J&J raises fore­cast de­spite dip in 2Q

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - LINDA A. JOHN­SON

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.

“Medicines rep­re­sent

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.

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