What was the primary driver of JNJ's sales growth in the reported period?

The primary driver of JNJ's sales growth was strong performance in its international markets, which benefited significantly from favorable currency exchange rates. Operational growth also contributed, particularly in the Pharmaceutical and Medical Devices & Diagnostics segments.

What factors negatively impacted JNJ's net earnings in the nine-month period?

Net earnings were negatively impacted by several factors, including increased restructuring expenses related to the Cordis Corporation's cardiovascular business, higher litigation expenses and recall costs associated with products like the DePuy ASR Hip, and integration costs related to acquisitions such as Crucell.

How did the U.S. healthcare reform legislation affect JNJ's financial results?

The U.S. healthcare reform legislation resulted in increased rebate rates for Medicaid, impacting sales revenue, and introduced an annual fee on branded prescription drug sales, which increased selling, marketing, and administrative expenses. Discounts for Medicare Part D coverage gap also contributed to a reduction in net sales.

What is the outlook for LEVAQUIN® sales following patent expiration?

The report indicates a substantial decline in LEVAQUIN® sales due to the loss of market exclusivity in the U.S. in June 2011. Year-over-year sales are expected to continue declining throughout 2011 and the first half of 2012.

JNJ 10-Q Filed Nov 8, 2011

Summary

Johnson & Johnson (JNJ) reported its third-quarter and nine-month results for the period ending October 2, 2011. For the nine months, worldwide sales increased by 6.2% to $48.8 billion, driven by a 13.2% increase in international sales which benefited from a 7.4% positive currency impact. U.S. sales, however, saw a slight decrease of 1.3%. The company's net earnings for the nine months were $9.45 billion, a decrease from $11.39 billion in the prior year, reflecting increased restructuring expenses and litigation costs. The third quarter showed continued sales growth, with worldwide sales up 6.8% to $16.0 billion, again supported by strong international performance and favorable currency movements. While overall net earnings decreased to $3.2 billion from $3.4 billion year-over-year, the company maintained robust operating cash flow of $10.8 billion for the nine-month period. Significant investments were made in acquisitions and marketable securities during the period.

Key Highlights

1Worldwide sales for the nine months ended October 2, 2011, increased 6.2% to $48.8 billion, with international sales showing strong growth driven by currency tailwinds.
2Net earnings for the nine months decreased to $9.45 billion from $11.39 billion in the prior year, impacted by restructuring expenses and litigation costs.
3The Pharmaceutical segment reported a 9.5% increase in sales for the nine months, with REMICADE® and VELCADE® showing significant growth, while LEVAQUIN® sales declined substantially due to loss of market exclusivity.
4The Medical Devices & Diagnostics segment saw a 5.5% sales increase for the nine months, although operating profit margins declined due to restructuring charges and litigation costs.
5The company generated strong operating cash flow of $10.8 billion for the nine-month period.
6JNJ made significant investments in acquisitions, including a planned $21.3 billion acquisition of Synthes, Inc., and in marketable securities, leading to a decrease in cash and cash equivalents.
7The company announced a regular quarterly cash dividend of $0.570 per share, reflecting continued commitment to returning capital to shareholders.

JOHNSON & JOHNSON Quarterly Report for Q3 Ended Oct 2, 2011

Summary

Key Highlights

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