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J&J falling drug sales offset by medical devices

US firm playing a game of brinkmanship as deadline for improved offer for Guidant approaches

Johnson & Johnson (J&J) has seen US sales of prescription drugs fall, despite recording a 79 per cent increase in profit for the fourth quarter.

The US healthcare firm, which is embroiled in a bidding war with Boston Scientific for medical device maker Guidant, had net income of $2.18bn, or 73 cents a share, compared with $1.22bn, or 41 cents a share, a year earlier.

ìThe year 2005 was a solid one for Johnson & Johnson, despite significant challenges,î said chairman and CEO William Weldon. ìWe delivered excellent full-year earnings results, while continuing to make the major investments that will fuel future growth.î

Sales of US prescription drugs in 2005 fell 10.2 per cent to $3.57bn, down from $3.98bn the previous year, weaker on increased generic competition to pain patch, Duragesic, and safety concerns over heart-failure drug, Natrecor and anaemia drug Procrit.

However, international sales of prescription drugs actually rose 2.6 per cent to $1.9bn from $1.86bn the previous year.

Growth in J&J's medical devices and diagnostics unit offset the weaker demand for prescription drugs, with worldwide sales rising 13.1 per cent to $19.1bn in 2005, helped by strong sales of the Cypher stent.

At the time of writing, Weldon had until midnight tonight (Tuesday) to respond to Boston Scientific's offer to pay $27bn, or $80 a share in cash and shares, for Guidant, which trumped J&J's $24.2bn offer. On Friday, proxy advisers at Institutional Shareholder Services recommended Guidant investors reject the J&J bid.

The Guidant board had earlier accepted the J&J bid over Boston Scientific's even though it was smaller, on the basis that had cleared an antitrust review and would therefore be completed much more quickly.

30th September 2008

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