J&J's Revenue Falls on Currency Woes -- Update
January 26 2016 - 12:34PM
Dow Jones News
By Jonathan D. Rockoff and Chelsey Dulaney
Johnson & Johnson said Tuesday that a strong dollar
contributed heavily to a 2.4% drop in fourth-quarter sales to $17.8
billion world-wide, but the company expressed optimism that both
its underlying business and the global health-care market generally
would grow this year.
J&J said relatively new drugs such as Xarelto and Imbruvica
were driving increased sales in its pharmaceuticals division, while
nearly all of the company's recalled consumer health-products like
children's Tylenol were back on store shelves and helping turn
around that business after years of manufacturing issues.
Executives said they expected a similar revival of the company's
struggling medical-device business, due to 3,000 layoffs that are
pegged to save as much as $1 billion in costs and the launches of
several new products, including knee-replacement parts and contact
lenses.
"We're optimistic about the opportunities in health care and
frankly, the underlying strength of our core business," J&J CEO
Alex Gorsky told investors and analysts during a conference
call.
J&J, of New Brunswick, N.J., is considered an industry
bellwether because it is one of the world's biggest health-products
companies with a portfolio that spans across markets. The company
expects the world-wide health-care market to grow 3% to 5% annually
over the next few years, while coping with pricing pressures.
In response to increasing attention on drug prices, Mr. Gorsky
urged politicians and policy makers to "take a holistic approach to
reforming the health-care system." He said pharmaceuticals account
for just 12% of total health-care spending in the U.S. while often
cutting other costs by preventing or curing disease.
At the same time, J&J executives sought to ease Wall Street
concerns that one emerging tool for cutting spending on drugs, the
introduction of lower-priced versions of biotech drugs, posed a big
and imminent threat to sales of one of the company's top-selling
therapies, Remicade.
The executives said they aren't expecting so-called biosimilar
competition for the rheumatoid-arthritis agent in the U.S. this
year, because the drug's patent expires in September 2018 and the
company will defend it.
When the biosimilar competition comes, J&J executives said
they expect most Remicade patients will stay on the drug, because
they are satisfied with the results.
Overall in the quarter, J&J's revenue fell to $17.8 billion
from $18.3 billion a year earlier. About half of the company's
sales are outside the U.S., and unfavorable currency rates shaved
6.8% off the latest quarter's total. In addition, competition for
the company's hepatitis C drugs also hurt year-over-year
comparisons.
Earnings in the fourth quarter rose to $3.22 billion, or $1.15 a
share, from $2.52 billion, or 89 cents a share. Excluding a charge
for restructuring the medical-devices business and other items,
J&J reported earnings of $1.44 in the latest fourth
quarter.
Shares of the company rose 3% in trading on the New York Stock
Exchange, as analysts said the company's forecast for 2016 earnings
was better than they expected.
For 2016, J&J projected sales between $70.8 billion and
$71.5 billion, below analyst expectations of $71.89 billion, and
per-share earnings excluding certain items of $6.43 to $6.58, above
analyst expectations of $6.38.
J&J executives gave the strongest indication to date that
the company is eyeing deals. "We are actively looking for the right
opportunities," J&J Chief Financial Officer Dominic Caruso
said.
J&J has about $18.5 billion in cash available, which Mr.
Caruso said is more than it typically carries. Last year, J&J
bid for Pharmacyclics, the company's partner selling Imbruvica
cancer drug. But AbbVie Inc. won the bidding with a deal worth $21
billion.
Mr. Gorsky said he saw a "number of opportunities" for deals
across all of J&J's businesses, but the company wouldn't over
pay and wanted to do friendly deals. "We are intending to be quite
active," Mr. Gorsky said.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and
Chelsey Dulaney at Chelsey.Dulaney@wsj.com
(END) Dow Jones Newswires
January 26, 2016 12:19 ET (17:19 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Johnson and Johnson (NYSE:JNJ)
Historical Stock Chart
From Mar 2024 to Apr 2024
Johnson and Johnson (NYSE:JNJ)
Historical Stock Chart
From Apr 2023 to Apr 2024