J&J on Tuesday said it earned $4.73 billion, or $1.64 per share, in
the first quarter. That compared with $3.5 billion, or $1.22 per
share, in the year-ago quarter, when the diversified healthcare
company took a big litigation charge.
"Strong pharmaceuticals results showcased a very strong 2014 start
for J&J," said Morningstar analyst Damien Conover, referring to
sales growth of almost 11 percent for prescription medicines in the
quarter. He cited particularly strong sales of immunology medicines
and for the company's recently approved Olysio treatment for
The hepatitis drug, a protease inhibitor, was approved by U.S.
regulators in November and captured global sales of $354 million in
the first quarter.
Olyzio is being paired with Gilead Sciences Inc's <GILD.O> new and
widely used hepatitis C treatment, Sovaldi. But the J&J brand can
expect competition over the next year from other hepatitis C drugs,
including a second treatment from Gilead that will be combined with
Sovaldi in a single pill.
J&J handily beat earnings forecasts because newer drugs have very
high profit margins, Conover said. "They amplified the affect on the
company's bottom line."
But J&J's other business units failed to impress. Sales of medical
devices and diagnostics were flat at $7.06 billion, hurt by lower
prices associated with competitive bidding in the U.S. Medicare
insurance program for the elderly and disabled.
Company executives, in a conference call with analysts, said device
and diagnostics sales were also hurt by a decline in hospital
admissions and laboratory procedures during the quarter.
Global sales of consumer products fell 3.2 percent to $3.56 billion,
as many over-the-counter medicines remain unavailable due to earlier
product recalls in the United States.
J&J says it now expects full-year earnings of $5.80 to $5.90 per
share, up from its prior forecast of $5.75 to $5.85 per share given
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Excluding $300 million in gains from special items, including a tax
benefit, J&J earned $1.54 per share. Analysts, on average, were
expecting $1.48 per share, according to Thomson Reuters I/B/E/S.
"The earnings beat was clean, driven by higher gross margins" and
slightly lower spending for sales, general and administrative
expenses, said Glenn Novarro, an analyst with RBC Capital Markets.
Company sales rose 3.5 percent to $18.1 billion in the quarter,
topping Wall Street forecasts of $18 billion. They would have risen
5.3 percent if not for the stronger dollar, which lowers the value
of sales in markets outside the United States.
Global sales of prescription drugs jumped to $7.5 billion, about
$350 million above Wall Street expectations.
Sales of Simponi, for rheumatoid arthritis, rose 9.3 percent to $259
million, while sales of psoriasis treatment Stelara soared 32
percent to $456 million. Sales of Zytiga, a three-year old drug used
to treat prostate cancer, jumped 49 percent to $512 million.
J&J shares were up 1 percent to $98.13 on the New York Stock
Exchange, amid a 0.6 percent decline for the ARCA Pharmaceutical
Index <.DRG> of large U.S. and European drugmakers.
(Reporting by Ransdell Pierson, editing by Franklin Paul and Sofina
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