Summary
Johnson & Johnson (JNJ) reported strong overall sales growth of 6.3% in 2017, reaching $76.5 billion. This growth was driven by significant increases in the Pharmaceutical segment, particularly in Oncology and the newly acquired Pulmonary Hypertension area, alongside solid performance in the Medical Devices segment. The company's R&D investment remained substantial at $10.6 billion, underscoring its commitment to innovation. However, investors should note the impact of significant acquisitions, such as Actelion, which increased intangible assets and goodwill but also contributed to a rise in amortization expense. The pharmaceutical segment faced headwinds from biosimilar competition for REMICADE, leading to sales declines for that specific product, though newer immunology products show promise. Financially, the company saw a substantial one-time charge of $13 billion in the fourth quarter of 2017 due to the U.S. Tax Cuts and Jobs Act, which significantly impacted net earnings and the effective tax rate. Despite this, JNJ continued its history of increasing dividends, highlighting its commitment to returning value to shareholders.
Key Highlights
- 1Total sales increased by 6.3% to $76.5 billion in 2017, driven by growth across key segments.
- 2The Pharmaceutical segment experienced strong growth (8.3%), notably in Oncology and the Pulmonary Hypertension therapeutic area following the Actelion acquisition.
- 3Medical Devices segment sales grew by 5.9%, with strong performance in Vision Care and Cardiovascular, though Orthopaedics saw a slight decline.
- 4Research and Development (R&D) investment increased by 16.0% to $10.6 billion, reflecting a commitment to innovation.
- 5The company recorded a significant provisional tax charge of $13.0 billion in Q4 2017 due to the Tax Cuts and Jobs Act, heavily impacting reported net earnings and the effective tax rate.
- 6REMICADE sales declined due to biosimilar competition, although newer immunology products like STELARA and TREMFYA showed strong growth.
- 7Johnson & Johnson continued its dividend growth, increasing its quarterly dividend to $3.32 per share in 2017, marking the 55th consecutive year of dividend increases.