Johnson & Johnson's sales miss; seeks options for diabetes care unit

[January 24, 2017]  (Reuters) - Johnson & Johnson reported a smaller-than-expected rise in fourth-quarter sales, hurt by slowing demand for its pharmaceutical products and a strong dollar, and said it was looking at strategic options for its diabetes care division.

Shares of the diversified healthcare company, which also forecast 2017 earnings and revenue below estimates, slipped 1.2 percent in premarket trading on Tuesday.

J&J is seeking strategic options for its diabetes care division, specifically LifeScan Inc, Animas Corp and Calibra Medical Inc, as the company looks to rejuvenate its aging legacy portfolio.

The division falls within J&J's medical device business, which is the company's second-biggest division. The diabetes unit accounted for 2.5 percent of total sales in the latest quarter.

J&J's total sales rose 1.7 percent to $18.11 billion in the fourth quarter, but missed analysts' average estimate of $18.28 billion, according to Thomson Reuters I/B/E/S.

A slower-than-expected rise in sales in the company's pharmaceutical business weighed on the quarter.

Sales of its cancer drugs, Imbruvica and Velcade, were below consensus estimates, according to Jefferies analysts.

Another drag was a drop in sales of Remicade, the company's top-seller. Sales of the autoimmune drug fell 3.3 percent in the quarter, dropping for the first time in 2016, but was in line with consensus estimates.

The drug now faces competition in the United States from Pfizer Inc's <PFE.N> biosimilar, Inflectra, which was launched on Nov. 21, midway through the quarter, at a 15 percent lower price.

Sales in the latest quarter took a hit of 0.6 percent due to a strong dollar and another 4.8 percent due to additional shipping days in the year-ago quarter, the company said.

The logo of healthcare company Johnson & Johnson is seen in front of an office building in Zug, Switzerland July 20, 2016. REUTERS/Arnd Wiegmann

This is a tepid quarter for J&J, and most of its disappointments came from the U.S. market, both before and after currency, Leerink analysts said.

Excluding items, the band-aid maker earned $1.58 per share, beating analysts' average estimate by 2 cents, helped by lower taxes.

J&J forecast 2017 adjusted earnings of $6.93-$7.08 per share and revenue of $74.1 billion-$74.8 billion.

Analysts on average were expecting a profit of $7.11 per share and revenue of $75.10 billion.

The company is currently in exclusive talks to buy Actelion Ltd, Europe's biggest biotech, and last September agreed to pay $4.33 billion to buy Abbott Laboratories' <ABT.N> eye-care business.

J&J's report, the first among major pharmaceutical companies, comes on the heels of President Donald Trump's scathing remarks on drug price gouging.

(Reporting by Natalie Grover in Bengaluru; Editing by Savio D'Souza and Sriraj Kalluvila)

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