Johnson & Johnson has unveiled its third-quarter financials which show that group sales were up 12.7% to $14.97 billion but net earnings fell 7.7% to $2.55 billion, hit by a restructuring charge of $528 million.

Worldwide pharmaceutical sales were $6.10 billion, up 3.7%, driven by the antiepileptic and migraine agent Topamax (topiramate; +15% to $613 million), the anti-inflammatory Remicade (infliximab; +5.5% to $819 million) for Crohn’s disease and arthritis, and its antipsychotic franchise (+8.9% to $1.16 billion) headed by Risperdal (risperidone). Unsurprisingly, J&J’s anaemia therapy Procrit/Eprex (epoetin alfa) slumped 14.6% to $682 million, but were down 27.1% in the USA on the back of continued fears over cardiovascular safety for the entire erythropoiesis-stimulating class of drugs and problems regarding Medicare reimbursement.

So not the most spectacular results but chief executive William Weldon was not overly concerned, saying that “our broad base enables us to pursue opportunities while managing through pressures in certain markets”. Pharmaceutical growth may be a little sluggish but J&J’s consumer healthcare sales shot up 47.5% to $3.63 billion, boosted by the contribution of products from the recently-acquired Pfizer Consumer Healthcare unit.

Diagnostic and devices sales climbed 6.0% to $5.25 billion but revenues from its Cordis subsidiary, which markets the drug-coated stent Cypher, posted a 21.0% decline to $777 million. Nevertheless, the response from brokers was positive in the main, and Banc of America Securities analyst Glenn Novarro wrote a research note saying that the results "reflect the broad-based nature of the company's portfolio and the cost-cutting ability of the company".

He added that “we continue to believe that investors are underestimating J&J's earnings power, owing to the financial flexibility that exists in the middle of the income statement, and strong cash flow, which will allow for debt paydown and share buyback." Mr Novarro concluded by saying that over the next three years, the firm can grow sales in the mid-single digits, and achieve earnings per share close to 10%, “despite a meaningful slowdown in pharmaceutical sales owing to generic competition to Risperdal and Topomax".

J&J also raised its 2007 earnings forecast and said that EPS will be in the region of $4.10-$4.13, up from its previous estimate of $4.02-$4.07 per share.