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J&J sales fall 0.5 per cent for 2010

Johnson & Johnson has reported an annual decrease in sales of 0.5 per cent for 2010, due in part to a series of recalls for OTC products and suspension of manufacturing at a US plant

Johnson & Johnson (J&J) has reported an annual decrease in sales of 0.5 per cent for 2010, due in part to a series of recalls for over-the-counter (OTC) products and the suspension of manufacturing at a healthcare facility in Fort Washington, Pennsylvania, operated by McNeil Consumer Healthcare – a subsidiary of J&J.

In contrast, net profit for the company did improve for the year, increasing by 8.7 per cent to $13.33bn from 2009.

Results in the fourth quarter demonstrated poorer recent performance, however, with net profit down 12 per cent from $2.21bn in the same period in 2009, to $1.94bn in Q4 2010. Revenue also fell for the quarter, decreasing 5.5 per cent in Q4 2010 from Q4 2009.

One of the worst hit areas for company sales was OTC products in the US, with Q4 revenue decreasing by over half from $807m to $381m. Annual figures for the region were similarly disappointing for J&J, falling by 37.1 per cent to $1.85bn.

J&J's OTC product performance in the US was affected by several recalls of children's medications by the US Food and Drug Administration (FDA), including batches of Tylenol (paracetamol) in spring.

The recalled products were manufactured at the McNeil plant in Pennsylvania. The plant was closed following an FDA inspection that found serious violations of the agency's good manufacturing practice requirements, including contaminated ingredients. Further problems at the facility were reported in December 2010.

In a separate incident, 9.3 million bottles of Tylenol Multi-Symptom were recalled in November 2010 after the company failed to list the alcohol content on the front label.

In a statement, William C Weldon, chairman and CEO, J&J, said of the company's performance: "Although 2010 was a challenging year, the business continued to deliver earnings growth, while investing in the future and emerging a stronger organisation."

Weldon also spoke of his hopes for 2011, a year which has already seen J&J recall 47 million units of OTC products, including Tylenol and Sudafed (pseudoephedrine): "While we will continue to see near-term pressures on the business for 2011, we remain committed to investing in innovative products, a robust pipeline and talented people who will sustain our growth and increase our market leadership in one of the most important and rewarding industries in the world."

26th January 2011

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