the McNeil unit continues to return recalled products to U.S. store shelves. The medical device and diagnostic unit, the company’s biggest, saw sales rise 9.6 percent to $7.19 billion, helped by the acquisition of Synthes Inc.

To contact the reporter on this story: Michelle Fay Cortez in Minneapolis at mcortez@bloomberg.net Shannon Pettypiece in New York at spettypiece@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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