Johnson & Johnson Outlook Buoyed by Drug Unit -- Update
October 17 2017 - 12:53PM
Dow Jones News
By Jonathan D. Rockoff and Cara Lombardo
Johnson & Johnson increased its 2017 sales and adjusted
profit guidance for the third quarter in a row, though net income
in the quarter fell due to one-time items and amortization related
to the company's Actelion acquisition.
J&J, one of the largest health-products companies by revenue
based in the U.S., urged lawmakers in Washington to "unite behind"
a plan to overhaul the corporate tax system but said its 2017
guidance doesn't assume there will be tax reform this year.
Overall in the third quarter, J&J's revenue rose 10% to
$19.7 billion. The company posted earnings per share of $1.37 on
net income of $3.7 billion, which decreased 12% from $4.3 billion
in the previous year's quarter.
A J&J spokesman said profit fell "due to amortization and
inventory step-up charges primarily related to" the company's
recent $30 billion acquisition of rare-disease drugmaker
Actelion.
Adjusted earnings per share, which exclude one-time items and
amortization expenses, were $1.90 on adjusted net income of $5.2
billion, which rose 11% from a year ago. Analysts polled by Thomson
Reuters had expected adjusted net income of $4.9 billion.
J&J is now forecasting adjusted earnings per share for the
year of $7.25 to $7.30, up from $7.12 to $7.22. It also raised its
sales outlook to $76.1 billion to $76.5 billion, from $75.8 billion
to $76.1 billion.
The New Brunswick, N.J., company's shares, which are up 18% for
the year, were up 2.3% Tuesday.
The company gave an indication of the impact of Hurricane Maria,
which has devastated Puerto Rico, on the manufacturing of medical
products there. J&J CFO Dominic Caruso said J&J's six
plants on the island are making and shipping products using
generator power.
"Considering the magnitude of the storm, our sites fared very
well," Mr. Caruso said during a conference call with investors and
analysts. He said he doesn't expect the hurricane will have "any
material impact to our future results."
Mr. Caruso said the storm season had a "limited" negative impact
on the company's medical-device business because some hospitals
canceled surgeries due to the bad weather.
Despite the storms' impact, J&J's medical-device sales rose
7.1% to $6.6 billion world-wide. Meanwhile, global consumer-health
sales grew 2.9% to $3.4 billion.
Joaquin Duato, who runs J&J's pharmaceuticals business, said
its performance is accelerating during the second half of the year.
Revenue from the prescription-drugs business, J&J's largest,
jumped 15% to $9.4 billion world-wide during the third quarter.
The pharmaceutical results were bolstered by J&J's purchase
of Swiss biotech Actelion earlier this year and gains by key
brands, such as autoimmune disease treatment Stelara and
blood-thinner Xarelto.
Revenue from Remicade, a rheumatoid-arthritis treatment that is
J&J's top-selling product, fell 7.6% to $1.6 billion amid
competition from lower-priced copies called biosimilars.
Last month Pfizer Inc., which makes one of the Remicade
biosimilars, sued J&J, alleging it had protected Remicade from
Pfizer's biosimilars through "exclusionary contracts" that violate
federal antitrust law.
Mr. Duato said during the conference call that Remicade's price
after discounts has fallen amid the competition.
"The key factor to Remicade being successful is physicians and
patients have a high confidence in Remicade based on experience"
using the drug, and they don't want to switch to another therapy,
Mr. Duato said, noting the biosimilars aren't "interchangeable"
with Remicade.
The company also said it is dropping development of two drugs
that it had expressed high hopes for: rheumatoid-arthritis therapy
sirukumab and talacotuzumab for acute myeloid leukemia.
Earlier this month, J&J abandoned its insulin pump business
in the U.S. and Canada, and pledged to help transition its roughly
90,000 diabetes patients to Medtronic PLC's pumps instead.
Medtronic commands about 65% of the insulin pump market, while
analysts estimate J&J held 10%. Groups representing diabetes
patients have said they are concerned that J&J's decision will
limit options and stunt innovation.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and
Cara Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
October 17, 2017 12:38 ET (16:38 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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