Johnson & Johnson 3rd-Qtr Profit Rises 12% on Anemia, Schizophrenia Drugs
Bloomberg News
October 13, 1998, 2:34 p.m. ET
J&J 3rd-Qtr Earnings Rise 12% on Higher Drug Sales (Update2)
(Updates share price, adds analyst comments in 4th and last
paragraphs.)
New Brunswick, New Jersey, Oct. 13 (Bloomberg) -- Johnson &
Johnson, one of the world's largest makers of medical products,
said third-quarter profit rose 12 percent on increased sales of
its drugs such as Procrit for anemia and Risperdal for
schizophrenia.
Net income for the world's fifth-largest drugmaker climbed
to $961 million, or 70 cents a share, from $855 million, or 63
cents, a year earlier. Revenue rose 2.5 percent to $5.724 billion
from $5.586 billion.
Pharmaceutical sales drove profit for the maker of Tylenol
and Band-Aids, while sales in the medical-devices unit fell
slightly and consumer-products sales were little changed.
Analysts said the rise in drug sales and efforts to keep down
costs, such as holding back on hiring new employees, helped third-
quarter profit meet estimates.
''As pharmaceutical grows, the margins will grow,'' said
Michael Weinstein, an analyst with J.P. Morgan who has a ''market
perform'' rating on J&J stock.
J&J shares rose 1 3/8 to 77 13/16 in midafternoon trading.
Drugs are among the most profitable of Johnson & Johnson's
thousands of products, which range from artificial knees to baby
shampoo to antibiotics.
In the third quarter, drug sales rose 9.4 percent to $2.1
billion. In addition to Risperdal and Procrit, Johnson & Johnson
said sales increased for Duragesic, a patch to treat chronic
pain.
Dollar's Effect
The New Brunswick, New Jersey-based company said about 46
percent of its third-quarter sales came from outside the U.S.
Sales would have been 2.3 percent higher if the dollar had been
weaker, Johnson & Johnson said.
''Despite economic turmoil in many parts of the world, our
continued efforts to enhance productivity and take unnecessary
costs out of the business have enabled us to deliver consistently
strong earnings growth to our shareholders,'' Ralph Larsen,
Johnson & Johnson's chairman and chief executive, said in a
statement.
Larsen has described 1998 as one of the most difficult years
Johnson & Johnson has faced recently.
In addition to the effect of the U.S. currency's strength,
the company has been hurt by the loss of a near-monopoly on the
U.S. market for a profitable medical device, the coronary stent,
which is used to prop open once-clogged arteries. New products
from Guidant Corp., Arterial Vascular Engineering Inc. and Boston
Scientific Corp. have taken an estimated 80 percent of the stent
market from J&J in the past year.
Sales in J&J's professional segment, which includes medical
devices and hospital supplies, fell 2.2 percent to $2.04 billion.
Even with the decline in U.S. stent sales, Johnson & Johnson
is still a reliable performer, analysts said.
''There were no surprises,'' said Sheryl Zimmer, an analyst
at Deutsche Bank Securities with an ''accumulate'' rating on
Johnson & Johnson. ''It was a good solid quarter, as expected.''
--Kerry Dooley (609) 279-4016 and Marion Gammill (609) 279-4097 |
