So Far, So Good for J & J

October 16th, 2008 | Sources: NY Times, Wall Street Journal

What economic downturn? Health care conglomerate Johnson & Johnson posted higher profits in the third quarter thanks to growth in international sales and consumer products.

J & J is the first pharmaceutical company to report quarterly results. Its Q3 profit was $3.31 billion, or $1.17 a share. Excluding special charges, that’s up 7.6% year over year.

Revenues from J & J’s consumer products rose 13% to $4.1 billion, lead by tried-and-true favorites like Listerine mouthwash, Neutrogena skin cream and Aveeno skin care products. Consumer product sales were particularly strong overseas, where they benefited from the weak dollar.

Listerine was part of J & J’s purchase of Pfizer’s consumer-products business two years ago, as was the OTC allergy medicine Zyrtec. The latter helped drive a 14% rise to $1.4 billion in the company’s OTC and nutritionals unit.

“The timing of taking on Pfizer’s consumer business could not have been better,” analyst Rick Wise told the Wall Street Journal.

Meanwhile, J & J’s CFO Dominic Caruso indicated the economic meltdown had not adversely affected the company’s access to credit. “That’s important,” analyst Ronny Gal told the New York Times. “The markets are not frozen for health care companies.”

J & J’s core pharmaceutical business struggled to post a small revenue gain to $6.1 billion, again due to increased international sales. Patent protection for J & J’s blockbuster antipsychotic drug Risperdal expired during the quarter, and sales of that drug plummeted 62% to $320 million. Sales of Procrit, J & J’s anemia drug dropped $619 million, or 9.2%, on safety concerns.


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