Higher Prescription-Drug Sales Aid Johnson & Johnson Results--Update

By Peter Loftus and Kimberly Chin 

Higher prescription-drug sales helped Johnson & Johnson offset softness in its consumer-products and medical-device businesses and report better-than-expected first-quarter sales and earnings, while slightly boosting its forecast of full-year sales.

J&J shares rose 2.5% to $139.88 on the report, as the stock continued to rebound from a sharp selloff in late 2018 triggered by fresh concerns about liability in litigation over the safety of Johnson's Baby Powder and other talc-containing products.

"We are much more confident at this point in the year than maybe we were a year ago," J&J CFO Joseph Wolk told analysts on a conference call, referring to the financial forecast.

Analysts said the quarterly results and updated full-year forecast show J&J is navigating through its challenges, which also include competition from lower-cost generic drugs. "To us, the good far outweighs any possible questions or concerns investors could have on the quarterly performance," SVB Leerink analyst Danielle Antalffy said in a research note.

J&J's world-wide pharmaceutical sales rose 4.1% to $10.24 billion, fueled by gains for anti-inflammatory drug Stelara and cancer treatment Darzalex. Competition from generic drugs hurt sales of arthritis treatment Remicade and cancer drug Zytiga.

J&J's second-biggest business by sales, medical devices, posted a sales decline of 4.6% to $6.46 billion. Excluding divestitures, acquisitions and currency effects, J&J said sales grew 4.3%, helped by sales of cardiology devices and contact lenses.

Global sales of J&J's consumer products, which include brands such as Band-Aid and Tylenol, dropped 2.4% to $3.32 billion. J&J said "broad market softness" affected results, including a soft cold-and-flu season in Russia and Western Europe, which hurt sales of certain over-the-counter drugs.

Sales of J&J's baby-care products dropped 14% globally, which J&J attributed partly to inventory changes related to launching new versions of products outside the U.S. J&J rolled out the new versions in the U.S. last year.

J&J didn't break out sales of its talc-containing powders. At least 13,000 lawsuits against the company allege that use of Johnson's Baby Powder and other talc products caused ovarian cancer and mesothelioma.

J&J didn't discuss the lawsuits in its earnings release or on a conference call with analysts. It says decades of testing have shown its baby powder is safe and asbestos-free, and that it doesn't cause cancer. The U.S. Justice Department and the Securities and Exchange Commission have issued subpoenas seeking documents related to talc safety.

The New Brunswick, N.J.,-based company anticipates adjusted earnings this year to be between $8.53 to $8.63 per share, narrowed from its prior forecast of $8.50 to $8.65 a share. It expects operational sales, excluding currency impact, to be between $82 billion and $82.8 billion, up from $81.6 billion to $82.4 billion as previously targeted.

Overall, sales rose 0.1% to $20.02 billion, ahead of analysts' expectations. J&J's profit fell 14% from the year-ago quarter to $3.75 billion, or $1.39 a share. Excluding various items, J&J earned $2.10 a share, topping expectations.

Write to Peter Loftus at [e-mail] and Kimberly Chin at [e-mail]

(END) Dow Jones Newswires

April 16, 2019 11:31 ET (15:31 GMT)

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