Johnson & Johnson 3Q profit down 6 pct, sales up (AP)

Johnson & Johnson's third-quarter profit fell 6 percent as continuing product recall costs, rising generic competition and costs tied to an acquisition more than offset higher foreign sales.

The health care giant's U.S. revenue dropped 4 percent because of competition from generic versions of antibiotic Levaquin and several other prescription drugs, a two-year string of product recalls that have hammered its over-the-counter drug business and marketing costs to launch new products.

U.S. sales also were hurt by a severe shortage of J&J's chemotherapy drug Doxil caused by manufacturing problems. Doxil is one of hundreds of drugs, mainly used in hospitals, in such short supply that Congress is investigating.

The maker of baby products, medical devices and biologic drugs said Tuesday that net income was $3.2 billion, or $1.15 per share. That's down from $3.42 billion, or $1.23 per share, a year earlier.

Excluding a charge of 9 cents per share for the pending acquisition of medical device maker Synthes Inc., earnings would have been $3.4 billion, or $1.24 per share.

That topped by 3 cents the expectations of analysts polled by FactSet, but they were expecting revenue of $16.02 billion, just above the $16 billion J&J reported. Total revenue rose nearly 7 percent from a year ago, because of a 16.4 percent jump in foreign sales, but half of that came from favorable currency exchange rates.

Analyst estimates generally exclude one-time items.

The company, based in New Brunswick, N.J., raised the low end of its 2011 profit forecast, to betweem $4.95 and $5 per share, from its earlier forecast of $4.90 to $5 per share. Both sets of figures exclude one-time items.

In morning trading, J&J sales fell 19 cents at $63.60.

"In the third quarter, we produced solid sales growth," Chief Financial Officer Dominic Caruso told analysts on a conference call.

However, revenue in all three J&J divisions ? prescription drugs, consumer health care and medical devices and diagnostics ? were down in the U.S.

U.S. prescription drug revenue fell 6 percent. U.S device and diagnostic product sales dipped 0.7 percent, on lower sales of artificial hips after a recall of implants causing severe pain and of artery-opening stents because J&J has stopped making heart stents as safety risks have reduced that market.

The consumer business declined 4.5 percent as the product recalls, mainly nonprescription medicines made by its McNeil Consumer Healthcare business, kept Tylenol, Motrin and other products off store shelves.

Only a couple of the consumer medicines, most recently Tylenol Cold and Flu Severe, are back in production so far. J&J officials said more will return to stores later this year and "the balance of key selected products" will begin shipping next year, but they are not predicting when all the products will be back.

One of McNeil's three factories shut down in April 2010 and is being gutted and rebuilt. The other two have slowed production amid upgrades and heightened inspections required under a deal with the Food and Drug Administration. Manufacturing of some products is being switched to other J&J factories.

Meanwhile, shoppers have been buying much-cheaper store brands or rivals' brands, some of them heavily advertised as competitors lure J&J customers.

"We're hopeful that the loyalty these (J&J) brands have achieved with consumers over many years will stay with us as we bring these products back into the market," Caruso said. He declined to give details but said the company plans a mix of marketing and coupons to win customers back, "kind of a surround-sound effect."

International revenue was stronger in all three divisions, driven by sales jumps mainly in emerging markets ? in the Asia-Pacific and Africa regions and in North and South America, excluding the U.S.

Worldwide, revenue from medical devices and diagnostics rose 6.1 percent, to $6.28 billion. Prescription drug revenue jumped 8.9 percent to $5.98 billion. Consumer product revenue rose 4.9 percent to $3.74 billion.

Source: http://us.rd.yahoo.com/dailynews/rss/earnings/*http%3A//news.yahoo.com/s/ap/20111018/ap_on_bi_ge/us_earns_johnson___johnson

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