por Lynn Shapiro
, Writer | April 15, 2009
Despite a difficult first quarter, Johnson & Johnson's shares rallied 2 percent to $51.90 in early trading Tuesday, as earnings beat analysts' estimates of $1.22 a share, reaching $1.26.
First quarter net earnings dropped 2.5 percent, to $3.5 billion, down from $3.6 billion in the year-earlier quarter due to generic competition and a drop in consumer product sales.
Revenue dropped 7.2 percent to $15.02 billion, with 6 percentage points of the drop due to the stronger dollar. U.S. sales slipped 5 percent, while international sales fell 9.6 percent. For the full year, J&J reiterated its earnings projection of $4.45 to $4.55 a share, excluding one-time items.
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Medical device revenues of $5.5 billion skidded 2.9 percent, as the company's mainstay product, coronary stent Cypher, has started doing battle with Abbott's popular, new stent Xience, marketed by Boston Scientific under the name Promus. Medtronic also has a competing drug-eluding stent. Sales of surgical-care and joint-reconstruction products increased, but sales of drug-coated stents declined by 37 percent to $252 million from $400 million in the first quarter of 2008.
For the full year, J&J maintained its earnings projection of $4.45 to $4.55 a share, excluding one-time items.
J&J Chief Executive William Weldon acknowledged "challenging economic and near-term business pressures" but said in a statement that the company is well-positioned for long-term growth.
J&J's biggest unit, pharmaceuticals, had quarterly sales of $5.8 billion, down 10 percent from a year earlier. "Our results continue to be impacted by generic competition for some of our products," Louise Mehrotra, vice president of investor relations, said on a conference call Tuesday morning.
Sales in J&J's consumer segment fell 8.7 percent to $3.7 billion. In past quarters, sales were buoyed by allergy medicine Zyrtec, which began over-the-counter sales in early 2008. Remicade, an arthritis treatment, was J&J's best performer, with a 3 percent jump in sales.
In January, J&J Chief Executive William Weldon said the recession was hurting all three of the company's businesses: drugs, medical devices and consumer goods. Like other pharmaceutical companies, J&J is cutting costs as it loses profits to generic drugs, he said.