Johnson & Johnson, the world's biggest maker of health-care products, forecast lower earnings in 2015 as competition cuts into revenue for some of its best-selling drugs.
Adjusted profit this year will reach $6.12 to $6.27 a share, the company said today. That figure excludes an estimated charge of 32 cents a share for intangible amortization costs -- an expense Johnson & Johnson hasn’t previously left out of its results. Including that figure, 2015 earnings would be $5.80 to $5.95 a share, compared with 2014 adjusted profit of $5.97 a share.
The company is seeking to replenish its product lineup as drugs such as hepatitis C treatment Olysio and blood thinner Xarelto face new competition. Jami Rubin, an analyst at Goldman Sachs Group Inc., lowered her recommendation to sell from neutral on 15 January because she sees the company bringing fewer new drugs to market this year than in previous years, she said in a note.
The company’s accounting decision on intangible amortization means the company is no longer deducting the changing cost of hard-to-value assets like trademarks and patents in the company’s adjusted earnings.
Fourth-quarter earnings of $1.27 a share, excluding one-time items, beat the $1.26 average of analysts’ estimates compiled by Bloomberg. Revenue decreased 0.6 percent to $18.3 billion, compared with the $18.5 billion average projection.
Prescription drug revenue rose 9.6 percent to $8 billion in the quarter, weighed down by a 2.7-per-cent decline outside the US
Johnson & Johnson fell less than 1 per cent to $103.25 in early trading. The shares had risen 9.4 per cent in the past year through last week.
The medical device and diagnostic unit saw sales fall 9 per cent to $6.65 billion in the fourth quarter. Sales of consumer goods and over-the-counter medicine, including Tylenol and Motrin, dropped 3.9 per cent to $3.61 billion.
Net income fell to $2.52 billion, or 89 cents a share, from $3.52 billion, or $1.23, a year earlier. Profit was reduced in the quarter by litigation expenses and costs from the acquisition of Synthes Inc., among other items.
Bloomberg News edited by ESM
