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Johnson & Johnson (JNJ-N) reported a higher- than-expected quarterly profit, but revenue fell slightly on anemic sales of medical devices and consumer medicines -- businesses that have been hit by costly recalls in the past two years.
Earnings rose to $3.91 billion US, or $1.41 per share, in the first quarter from $ 3.48 billion, or $1.25 per share, a year earlier.
Excluding special items, the diversified healthcare company earned $1.37 per share, topping the analysts' average forecast of $1.35, according to Thomson Reuters I/B/E/S.
Revenue slipped 0.2 percent to $16.14 billion, while Wall Street had expected $ 16.26 billion. J&J said sales would have risen 1 percent if not for the stronger dollar, which lowers the value of sales in overseas markets.
The quarter was "a little light on revenue, especially in the consumer and device businesses," Gabelli & Co analyst Jeff Jonas said. He added, though, that the company had impressively controlled sales, general and administrative costs as well as spending on research and development.
"That's something they've been promising for a long time, and we haven't really seen until now," Jonass aid.
Jonas said the company's new Zytiga prostate cancer treatment was a standout performer in the quarter. "That's definitely going to be a billion-dollar-plus drug," he said, adding that HIV drugs also did well.
But the overall sales decline, which also happened in recent quarters, illustrates J&J's struggle to revive growth in all three of its main businesses and tough challenges ahead for incoming chief executive officer Alex Gorsky.
Later this month, Gorsky will take the helm of J&J, which for most of the past century has posted dependable double-digit annual profit growth.
Shares of the company have barely budged in the past two years, amid moderate gains for the drug sector and 15 percent growth for the Standard & Poor's 5 00 stock index.
Global sales of prescription drugs rose 1.2 percent to $6.1 billion in the quarter, held back by generic competition for J&J's Levaquin antibiotic and Concerta treatment for attention deficit disorder.
Sales of consumer products slipped 2.4 percent to $3.6 billion, hurt by quality-control issues that have triggered recalls of dozens of over-the-counter prescription medicines, including painkiller Tylenol. The company is revamping a big Pennsylvania factory that made many of the products, but production will not resume until next year.
Medical device and diagnostic sales slipped 0.3 percent because of J &J's decision to end sales of drug-coated heart stents, and widely publicized recalls of its faulty DePuy ASR hip replacement products.
J&J took charges of more than $3 billion in January, largely for recalls of the DePuy devices, and also for litigation involving allegedly improper marketing of its Risperdal schizophrenia drug.
Citing positive current foreign exchange rates, J&J slightly lifted its full-year profit forecast, to between $5.07 and $5.17 per share, from its earlier view of $5.05 to $5.15.