US healthcare major Johnson & Johnson saw its sales for the third quarter climb 6.6% from the year-ago period to $12.3 billion, an increase of 6.6% over the prior year. The rise was largely driven by international turnover, which grew 12.2%, while domestic sales rose 2.6%.
The modest rise in revenues helped push net earnings 12.1% to $2.6 billion, and diluted earnings per share up 11.5% to $0.87, though results also benefited from the absence of last year’s after-tax in-process R&D charges of $12 million, related to the group’s purchase of Scott Lab.
Worldwide turnover of medical devices and diagnostics jumped 14.3% to $4.6 billion, driving operational growth of 13.7%. On the down side, global sales of pharmaceuticals dipped 0.5% to $5.5 billion, as a 7.8% rise in international sales failed to counteract a 4.5% fall in domestic revenues.
Turnover of pharmaceuticals in the USA was impacted by mounting generic competition to products such as: Duragesic (fentanyl), a pain relief patch; the analgesic Ultracet (acetaminophen/tramadol); and the antifungal Sporanox (itraconazole). However, strong performances by the antipsychotic Risperdal (risperidone), the anti-inflammatory Remicade (infliximab) and the anti-epileptic/migraine drug Topamax (topiramate).
Commenting on the results, William Weldon, J&J’s chief executive, stated: "Our broadly based approach to businesses in support of human health care continues to serve us well. The strong performance of our worldwide Medical Devices and Diagnostics and Consumer segments resulted in solid growth for Johnson & Johnson despite the competitive challenges that our Pharmaceutical business has experienced."
But despite the relatively positive set of results, shares in the group closed down $0.03 at $62.97, reflecting investor concern on the group’s indication that it is considering alternatives to its planned acquisition of heart device maker Guidant, following a succession of recalls of the firm’s pacemakers and defibrillators after defects were uncovered [[20/07/05j]].
This implies that the $25.4 billion deal [[16/12/04a]], which was initially set to close in September, is on rather shaky ground. The companies have until February 28 to complete the merger, but given that things at Guidant have changed substantially since the deal was first negotiated, J&J could be seeking to lower the purchase price or even pull the plug on the deal if it can demonstrate any breach in contract.