Johnson & Johnson Results Driven by Pharmaceutical Sales Growth -- 2nd Update
January 23 2018 - 2:39PM
Dow Jones News
By Jonathan D. Rockoff and Allison Prang
Johnson & Johnson sales rose in the fourth quarter, but the
company reported a loss after taking a $13.6 billion charge as a
result of the new U.S. tax law.
J&J expects the new law will lower its effective tax rate by
1.5 to 2.5 percentage points from the current rate of 17.2%.
Analysts said the positive impact probably figured in the company's
better-than-expected financial outlook for this year.
New Brunswick, N.J.,-based J&J is the latest company to
report a charge as a result of the new tax law's levy on earnings
made abroad, part of the overhaul's efforts to shift to a
territorial system of taxation.
J&J has about $16 billion in foreign earnings it has held
overseas to avoid paying taxes under the old 35% corporate tax
rate. The new law will charge companies a one-time tax of 15.5% on
overseas profits held in cash and liquid assets.
Chief Executive Alex Gorsky praised the tax changes for
improving the competitiveness of U.S. companies and giving them
more flexibility to use their cash.
He said the law will prompt J&J to increase investment "with
the intent to have [the investment] substantially made in the
U.S."
In the fourth quarter, J&J swung to a loss of $10.71
billion, or $3.99 a share, compared with a profit of $3.81 billion,
or $1.38 a share, in the year-ago period, largely because of the
tax-law charge.
Excluding special items such as the tax provision, J&J's
profit rose 9.5% to $4.78 billion, or $1.74 a share. Analysts
polled by Thomson Reuters were expecting adjusted earnings of
$1.72.
J&J, one of the largest U.S. health-products companies by
revenue and a bellwether for the health-care sector, said sales
rose 12% to $20.2 billion.
The performance was driven by sales in the company's
pharmaceuticals business, which rose by 18% to $9.7 billion. Sales
of J&J's cancer drugs had some of the biggest gains.
Global sales of multiple-myeloma treatment Darzalex rose 86% in
the quarter to $371 million, making the drug a so-called
blockbuster, with annual sales over $1 billion.
But sales of arthritis therapy Remicade, J&J's longtime
top-selling product, fell 10% the quarter to $1.5 billion as the
company offered heavy discounts to compete with lower-priced
biosimilars.
Mr. Gorsky said the company was making moves to improve the
performance of its consumer-health and medical-device businesses,
which haven't been performing as well as the pharmaceuticals
unit.
For 2018, J&J said it expects sales between $80.6 billion
and $81.4 billion and adjusted earnings per share between $8 and
$8.20. Analysts had expected full-year adjusted earnings of $7.87
on revenue of $80.7 billion.
Also on Tuesday, a federal appeals court upheld a decision from
the U.S. Patent and Trademark Office invalidating a key patent
protecting Remicade. If J&J had won, the company could have
sought compensation from rivals like Pfizer Inc. for sales lost to
biosimilar versions of Remicade.
The news helped send J&J shares down around 4% during the
afternoon.
A spokesman said J&J was "disappointed" in the ruling.
Patents "enable us to invest in the discovery and development of
tomorrow's life-changing and life-saving new medicines," the
spokesman said.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and
Allison Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
January 23, 2018 14:24 ET (19:24 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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