Johnson & Johnson posted a fractional dip in sales in the second quarter of 2012 but cut its profit forecast for the year as net earnings slumped 49 per cent to $1.4bn.
The main reason for the decline in profit was costs associated with the $21.3bn acquisition of medical device company Synthes, which closed on June 14, 2012, and J&J has now trimmed its earnings per share for the year to $5.00 to $5.07, a drop of 7 to 10 cents.
New chief executive Alex Gorsky intimated on a conference call that some divestment of less profitable elements of J&J's business portfolio may be on the cards.
There was no suggestion of a major retreat from the company's diversified healthcare approach, with business units spanning pharmaceuticals, OTC medicines, nutritionals, medical devices and diagnostics.
Currency factors and generic competition to antibiotic Levaquin (levofloxacin) and attention-deficit hyperactivity disorder (ADHD) drug Concerta (methylphenidate) held back revenues, which fell 0.7 per cent to $16.5bn in the second quarter.
J&J's pharmaceutical operations added a little less than 1 per cent to reach $6.3bn in sales, supported by strong gains for arthritis and Crohn's disease drug Remicade (infliximab), up 11 per cent to $1.52bn, and new HIV medicine Prezista (darunavir) which rose 19 per cent to $373m.
Another big driver for growth was J&J's amended agreement with Merck & Co, under which J&J started selling Remicade and once-monthly arthritis drug Simponi (golimumab) directly in certain international territories. The changed arrangement meant that J&J's booked sales of Simponi rose 87 per cent in the quarter to reach $125m.
J&J also reported big gains for Xarelto (rivaroxaban), an anticoagulant partnered with Bayer, which grew 80 per cent and is outperforming rival drug Pradaxa (dabigatran) from Boehringer Ingelheim in terms of new US prescriptions, according to J&J's vice president of investor relations Louise Mehrotra.
On the downside, sales of Doxil/Caelyx (doxorubicin) plummeted 90 per cent from $138m a year ago to $13m as a result of supply constraints which stemmed from manufacturing problems at contract manufacturer Ben Venue Laboratories.
Worldwide consumer segment sales for the second quarter of 2012 were $3.6bn, down 4.6 per cent, and continued to be affected by the consent decree affecting manufacturing facilities operated by J&J's McNeil subsidiary in Las Piedras, Puerto Rico, and Fort Washington and Lancaster in Pennsylvania.
Returning the consumer division to health was one of three main objectives identified by Gorsky on the conference call along with "building momentum" in the pharmaceuticals business and integrating Synthes to create the "unparalleled world leader in orthopaedics and neurologics".
Medical devices and diagnostics sales rose 3.4 per cent to $6.6bn, with Synthes accounting for the bulk of the increase.
"The completion of the Synthes acquisition … marks an important milestone in strengthening our leadership in key healthcare markets," said Gorsky.