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J&J Earnings Beat Analyst Estimates on Sales of New Drugs

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J&J Earnings Beat Analyst Estimates on Sales of New Medicines
Johnson & Johnson reaffirmed its 2013 forecast of earnings excluding one-time items of $5.35 to $5.45 a share. Photographer: Scott Eells/Bloomberg

April 16 (Bloomberg) -- Johnson & Johnson, the world’s biggest maker of health-care products, reported first-quarter earnings that beat analysts’ estimates as new drugs and the acquisition of Synthes Inc. boosted sales.

Earnings excluding one-time items were $1.44 a share, topping by 5 cents the average of 11 analysts’ estimates compiled by Bloomberg. Net income declined 11 percent to $3.5 billion, or $1.22 a share, from $3.91 billion, or $1.41, a year earlier, New Brunswick, New Jersey-based J&J said today in a statement. The company reiterated its full-year forecast.

J&J is focusing on increasing sales of newly approved medicines, including the prostate cancer drug Zytiga and stroke prevention treatment Xarelto, to help overcome lost revenue from generic competition. Investors are watching to see results for J&J’s newest therapy, the diabetes treatment Invokana.

“The pharma business is really what outperformed in the quarter,” said Jeff Jonas, co-portfolio manager at Gabelli Healthcare and Wellness, in a telephone interview. “We are seeing really good uptake for a lot of their new medicines.”

Sales rose to $17.5 billion from $16.1 billion. The company reaffirmed its 2013 forecast of earnings excluding one-time items of $5.35 to $5.45 a share.

“One thing that was a positive surprise was that they could maintain their guidance, the street was expecting a cut mostly on foreign exchange,” Jonas said. “That was a real positive that they could maintain it.”

Unit Sales

J&J gained 2.1 percent to $83.44 at the close in New York. The shares have increased 30 percent in the past 12 months.

Sales of consumer goods and over-the-counter products, led by Tylenol and Motrin, rose 2.2 percent to $3.7 billion as the company started to return dozens of recalled products to U.S. store shelves.

Prescription medicines sales climbed 10 percent to $6.8 billion, led by a 57 percent increase in sales of psoriasis treatment Stelara to $346 million and a 72 percent jump in Zytiga sales to $344 billion.

At J&J’s medical device and diagnostics division, revenue rose 10 percent to $7.06 billion. The purchase last year of device maker Synthes boosted earnings in the device division by 14 percent worldwide, the company said. A sale of the $2.2 billion Ortho Clinical Diagnostics unit is being weighed, the company said in January.

Net income in the quarter was reduced by about $600 million from litigation expenses and costs from the acquisition of Synthes. The company is fighting more than 10,000 lawsuits over its recalled hip implants.

To contact the reporter on this story: 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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