J&J 4Q profit jumps on higher sales, lower charges

Published on NewsOK Modified: January 22, 2013 at 5:33 pm •  Published: January 22, 2013

"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.

Brozak said the company's growth assumptions are too optimistic, given that government health programs, particularly in debt-laden European countries, are trying to trim their spending.

"They're talking about a pie ... that's only growing in terms of demand, but who's going to pay for that demand?" he said.

For all of 2012, J&J reported net income of $10.85 billion, or $3.86 per share, on revenue of $67.22 billion. The company expects 2013 revenue of about $71 billion.

During a lengthy presentation on the medical device business — the world's largest — managers of its three divisions said they intend to increase market share, partly by expanding sales into more countries.

Other sales-boosting strategies they cited include developing innovative products, such as a new artificial knee with improved range of motion that makes climbing stairs easier. Another is giving customers "both clinical and economic value," as with a program J&J developed to speed up each step in treating patients with new hip fractures — so they're sent home from the hospital quicker, saving insurance plans lots of money.

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Linda A. Johnson can be followed at http://twitter.com/LindaJ_onPharma.