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J&J sales rise but miss analysts' targets in Q4

Leads in number of FDA approvals since 2009

J&J headquarters

Johnson & Johnson posted sales of $17.6bn in the fourth quarter of 2012 - just shy of analyst expectations - although the performance of the consumer health division continued to weigh on its figures.

Quarterly net earnings leapt to $2.6bn from $218m a year ago, when they were held back by $2.9bn in charges relating to product recalls in its consumer health business and product litigation expenses.

For the full-year, revenues rose a little over 3 per cent on 2011 to $67.2bn, while profit was up 12 per cent to $10.9bn, which chief executive Alex Gorsky said were "solid results".

The pharma division posted sales up 7 per cent to $6.5bn, despite generic competition to former big sellers such as gastrointestinal drug Aciphex/Pariet (rabeprazole) and attention-deficit hyperactivity disorder (ADHD) therapy Concerta (methylphenidate), as well as lower sales of red blood cell stimulator Procrit (epoetin alfa) thanks to reduced demand in the marketplace.

Growth drivers included newer products such as arthritis drug Simponi (golimumab), up 52 per cent to $181m and buoyed by a launch in Japan, and Stelara (ustekinumab) for psoriasis, which rose 30 per cent to $269m.

Flagship arthritis product Remicade (infliximab) also held up well, rising 5.3 per cent to $1.5bn, while HIV treatment Prezista (darunavir) added almost 12 per cent to reach $353m in the quarter. Velcade (bortezomib) for multiple myeloma had a great quarter with sales up almost 43 per cent to $502m.

"By any measure, we have transformed our pharmaceutical business," said Gorsky on J&J's results call yesterday, pointing to both an industry-leading batch of FDA approvals and total sales of new products launched in the US since 2009.

Consumer product sales fell marginally to $3.65bn in the quarter, with turnover in the US continuing to be pegged back by supply issues affecting analgesic products, such as Tylenol, resulting from manufacturing quality problems at J&J's McNeil division which look set to drag on through the remainder of this year.

"We will return a consistent supply of key products to the market over the course of 2013," said Gorsky on the call. J&J has been wrestling with the problem since 2009 and had originally hoped to have it resolved by 2011. The analgesic declines were offset by gains for upper respiratory medicines and baby care products.

Medical devices were the star of the show on the surface, with sales up nearly 14 per cent to $7.38bn thanks to J&J's acquisition last year of surgical equipment and implants manufacturer Synthes.

However, without the positive impact of the Synthes deal, the medical devices division would have shown lacklustre growth of around 0.8 per cent, with diagnostics down more than 3 per cent.

J&J to divest Ortho Clinical?
Gorsky said yesterday that J&J is looking at "strategic alternatives" for its Ortho Clinical Diagnostics business, including a possible divestment to another company or spin-out into a standalone company.

The revelation comes at a time when big pharma seems to have an appetite for hiving off non-core assets. Abbott has just separated its pharma operations into independent company AbbVie, while Pfizer is starting the process of spinning out its animal health unit Zoetis and selling its nutritionals business to Nestle, having already sold capsule specialist Capsugel to a private equity firm for $2.4bn.

23rd January 2013

From: Sales

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