Market reaction to Johnson & Johnson's earnings announcement reflects an overall worry about cost-cutting versus sales growth. Yes, J&J beat expectations, posting earnings of $1.20 per share, about 7 cents higher than analysts had estimated. But third-quarters sales came in at $15.1 billion, which fell short of those same estimates. At press time, the stock had fallen 2.62 percent, or $1.64, to $60.89. "I think people would have been happier if the revenue was stronger and the beat on the bottom line was less," Noble Financial Group analyst Jan Wald told Reuters.
It wasn't just analyst expectations that J&J's sales failed to beat, either. That $15.1 billion represented a 5.3 percent decline from the third quarter of last year. And in further evidence of the relative weakness of U.S. drug markets versus the rest of the world, domestic sales dropped by 8.1 percent, while international sales would have grown 2.4 percent without the drag of currency effects.
Looking at J&J's pharma division alone, the drop is even more marked. Worldwide drug sales amounted to $5.3 billion, down 14.1 percent year-over-year, including a negative 2.2 percentage-point currency hit. Domestic sales dropped a whopping 19.2 percent, as blockbuster drugs Topamax (down 88 percent in the U.S.) and Risperdal (down 71 percent) fell off the patent cliff.
Bright spots? Remicade, which grew by 5.7 percent in the U.S. and 5.9 percent worldwide, to $1.036 billion for the quarter. Risperdal Consta, the long-acting form of the now-generic antipsychotic, grew by 9.3 percent in the U.S. and 4.4 percent globally, to $353 million. And the company did get the FDA OK for its "new Remicade," the anti-inflammatory Stelara. So there's hope for next quarter.