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J&J profit rises, sales dip

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Health care giant outpaces Wall Street estimates as earnings jump 1 per cent

Health care giant Johnson & Johnson JNJ-N on Tuesday reported a meagre 1-per-cent increase in its third-quarter profit, as generic competition slashed sales of several of its top drugs and the recession hurt consumer product sales.

The maker of Band-Aids, biotech drugs and Acuvue contact lenses said it earned $3.35-billion in the quarter, or $1.20 per share. In last year’s third quarter, it had profit of $3.31-billion, or $1.17 per share.

Analysts polled by Thomson Financial were expecting lower earnings per share, at $1.13, and revenue of $15.19 billion in the latest quarter.

J&J just missed the revenue forecast, reporting total sales of $15.08-billion. That’s down 5 per cent from a year ago.

However, the company raised its earnings forecast for all of 2009 to a range of $4.54 to $4.59 per share. The previous forecast was $4.45 to $4.55 per share. Analysts are expecting $4.52 per share, on average.

Sales in Johnson & Johnson’s biggest division, medical devices and diagnostics, rose 2.3 per cent to $5.84-billion.

Pharmaceutical sales, which had been the top-selling division, suffered a 14.1-per-cent drop in sales, to $5.25-billion from $6.1-billion, as U.S. sales plunged 19 per cent. J&J cited a $680-million decrease in the combined sales of two blockbusters with recent generic competition: epilepsy drug Topamax, which had a 76-per-cent drop in sales, and the short-acting version of antipsychotic drug Risperdal, which was down 40 per cent.

However, several other drugs also saw a double-digit drops in sales due to generic competition or other factors, including attention deficit disorder pill Concerta, painkiller Duragesic, anemia treatment Procrit and Alzheimer’s drug Razadyne. Only a few drugs showed sales growth, including Remicade for rheumatoid arthritis and other immune disorders, up 6 per cent to $1-billion, and the long-acting version of Risperdal.

The consumer products division posted a 2.7-per-cent drop in sales, to $3.99-billion.

“We continue to successfully manage our broad base of businesses and deliver solid earnings despite the impact of patent expirations and the challenges posed by the current economic environment,” chief executive officer William Weldon said in a statement. “We completed multiple acquisitions and strategic collaborations and receive several new product approvals in the quarter that will benefit patients worldwide and drive future growth.”

Among the key deals in the last quarter, J&J jumped into the vaccine business by paying $440-million for a stake in Dutch biotechnology company Crucell NV, which is developing an antibody-based vaccine and a drug that would target all types of influenza. J&J also invested nearly $1.4-billion in Irish biotech company Elan Corp., which it will help to develop two experimental drugs for Alzheimer’s disease and a vaccine to prevent it.

For the first nine months of the year, profit fell 2 per cent to $10.06-billion, or $3.61 per share, from $10.24-billion, or $3.60 per share, in the same period in 2008. Revenue fell nearly 7 per cent to $45.35-billion from $48.57-billion.

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