UPDATED: J&J's pharma biz takes Q2 hit on hep C slippage, but new meds keep delivering

Johnson & Johnson's ($JNJ) second-quarter results might look bad on the surface--the strong dollar dragged down overall sales by 7.9%--but even without that hit, the top line grew by just 1.7%. Its fast-growing pharma business, which has been making up for shortfalls elsewhere in the company for some time, faltered because of collapsing Olysio sales.

Johnson & Johnson CEO Alex Gorsky

But J&J pointed past all that, using terms like "underlying growth." And analysts seemed to agree: The numbers measured up to expectations, after all--and for some, beat them. That 1.7% growth, "in the wake of competitive factors and pricing pressure is impressive and speaks to the diversity of its business," Moody's SVP Michael Levesque said after the earnings release. And Leerink Partners' Danielle Antalffy said J&J actually beat her firm's projection of a 4% decline.

Blame the hepatitis C drug Olysio and its new competitors for the pharma weakness: The drug's stateside sales plummeted to $50 million from $725 million, putting a drag on the entire pharma business. That division, whose growth has been making up for shortfalls in devices and consumer health for some time, saw U.S. sales slip by 1.5%.

So, like several of its Big Pharma rivals, J&J had to resort to backing out declining sales of one big product to highlight its healthier meds. Without Olysio's suffering and some product sell-offs, the entire company would have posted operational growth of 5%, and the pharma business would have grown by 9.7% worldwide.

Meanwhile, in a cautionary tale for companies facing biosimilars in the near future, J&J's Remicade sales suffered from overseas competition, with international sales down 20% (6.6% excluding currency). U.S. exports were off by almost one-third, because it took a hit from inventory shifts. Overall, the anti-inflammatory med slipped to $1.67 billion from $1.8 billion for Q2 2014. The company called the biosim share-grab "as expected."

The bright spots in the drug business included the rheumatoid arthritis med Simponi's worldwide growth to $308 million, and the psoriasis therapy Stelara's $570 million. The anticoagulant Xarelto took a 30% leap to $472 million. Plus, the long-acting antipsychotic Invega Sustenna jumped by 25% in the U.S., helping to hike worldwide sales to $436 million--and J&J is looking to a brand-new quarterly Invega injection, Invega Trinza, to add to that franchise for the rest of the year. The prostate cancer med Zytiga delivered a respectable 8.5% growth in the U.S., despite intensifying competition from Astellas and Medivation's ($MDVN) Xtandi.

The most impressive growth stats, however, came from the diabetes med Invokana and the closely watched blood cancer treatment Imbruvica. Invokana's sales more than doubled to $318 million, even as new SGLT2 meds hit the market. Imbruvica, which J&J shares with AbbVie ($ABBV), delivered $154 million to J&J, more than triple last year's total, with $89 million of that in the U.S. The drug's European launch pitched in, too, helping raise international sales to $65 million. That's all good news for AbbVie, which recently paid $21 billion for Pharmacyclics and is betting on $12 billion in peak sales for Imbruvica.

All those promising numbers offset Levesque's concerns about the current report. "J&J will face continuing headwinds including Remicade biosimilars outside the US and hepatitis-C competition, but strong diversity and rising sales of newer products will result in continuation of steady organic growth," he noted.

Those new products, coupled with some forthcoming launches, will ratchet up growth from here, Antalffy figures. And J&J CFO Dominic Caruso pointed out that 2016 results will look quite different, given that it won't have to figure with currency issues and Olysio declines in year-over-year comparisons.

- read the J&J release

Special Reports: Top 15 pharma companies by 2014 revenue - J&J | Top 20 highest-paid biopharma CEOs - Alex Gorsky, J&J

Editor's note: This story was updated with comments from analysts.