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J&J’s Third-Quarter Profit Beats Estimates on Drug Sales

Johnson & Johnson raised its 2012 earnings forecast to $5.05 to $5.10 a share excluding certain items, after trimming the forecast last quarter by 5 cents to $5 to $5.07 a share. Photographer: Daniel Acker/Bloomberg
Johnson & Johnson raised its 2012 earnings forecast to $5.05 to $5.10 a share excluding certain items, after trimming the forecast last quarter by 5 cents to $5 to $5.07 a share. Photographer: Daniel Acker/Bloomberg

Oct. 16 (Bloomberg) -- Johnson & Johnson, the world’s biggest maker of health-care products, beat analysts’ earnings estimates in the third quarter on demand for new prescription medicines and medical tools acquired with the Synthes Inc. purchase. The company raised its 2012 forecast.

Net income decreased to $3 billion, or $1.05 a share, from $3.2 billion, or $1.15, a year earlier, New Brunswick, New Jersey-based J&J said today in a statement. Earnings excluding one-time items were $1.25 a share, topping the $1.22 average of 18 analyst estimates compiled by Bloomberg.

Sales of recently approved drugs, including Zytiga for prostate cancer, Xarelto for stroke prevention and Stelara for psoriasis helped push revenue 6.5 percent to $17.1 billion for the quarter, from $16 billion a year earlier. The June purchase of Synthes with novel financing that used cash that had accumulated outside the U.S. also bolstered quarterly earnings.

“We’re in the early stages of the turnaround,” said Jeff Jonas, an analyst at Gabelli & Co. in Rye, New York. “Clearly the pharmaceutical business is booming, as they’ve introduced several new drugs. Medical devices are growing steadily but slowly. The consumer business, hopefully that will turn next year.”

The company raised its 2012 earnings forecast to $5.05 to $5.10 a share excluding certain items, after trimming the forecast last quarter by 5 cents to $5 to $5.07 a share. Analysts estimated J&J would generate $5.08 a share this year.

J&J rose 1.4 percent to $69.55 at 4:01 p.m. New York time. The shares gained 6.1 percent this year.

Bapineuzumab Charge

The company took a charge of $553 million in the quarter for the discontinuation of the experimental Alzheimer’s disease drug bapineuzumab, integration costs from the Synthes acquisition and costs related to the DePuy ASR hip.

Sales included the impact of the Synthes acquisition, which contributed 5.8 percent to worldwide operational sales growth, net of the divestiture of the DePuy trauma business, the company said in the statement.

Sales of consumer goods and over-the-counter products like Tylenol and Motrin from the company’s McNeil unit, which haven’t all returned to the market after manufacturing problems, fell 4.3 percent to $3.6 billion. Chief Executive Officer Alex Gorsky named Sandra Peterson to head the division in September, marking his first major hire. Peterson, who was chief of Bayer AG’s crop-chemical unit, is slated to start at J&J on Dec. 1.

Pharmaceutical sales rose 7 percent to $6.4 billion. J&J’s biggest unit, the medical-device division, had a revenue increase of 13 percent to $7.1 billion.

To contact the reporter on this story: Michelle Fay Cortez in Minneapolis at mcortez@bloomberg.net

To contact the editor responsible for this story: Reg Gale at Rgale5@bloomberg.net

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