Johnson & Johnson (JNJ) has announced its fourth quarter, 2012, earnings. Remarkably, Johnson & Johnson reported sales in excess of $17.5 billion, which was an increase of 8% year over year. The question is whether Johnson & Johnson can continue to produce this kind of growth.
Johnson & Johnson posted an impressive growth rate of 9.3%, coupled with a stock performance of 17.34% for the year. As I expected, most of this growth was due in large part to its pharmaceutical industry segment. However, its consumer business remains weak in comparison to its industry peers. Despite early year setbacks and a weak consumer base, Johnson & Johnson is still set for more growth.
Johnson & Johnson saw a large boost to its medical and diagnostics device sales division, due in large part to the acquisition of Synthes, a Swiss medical device maker that was proving to be a competitor. In acquiring Synthes, Johnson & Johnson effectively removed a competitor and increased its sales, a smart move on its part resulting in an increase of 3.1% to its worldwide operational sales growth. Further improving its adjusted net earnings was the cost cutting initiative implemented by the executive management team.
Pharmaceutical division performance
As was expected, the pharmaceuticals division of Johnson & Johnson continues to be the core business and revenue generator for Johnson & Johnson bringing in $6.5 billion in reported revenue and strong, high single digit, growth. Drugs Zytiga, Velcade, Remicade, Simponi and Stelara delivered much of this growth.
However, there are some key concerns. There was some unexpected growth in the sales of the drug Invega, despite the patent having expired back in the middle of 2012. Do not expect this to continue, as the competition is sure to bring some generic forms to market in the near future; much in the same way that we are seeing a decline in the drug Concerta, which also lost its patent back in 2011.
Yet, despite concerns over declining sales due to expiring patents, you can expect these losses to be replaced and surpassed with continued growth in the emerging markets; especially in China and Russia where Johnson & Johnson has already shown very strong sales and market penetration. To continue reading, click here.