Health care conglomerate Johnson & Johnson reported that its Q4 2008 revenues declined 4.9% to $15.2 billion, and braced investors to expect that 2009 will bring the first revenue drop for the company since 1933.
“Consumers and patients are becoming more frugal,” William Weldon told analysts last week. J&J’s Chief Executive added “there is downward [economic] pressure in lots of areas of health care.”
Until things went so wrong for everyone during Q4, J&J’s diversified product portfolio had served it rather nicely compared with competing organizations that concentrated on pharmaceuticals such as Merck and Pfizer.
In Q3, the company told investors the weakening economy was impacting only women’s health products and sports-medicine product lines, but this time around it expanded the list to include vision care products, diabetes monitors and other products that are often paid for out of pocket.
J&J’s pharmaceuticals unit fared poorly in Q4. There, revenues dropped 11% to $5.7 billion. J&J’s best-seller, the atypical antipsychotic Risperdal, lost patent protection in 2008 precipitating a 67% drop in Q4 revenues to $285 million.
Remicade, the company’s anti-inflammatory drug had sales of $886 million, off 2.4% from the previous year due to competition from Amgen’s Enbrel and Abbott’s Humira.
J&J did manage to post a 14% rise in Q4 profit, as expense reductions and one-time gains offset the revenue shortfall.
The weak stock market might tempt J&J to explore acquisitions in 2009, according to Weldon. “This economic environment creates opportunities we may never see again, so we need to be in a position to go after them,” he told the Wall Street Journal.
Mr. Weldon suggested that health IT and wellness companies were “fertile areas” for J&J.