Anemia Drug Boosts J&J; Results
A drug that treats anemia helped energize Johnson & Johnson’s second-quarter earnings, which climbed 14% from a year earlier and topped forecasts, the big health-products concern said Tuesday.
Led by Procrit, which treats anemia in dialysis and cancer patients, J&J; said its drug sales surged 14% in the quarter ended June 30, to $3.2 billion. That included a 24% increase in domestic sales and a 1.2% decline in international sales, which were hurt by the stronger dollar relative to key foreign currencies.
J&J; said the higher sales, combined with cost controls, produced net income of $1.33 billion, or 94 cents per diluted share, up from $1.16 billion, or 82 cents, a year ago.
The results topped analysts’ average estimate of 92 cents, according to First Call/Thomson Financial.
J&J;’s total sales rose 8% to $7.5 billion. In addition to pharmaceuticals, J&J; is a leading maker of medical instruments and familiar consumer health-care products such as Band-Aids and Neutrogena items.
“They were a tad light on sales [in the quarter], but they more than made it up on expenses, and they beat the numbers,” said Robert Flamm, analyst at Evergreen Funds. “It was a good quarter.”
Still, the stock--a component of the Dow industrials--got only a slight lift, adding 66 cents to $95.
The company’s shares have managed only a 1.9% gain this year, compared with the 12.5% advance of the Standard & Poor’s index of diversified health-care stocks and a 22% rise in S&P;’s drug-stock index.
That suggests some investors still have concerns about J&J;’s outlook. In March the company suffered a blow after it said it would stop marketing the heartburn medication Propulsid amid reports of deaths linked to the drug.
On the plus side, J&J; has enjoyed big success in the area of pharmaceuticals not only with Procrit, but also with its Risperdal drug for manic-depressive illness and Duragesic, a transdermal patch for chronic pain.
J&J; also has made headway in moving new drugs through regulatory channels in the U.S. and abroad. For instance, an advisory panel recently recommended that the U.S. Food and Drug Administration approve the company’s Checkmate product that uses gamma radiation to treat complications related to coronary artery disease.
Another FDA panel and European authorities recently recommended the use of Remicade, a J&J; drug for treatment of rheumatoid arthritis and Crohn’s disease, with other treatments for patients that aren’t responding to the other treatments alone.
J&J; also has an experimental drug for Alzheimer’s disease, called Reminyl, that has shown promise.
But J&J; keeps meeting skepticism among investors who believe its pipeline of new drugs is spotty, even though some analysts say the pipeline is better than in past years.
Some investors also fret about the long-term outlook for Procrit--which is J&J;’s brand name for what’s commonly called EPO--because of the fallout from a dispute with Amgen Inc., the biotech giant from which J&J; licenses the drug. “EPO is perhaps the most lucrative product in J&J;’s portfolio,” analyst Glenn Reicin of Morgan Stanley Dean Witter said recently.
But an arbitration panel ruled in late-1998 that Amgen’s licensing pact doesn’t cover a new version of EPO that Amgen is developing.
The ruling means that the new Amgen drug could eventually eat into sales of Procrit, until J&J; can develop its own new version.
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J&J;’s Gyrations
Shares of Johnson & Johnson (ticker: JNJ) have recovered from the dive they took early this year with the general sell-off in “old-economy” shares, but they remain below their record high of $106.88. Monthly closes and latest on NYSE:
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Tuesday: $95.00, up 66 cents
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Source: Bloomberg News
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Bloomberg News contributed to this report.
