In its first-quarter financial results presentation Tuesday, Johnson & Johnson said it lifted its annual sales outlook for 2016 to reflect current foreign exchange rates, and now expects revenue in the range of $71.2 billion to $71.9 billion, up from prior guidance of $70.8 billion to $71.5 billion. The company also projects earnings this year to be between $6.53 per share and $6.68 per share, 10 cents higher than previously forecast.
Chief financial officer Dominic Caruso noted that the negative currency effect in the quarter was less than half of the 7-percent impact felt by Johnson & Johnson in the first three months of 2015. Meanwhile, CEO Alex Gorsky said the company is "off to a strong start to the year, supported by our first-quarter underlying sales growth," adding that "our pharmaceuticals business continues to deliver impressive levels of growth." Sales of prescription drugs during the quarter climbed 5.9 percent year-over-year to $8.2 billion, while overall revenue increased less than 1 percent to $17.5 billion, broadly in line with analyst estimates.
US pharmaceutical sales in the quarter rose 12.9 percent to $4.9 billion, while revenue generated in international markets declined 3.4 percent to $3.2 billion due to negative currency effects. In addition, consumer brand sales were 5.8 percent lower than the year-ago period at $3.2 billion, also as a result ofunfavourable exchange rates.
Regarding individual products, Remicade revenue climbed 11.2 percent during the quarter to $1.8billion. Earlier this month, the FDA approved Celltrion's biosimilar version of the drug under the name Inflectra. RBC analysts noted that the product, which will be marketed by Pfizer in the US, could be launched as early as October.
In other quarterly results, Xarelto recorded sales of $567 million, reflecting an increase of 28.6 percent. Stelara revenue surged 33.9 percent to $735 million, while combined sales for Simponi and Simponi Aria totalled $390 million, up from $300 million in the corresponding year-ago period. Meanwhile, sales of Imbruvica, whose indication was recently expanded in the US to include first-line treatment of chronic lymphocytic leukaemia, doubled to $132 million. Johnson & Johnson reported that net income for the three-month period was flat at $4.3 billion.
According to Caruso, the company "carried last year's momentum into 2016." He explained that "underlying [sales] growth was a very strong 7 percent," after excluding the impact of acquisitions, divestitures and the 86-percent sales decline for the hepatitis C therapy Olysio, which garnered $32 million during the quarter. Edward Jones analyst Ashtyn Evans remarked "overall it was a pretty solid quarter, with Johnson & Johnson beating earnings estimates and delivering on sales."
Meanwhile, Caruso said Johnson & Johnson would look to deploy its $17 billion in net cash toward acquisitions, but that it was willing to wait for "the right deal at the right time with the right party at the right valuation." However, the executive suggested that current valuations for biopharmaceutical and medical-device companies are inflated.
Earlier this year, Johnson & Johnson unveiled plans to cut jobs in its medical devices business by about 3000 positions, representing 4 percent to 6 percent of the segment's workforce. The company estimated that the restructuring could result in cost savings of $800 million to $1 billion.
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