Johnson & Johnson beat Wall Street's quarterly profit estimates on sharply lower taxes, strong sales of prescription drugs and a revival of over-the-counter medicines that had been recalled over quality control problems.
Newer prescription medicines, including prostate cancer drug Zytiga, psoriasis drug Stelara, and Incivo for hepatitis C made big contributions.
J&J shares rose 1.7 percent to $83.13 in mid-day trading.
"Overall, the company's first-quarter performance was clearly a positive, with pharmaceuticals firing on all cylinders and more than making up for disappointment with medical devices," said Edward Jones analyst Judson Clark. He was also optimistic that over-the-counter medicines would continue to regain lost ground this year.
U.S. sales of over-the-counter (OTC) medicines, including painkillers Tylenol and Motrin, jumped 14 percent, allowing the broader consumer products business to eke out a 2.4 percent sales gain in the quarter.
"It's a strong start to the year that increases the chances that J&J will meet its 2013 profit forecast," Morningstar analyst Damien Conover said.
Sales at the OTC division had plunged over the last three years after J&J recalled products made at plants in Pennsylvania and Puerto Rico that were shown to have foreign particles or incorrect concentrations of active ingredients.
Although costly plant upgrades were still underway, Conover noted other factories have geared up production of Tylenol, Motrin and other OTC products in the meantime, allowing J&J to restock drugstore shelves.
Chief Financial Officer Dominic Caruso said on a conference call with analysts that a "strong flu season" bolstered sales of OTC products. He predicted 75 percent of recalled OTC brands would be back on the U.S. market by the end of 2013.
MEDICAL DEVICES DISAPPOINT
J&J earned $3.5 billion, or $1.22 per share, compared with $3.91 billion, or $1.41 per share, in the year-earlier quarter.
Excluding special items, including litigation expenses of $529 million, J&J earned $1.44 per share. Analysts, on average, expected $1.40 per share, according to Thomson Reuters I/B/E/S.
Global company sales rose 8.5 percent to $17.50 billion, slightly higher than the $17.42 billion expected by Wall Street. They would have risen by 9.8 percent, if not for the stronger dollar, which hurts the value of sales in overseas markets.
Prescription drugs sales rose 10.4 percent to $6.77 billion. Stelara sales leapt 57 percent to $346 million, while Incivo's rose 23 percent to $162 million. Sales of Zytiga jumped 72 percent to $344 million.
Global sales of medical devices rose 10.2 percent to $7.06 billion, helped by the addition of new trauma-treating products from its recent acquisition of Synthes Inc.
Rick Wise, an analyst at Stifel Nicolaus, had predicted a 16 percent increase in the sales, and attributed the shortfall to fewer general and orthopedic surgeries being performed.
"J&J said procedure volumes were soft, and they're not expecting much of a recovery this year," said Wise, who noted that many patients were delaying surgeries because of higher insurance deductibles.
He said the trend cited by J&J appeared to be hitting shares of rival device makers.
Stryker Corp fell 0.5 percent to $64.98, while Zimmer Holdings Inc slipped 0.3 percent to $73.48.
J&J stuck to its earlier full-year 2013 profit forecast of $5.35 to $5.45 per share. It earned $5.10 per share last year.
(Reporting by Ransdell Pierson; Editing by Jeffrey Benkoe)