J&J drug sales hold their own, thanks to foreign growth

For the second quarter in a row, Johnson & Johnson posted a downward tick in revenues, hobbled by currency losses. Asset writedowns, legal-settlement set-asides, and acquisition costs dug into earnings. The company ($JNJ) cut its forecast for the year.

Meanwhile, domestic drugs sales dropped by 4.5%, thanks to a shortage of the cancer treatment Doxil and generic competition for the antibiotic Levaquin and the ADHD treatment Concerta. The troubled consumer unit saw its tiny sales increase swallowed by currency effects. And despite added sales from the newly acquired Synthes unit, J&J's devices business saw overall sales drop slightly.

But there are glimmers of hope among the gloomy numbers. Pharma sales actually eked out an increase, in spite of the currency impact. Worldwide drug sales rose by 0.9%, aided by international growth. In fact, without the Forex hit, overseas sales grew 15.5%. The anti-inflammatory blockbuster Remicade helped goose international sales upward, thanks to an amended sales deal with Merck ($MRK). The HIV drug Prezista performed well, too. And the new prostate cancer treatment Zytiga brought in $232 million, bringing its total for the year so far to $432 million.

In its earnings release, new CEO Alex Gorsky said J&J was building a "strong foundation for sustainable growth." Apparently, Barclays Capital analyst Tony Butler agrees. "I don't care about currency," Butler told Bloomberg. "I'm looking at what they do as a business." And as far as that goes, Butler says, "J&J is on the mend."

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