J&J raises forecast despite dip in 2Q
With a number of acquisitions and new product approvals, Johnson & Johnson looked beyond a dip in second-quarter profit and announced Tuesday that it is raising its outlook for the year.
The health care products giant expects sales and profit growth to accelerate this year, with momentum carrying over into 2018. The company, however, expects a weaker market for consumer health products and for continued pressure to hold down prices.
After Senate Republicans were unable to reach consensus on health care legislation, Chief Executive Officer Alex Gorsky said Congress needs to create a more stable environment for the industry.
Wall Street hates uncertainty, and on Tuesday, health care stocks were among the biggest losers.
Gorsky is in Washington for meetings with U.S. and global leaders.
Drugmakers understand concerns about drug prices and the need to ensure patients can get needed medicines, but that is only part of the solution, Gorsky said.
only about 15 percent of health care spending” in the United States, Gorsky said.
Until this year, however, those in the pharmaceutical industry stressed that prescription drugs accounted for only 10 percent of the country’s health care spending. Steady price increases and many new drugs with price tags exceeding $100,000 per year have pushed that percentage higher.
Johnson & Johnson on Tuesday reported higher spending on marketing, production and research, which pushed down second-quarter profit 4.3 percent. That spending will pay off, the company said.
Johnson & Johnson shares rose $2.31, or 1.8 percent, to close Tuesday at $134.46.
Johnson & Johnson’s biggest acquisition ever, a $30 billion deal for Switzerland’s Actelion, was completed last
month, bringing with it a stable of new medicines, including drugs to treat high blood pressure in the lungs and some experimental drugs in late-stage testing.
Last week, the Food and Drug Administration approved Tremfya, an injected drug for psoriasis, expanding the company’s key franchise of treatments for immune system disorders.
The first full quarter of sales after its buyout of Abbott Medical Optics pushed
sales in Johnson & Johnson’s medical devices business up 5.1 percent.
Net income was $3.83 billion, or $1.40 per share, down from $4 billion, or $1.43 per share, a year earlier.
Adjusted net income was $5 billion, or $1.83 per share, 4 cents better than Wall Street analysts expected. Revenue was $18.84 billion, just shy of analysts’ expectations.
Sales dipped 0.2 percent to $8.64 billion at its prescription drugs business, its largest segment.
Sales of medical devices and diagnostics climbed 4.9 percent to $6.73 billion.
Johnson & Johnson said it now expects full-year earnings in the range of $7.12 to $7.22 per share, up from $7 to $7.15. It forecast revenue in the range of $75.8 billion to $76.1 billion, up from $75.4 billion to $76.1 billion.
“We’re going to be launching 10 new brands between now and 2021, several of them with over $4 billion [annual sales] potential,” Gorsky said.