By Michael Erman
Oct 13 (Reuters) – Johnson & Johnson reported a slightly higher-than-expected profit on Tuesday, driven by strong sales of immune disease treatment Tremfya, but geopolitical issues including the Middle East conflict were a drag on its medical devices business.
Shares of the company fell more than 2% before the bell.
The company posted third-quarter revenue of $25.4 billion, above analysts’ average estimate of $25.28 billion, according to LSEG data. Adjusted earnings of $2.59 per share also topped Wall Street expectations of $2.54.
Pharmaceutical sales jumped 7.7% in the quarter to $16.76 billion. Medical technology division sales rose only 2.5% to $8.6 billion overall. Outside the US, sales in the division were basically flat.
J&J Chief Financial Officer Joe Wolk, in an interview, said the Mideast conflict, austerity measures in Europe and pricing in China continued to weigh on results internationally, “but maybe in a little bit more pronounced way.”
He said the Mideast conflict, which has led to soaring fuel costs at home and abroad, has yet to impact the company’s costs, but has hurt sales in the region.
“These are countries that still value and actually want premium healthcare systems, think Kuwait, UAE, Saudi Arabia. They pride themselves on having solid healthcare, very good healthcare,” Wolk said. “But their budgets now are being resourced and allocated towards defense.”
Sales at its Abiomed heart pump business also remained slow after a UK study earlier this year raised questions about the use of Impella pumps during certain high-risk coronary procedures.
The company had late last year said it intended to separate its orthopedics unit. J&J is leaning toward spinning out its hips-and-knees business, Wolk told the Wall Street Journal.
Tremfya sales rose 68% to $2.4 billion, exceeding analyst estimates of about $2.19 billion, while sales of Stelara, which is facing generic competition, fell 54% to $716 million, still well above Wall Street expectations of $591 million. Tremfya has increasingly replaced lost Stelara revenue following recent approvals in inflammatory bowel diseases.
Sales of blood cancer treatment Darzalex rose about 16% to $4.24 billion, short of analyst expectations of $4.4 billion.
The company raised its full-year forecast for reported sales to about $101.2 billion at the midpoint, from $101.1 billion previously. It increased its adjusted earnings forecast range with a new midpoint of $11.10 per share, up from $11.04.
J&J shares closed at $263.73 on Monday. They have risen 27% this year, outperforming both the broader market and most healthcare peers.
(Reporting by Michael Erman in New York; Editing by Bill Berkrot and Leroy Leo)
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