J&J profit beats forecast, but drug sales slump

NEW YORK (Reuters) - Johnson & Johnson on Tuesday reported better-than-expected first-quarter earnings, with strong sales growth of medical devices offsetting revenue declines for its prescription drugs and tepid growth for its array of consumer products.

The diversified healthcare company said it earned $4.53 billion, or $1.62 per share, compared with $3.51 billion, or $1.26 per share, in the year-earlier period.

Excluding special items, such as an after-tax gain of $910 million from litigation matters, the company earned $1.29 per share. Analysts on average had expected $1.27 per share, according to Thomson Reuters I/B/E/S.

Global company revenue rose 4 percent to $15.63 billion, in line with Wall Street forecasts, but would have been essentially unchanged if not for foreign exchange factors.

J&J trimmed its full-year profit forecast to between $4.80 per share and $4.90 per share excluding items, from its earlier view of $4.85 to $4.95.

The company said the adjustment was due to changes in foreign currency rates, which would add 5 cents a share due to a weaker dollar, and initial costs of recently enacted U.S. healthcare reform that would cut 10 cents a share.

Eli Lilly & Co on Monday cut its own 2010 forecast by about 35 cents per share due to projected costs of the revamped healthcare, including more generous price rebates that U.S. drugmakers will have to give patients insured by the Medicaid program for the poor. Lilly's move stirred concerns that other drugmakers would have to chop their profit forecasts due to healthcare-reform costs.

But Glenn Novarro, an analyst with RBC Capital Markets, said J&J's small adjustment suggests confidence it will not be greatly hurt by the costs and wasn't as bad as Lilly's.

J&J's earnings report overall was in line with expectations, although medical device sales surpassed forecasts and its prescription drugs disappointed investors "for the fourth or fifth quarter in a row," Novarro said.

J&J drug sales have been badly hurt by generic competition for its Topamax epilepsy treatment. The product's sales plunged 75 percent in the first quarter, to $148 million.

Novarro said J&J's drug business could rebound within the next few years if J&J wins approvals for important new products, including two potential blockbusters: Xarelto to prevent blood clots and telaprevir for heptatitis C.

Shares of J&J were little changed in premarket trading.

(Reporting by Ransdell Pierson, editing by Gerald E. McCormick, Dave Zimmerman)

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