J&J Lifts Forecast on Actelion Tie-Up--Update

By Jonathan D. Rockoff and Joshua Jamerson Features Dow Jones Newswires

Johnson & Johnson reported Tuesday that sales were hurt by greater rebating of some key prescription drugs in the U.S. and a slowdown world-wide in purchases of consumer-health products, while raising its forecasts for the year as it nears closing on its largest-ever acquisition.

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J&J's world-wide sales of $17.8 billion were up 1.6% for year but missed Wall Street's estimates. Especially disappointing to analysts was the performance of the company's pharmaceuticals business, whose $8.2 billion in quarterly sales rose just 1.4%, hurt by sales falling for the blood-thinner Xarelto and diabetes drug Invokana.

Analysts said the results are likely to concern investors worried that the company's pharmaceuticals business, its main engine of growth in recent years, was slowing. J&J shares fell 3.1% in morning trading on the report.

The New Brunswick, N.J., company attributed the misses to temporary factors, rather than weakening fundamentals. J&J Chief Financial Officer Dominic Caruso said Xarelto and Invokana sales, for instance, were hurt by the larger rebates offered to health plans in order to secure preferred formulary position versus competitors.

Mr. Caruso offered a rosy picture of the impact of U.S. biosimilar competition on J&J's top-selling product, rheumatoid-arthritis drug Remicade. He said J&J hasn't seen "much of an impact" so far from Pfizer's biosimilar version, which went on sale late last year. "We expects patients will move slowly to a biosimilar," he added.

J&J said its consumer health-products business was affected by a world-wide slowdown in the sector, as higher gas prices, delayed tax refunds and retailers reducing inventory levels caused sales to stay relatively flat at $3.2 billion world-wide in the quarter. Mr. Caruso said he expects retailers to eventually increase inventories.

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J&J raised its overall financial forecast for the year to include the expected impact of the $30 billion acquisition of European rare-disease biotech Actelion Ltd.

J&J expects the deal, its largest ever, to close in the second quarter. To account for the addition, J&J raised its adjusted per-share earnings guidance to a range of $7 to $7.15, up from $6.93 to $7.08. In addition, it now sees annual sales in a range of $75.4 billion to $76.1 billion, up from $74.1 billion to $74.8 billion.

"We're optimistic for the future," Mr. Caruso said.

Over all in the quarter, Johnson & Johnson posted a profit of $4.42 billion, down from $4.46 billion a year earlier. On a per-share basis, profit rose to $1.61 from $1.59, helped by a lower average outstanding share count. Excluding certain items, earnings came in at $1.83 a share; analysts expected $1.77 on that basis.

Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and Joshua Jamerson at joshua.jamerson@wsj.com

(END) Dow Jones Newswires

April 18, 2017 10:28 ET (14:28 GMT)