With a number of acquisitions and new product approvals, Johnson & Johnson looked beyond a dip in second-quarter profit and raised its outlook for the year.
The health care products giant expects sales and profit growth to accelerate this year, with momentum carrying over into 2018. The company, however, expects continued pressure to hold down prices and a weaker market for consumer health products.
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With the failure this week to win consensus for the Republican health care plan, CEO Alex Gorsky said Congress needs to create a more stable environment for the industry. But several hours later, GOP efforts to repeal much of President Barack Obama's health care law collapsed.
Saying she could not vote to repeal Obamacare, West Virginia Sen. Shelley Moore Capito said that she "did not come to Washington to hurt people."
Wall Street hates uncertainty and on Tuesday, healthcare stocks were among the biggest losers.
Gorsky is in Washington for meetings with U.S. and global leaders.
Drugmakers understand concerns about drug prices and the need to ensure patients can get needed medicines, but that is only part of the solution, Gorsky said.
"Medicines represent only about 15 percent of health care spending" in the U.S., Gorsky said.
Until this year, however, those in the pharmaceutical industry stressed that prescription drugs accounted for only 10 percent of U.S. health care spending. Steady price increases and many new drugs with price tags exceeding $100,000 per year have pushed that percentage higher.
J&J reported higher spending on marketing, production and research Tuesday, which pushed down second-quarter profit 4.3 percent. That spending will pay off, J&J said.
Shares rose 2 percent in midday trading, while broader markets in decline.
J&J's biggest acquisition ever, a $30 billion deal for Switzerland's Actelion, was completed last month, bringing with it a stable of new medicines, including drugs to treat high blood pressure in the lungs and some experimental drugs in late-stage testing.
Last week, the Food and Drug Administration approved Tremfya, an injected drug for psoriasis, expanding the company's key franchise of treatments for immune system disorders.
The first full quarter of sales after its buyout of Abbott Medical Optics pushed sales in J&J's medical devices business up 5.1 percent.
Net income was $3.83 billion, or $1.40 per share, down from $4 billion, or $1.43 per share, a year earlier.
Adjusted net income was $5 billion, or $1.83 per share, 4 cents better than Wall Street analysts expected. Revenue was $18.84 billion, just shy of analyst expectations.
Sales dipped 0.2 percent to $8.64 billion at its prescription drugs business, its largest segment. Sales of medical devices and diagnostics climbed 4.9 percent to $6.73 billion.
J&J said it now expects full-year earnings in the range of $7.12 to $7.22 per share, up from $7 to $7.15. It forecast revenue in the range of $75.8 billion to $76.1 billion, up from $75.4 billion to $76.1 billion.
"We're going to be launching 10 new brands between now and 2021, several of them with over $4 billion (annual sales) potential," Gorsky said.
Follow Linda A. Johnson at https://twitter.com/LindaJ_onPharma