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J&J's earnings rise modestly

Johnson & Johnson has reported a small increase in third-quarter earnings in spite of a drop in revenues

Johnson & Johnson (J&J) has reported a small increase in third-quarter earnings in spite of a drop in revenues. As a result of divestitures and lower taxes, income for the quarter rose about 2 per cent year-over-year to $3.42bn, or $1.23 per share. Sales were down about one per cent to $14.98bn from $15.08bn.

Sales of over-the-counter (OTC) medicines in the US fell by 40 per cent in the quarter, due mostly to the company's string of recalls of Tylenol, Motrin and other nonprescription drugs, as well as to competition from cheaper brands during the economic downturn. Total consumer product sales for the US, which include items such as Band-Aids and baby care products, were down by 25 per cent.

Louise Mehrotra, J&J's vice president of investor relations, said during a conference call with investors that recalled OTC products made at the company's Puerto Rico facility are back at normal levels of production. Operations at the troubled Fort Washington, Pennsylvania, facilities are still suspended, but the company is working to supply the products that were made there from within the J&J manufacturing network. "Beginning in the first quarter of 2011, shipments will ramp up and continue to expand throughout the year," Mehrotra said.

J&J's pharmaceutical business had revenues for the quarter of $5.5bn, a year-over-year increase of about 5 per cent, in part due to launches of new products. "With the successful launches of [the psoriasis treatment] Stelara (ustekinumab) and [the rheumatoid arthritis treatment] Simponi (golimumab), we achieved US market leadership in immunology in 2010," Sheri McCoy, worldwide chairman of the pharmaceuticals group, said during the conference call.

Sales of the biologic product Remicade, which is sold to treat a number of immune-mediated inflammatory diseases, were up 18.6 per cent compared to the third quarter of last year, McCoy noted.  However, sales of the anaemia drug Procrit were down nearly 40 per cent due to a decline in the market and the impact of a recall announced in September.

J&J's largest division, medical devices and diagnostics, had revenues of $5.92bn for the quarter, an increase of 1.3 per cent.

20th October 2010

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