However, J&J's long-running manufacturing quality problems continue to hurt sales of consumer health products, which were down 3.6 percent in the U.S. and 0.4 percent worldwide at $3.65 billion in the quarter.
The company has issued about 30 recalls of Tylenol and other products since September 2009. Reasons range from nauseating packaging smells to tiny glass and metal shards in liquid medicines.
Costs for upgrades and completely rebuilding one factory, and for lost sales as Tylenol, Motrin, Benadryl and other products remained off store shelves, top $1 billion. Upgrading its factories and getting all the products back in stores has dragged on far longer than the company initially predicted.
"We will return a consistent supply of our key products over the course of 2013," Gorsky said, with about 75 percent of the brands getting back on the market.Two years ago, Gorsky's predecessor, Bill Weldon, said all the products would be back in stores by the end of 2011. "They haven't turned the corner on the fallout from the string of recalls," said analyst Erik Gordon, a professor at the University of Michigan's Ross School of Business. "Without the sales added by the Synthes acquisition, overall sales were anemic and medical device and diagnostic sales took a dive." The $19.7 billion acquisition of surgical trauma equipment and orthopedic implants maker Synthes Inc. last June drove a 14 percent increase in sales of medical devices and diagnostics, J&J's largest segment, to $7.38 billion. Prescription medicine sales rose 7.1 percent, to $6.53 billion, despite continuing revenue losses to generic competition for several drugs. Newer medicines posted double-digit sales jumps, including HIV drug Prezista, Invega Sustenna for schizophrenia and Simponi and Stelara for immune disorders such as psoriasis. Gorsky told the analysts the company is poised to take advantage of expected growth of health care sales in developed countries from $5.5 billion in 2012 to $8 billion in 2022.