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"The challenge for (J&J) is to get new products out to the market, fix their manufacturing operations, and to change their culture so that it doesn't all go for waste because of quality control and illegal practices drains," he said. Prescription drug sales edged up 1 percent, to $6.3 billion, on strong sales for some existing medicines and several new drugs. Those include Xarelto for preventing blood clots and strokes, cancer drug Zytiga, Invega for schizophrenia, Stelara for psoriasis and Incivo for hepatitis C. But sales were down 0.1 percent to $6.57 billion for medical devices and diagnostics, and down 4.6 percent to $3.62 billion for the troubled consumer health business. "This lackluster growth probably represents the `new normal' in both sales and (earnings per share) growth," said analyst Steve Brozak of WBB Securities. "This is emblematic of" declines for all large drugmaker, medical device and health care companies, not just J&J. Besides the manufacturing problems in consumer health, the company noted supply disruptions reduced sales of power surgical tools and products from the Cordis Endovascular business, which makes artery-opening stents and guidewires and catheters for minimally invasive surgery. J&J's breast and ovarian cancer drug Doxil saw sales drop 90 percent in the quarter, to just $13 million, because the manufacturer to which J&J outsourced production shut down its Ohio factory last fall amid serious manufacturing deficiencies. J&J has been seeking a new supplier and said it hopes to resume shipments in the fourth quarter. The company recently applied for approval of experimental drugs canagliflozin for Type 2 diabetes and bedaquiline for drug-resistant tuberculosis, and to allow sales of Zytiga and Xarelto for additional uses. Meanwhile, the first late-stage testing results for Alzheimer's drug bapineuzumab
-- arguably J&J's most closely watched experimental drug -- will be announced at a September medical conference. J&J now expects 2012 earnings per share of $5 to $5.07 per share, down from its April forecast of $5.05 to $5.15 per share, excluding special items. It expects revenue to total about $67 billion. Last year, J&J reported revenue of $65.03 billion, after rare declines for two years due to the global recession and the recalls. Analyst Jeffrey Holder of Jeffries & Co. Inc. wrote that J&J's results "well illustrated some of the challenges facing the rest of the" large drugmakers, but called the business "operationally sound." After an initial decline, J&J shares rose 55 cents to close at $69 Tuesday.
[Associated
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