Johnson & Johnson's first-quarter profit declined 2.5% as the stronger U.S. dollar, a consumer-products slowdown and generic competition for prescription drugs weighed on sales.
The weak economy continues to hurt the health-care company's results, with sales coming in lower than Wall Street expectations for the second quarter in a row. J&J's consumer unit, which had strong sales growth for much of last year, is now seeing sluggish sales.
The New Brunswick, N.J., maker of Band-Aid bandages and Tylenol pain reliever has offset some of the pressure by cutting costs, including last week's disclosure that it would eliminate about 900 positions, or 6% of its U.S. pharmaceuticals work force.
J&J said first-quarter net income was $3.5 billion, or $1.26 a share, compared with $3.6 billion, or $1.26 a share, a year earlier. The latest results exceeded the mean estimate of analysts surveyed by Thomson Reuters for profit of $1.22 a share.
Sales dropped 7.2% to $15.02 billion from $16.19 billion a year earlier, falling, short of the Thomson estimate of $15.4 billion. Unfavorable currency-exchange rates accounted for six percentage points of the decline.
For the full year, J&J maintained its earnings projection of $4.45 to $4.55 a share, excluding one-time items.
J&J Chief Executive William Weldon acknowledged "challenging economic and near term business pressures" but said in a statement that the company is well-positioned for long-term growth.
Chief Financial Officer Dominic Caruso said the economic slowdown hurt sales of some consumer products because of an overall market slowdown and increased competition from private-label products. Also, tighter consumer spending hurt sales in J&J's device unit, including for contact lenses and diabetes test strips.
J&J's biggest unit, pharmaceuticals, had quarterly sales of $5.8 billion, down 10% from a year earlier. While sales rose for Concerta for attention deficit hyperactivity disorder and the Remicade anti-inflammatory drug, sales of the antipsychotic medication Risperdal declined 66% because of last year's U.S. patent expiration.
Exchange rates could hurt 2009 earnings more than J&J expected at the beginning of the year, Mr. Caruso said.
The company's medical-device and diagnostics unit had sales of $5.5 billion, down 2.9% from a year earlier. Sales of surgical-care and joint-reconstruction products increased, but sales of drug-coated stents fell.[JNJ lost a substantial amount of DES market share to ABT’s Xience, but this is old news; rising DES penetration in the US (#msg-37023588) offset the market-share loss to some degree.]
Consumer sales dropped 8.7% to $3.7 billion.
J&J hasn't followed some other large drug makers, such as Pfizer Inc. and Merck & Co., in making a large acquisition. Mr. Caruso said J&J would continue to explore getting into health-care information technology, which would represent a new line of business for J&J.‹
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