Updated from 9:12 a.m. EDTJohnson & Johnson ( JNJ) said Tuesday that its second-quarter sales rose 4.7% from a year ago, and the health care giant offered optimistic comments about the rest of 2006. The New Brunswick, N.J., company had quarterly sales of $13.4 billion, up from $12.8 billion a year ago. Domestic sales rose 4.4%, and international sales increased 5.1%. J&J earned $2.8 billion and 95 cents a share for the quarter, including a charge of $87 million associated with the acquisition of Vascular Control Systems. Before the charge, the company would have earned 98 cents a share, a penny ahead of estimates. Analysts surveyed by Thomson Financial were also calling for sales of $13.3 billion. Last year's profits totaled $2.6 billion, or 86 cents a share. The second quarter of 2005 had charges of $353 million for the acquisitions of Peninsula Pharmaceuticals, Closure Medical and TransForm Pharmaceuticals and a gain of $225 million for a tax adjustment. "Our second-quarter results demonstrated improving performance which is anticipated to continue throughout the remainder of the year," said William Weldon, J&J's chairman and CEO. "We have made a number of business-building investments and have received several significant regulatory product approvals. These investments and approvals will help us both sustain important leadership positions, as well as enter new high-growth markets characterized by unmet medical need." J&J's shares were recently falling 73 cents, or 1.2%, to $60.18. Sales of medical devices and diagnostics grew 6.2% to $5.2 billion for the second quarter. Pharmaceutical sales advanced 3.2% to $5.8 billion, driven by strong growth from the antipsychotic Risperdal, the inflammatory-disease drug Remicade, the epilepsy and migraine treatment Topamax and the attention-deficit hyperactivity disorder drug Concerta. Detracting from the results were the effects of patent losses on some of J&J's products, including its Duragesic pain-relieving patch.
The company seemed optimistic about its drug pipeline, however, saying it intends to pursue 10 to 14 regulatory filings by the end of 2007, including a new indication for its extended-release version of Paliperidone for bipolar disorder. "We think Paliperidone ER will hit the sweet spot" in the market, said Joseph Scodari, worldwide chairman of J&J's pharmaceuticals group, during the company's earnings conference call. J&J is also developing drugs to treat HIV, hepatitis C, cancer, diabetes and obesity. Additionally, it has entered a number of licensing agreements with other companies, including MGI Pharma ( MOGN), Vertex Pharmaceuticals ( VRTX) and a privately held firm called Metabolex. During the second quarter, J&J's consumer products business brought in $2.4 billion in revenue, up 5.3% from last year. By next year, after a $16.6 billion deal for Pfizer's ( PFE) consumer unit closes, the segment should look considerably different. For starters, J&J's over-the-counter division will double in size as a result of the acquisition. And while J&J's current consumer-products division focuses on skin care and pain relief, the Pfizer segment will add upper-respiratory treatments, the stop-smoking gum Nicorette and the mouthwash Listerine. J&J expects to close the deal by the end of the year. The company reaffirmed its guidance of 6% earnings growth for the year, which amounts to between $3.65 and $3.72 a share. However, J&J executives said they "would not be supportive of estimates beyond $3.70 at this point." Analysts currently expect J&J to earn $3.68 a share for the year.