Failed clinical programmes and Synthes acquisition hit net results
Johnson & Johnson (J&J) reported a healthy 6.5 per cent rise in sales in the third quarter yesterday but said profits had been pegged back by costs associated with a failed clinical programme, acquisitions and upgrades to its manufacturing network.
J&J posted a net profit of $3bn on third-quarter sales of $17.1bn, down 7 per cent, after taking an after tax charge of $533m from the discontinuation of Alzheimer's drug bapineuzumab IV and the acquisition of medical device firm Synthes.
Buoyant sales growth in the US offset a flat performance in international markets - thanks largely to unfavourable currency factors - and Synthes added 6 per cent to J&J's top line.
Pharmaceutical sales came in at $6.4bn, a rise of 7 per cent. The division's performance was driven by gains for anti-inflammatory drug Remicade (infliximab), up 14 per cent, as well as HIV drug Prezista (darunavir) and multiple myeloma treatment Velcade (bortezomib).
Recently-launched products such as Zytiga (abiraterone) for prostate cancer and once-monthly antipsychotic Invega Sustenna/Xeplion (paliperidone) also made a big contribution, although the pharma unit's results were undermined by an 80 per cent decline in sales of cancer drug Doxil/Caelyx (liposomal doxorubicin) caused by supply disruptions.
J&J's consumer healthcare division continued to be affected by manufacturing problems which have led to three facilities being placed under a US FDA consent decree and the recall of millions of product units.
Sales came in at $3.6bn in the third quarter - down a little over 4 per cent - and J&J now says it expects to continue to feel the effects of its production problems through 2012 and most of 2013, according to the firm's vice president of investor relations Louise Mehrotra.
Finally, the $21.3bn acquisition of Synthes helped boost J&J's medical device and diagnostic sales to $7.1bn, up 12.5 per cent from a year ago.
"Despite continuing marketplace and economic pressures, we reported solid sales growth in the third quarter of 6.5 per cent, which was slightly higher than analyst estimates," commented Dominic Caruso, J&J's chief financial officer.
"Excluding the impact of the acquisition of Synthes, the underlying global business grew by approximately 5 per cent on an operational basis," he added.