(AP)- Johnson & Johnson’s first-quarter profit dipped due to slightly higher spending and a bigger tax bill, but the health care giant gave a rosier financial forecast for the year.
The world’s biggest maker of health care products cited its pending $30 billion purchase of biopharmaceutical company Actelion for the raised forecast. It also benefited from several smaller acquisitions and from the restructuring of its medical device segment, which started in early 2016.
The New Brunswick, New Jersey-based company on Tuesday reported net income of $4.42 billion, or $1.61 per share, down from $4.46 billion, or $1.59 per share, a year earlier.
Earnings, adjusted for one-time costs, came to $1.83 per share, topping Wall Street expectations for earnings of $1.77 per share.
Revenue totaled $17.77 billion in the period, which missed Street forecasts for $18.01 billion. International sales jumped 2.8 percent to $8.4 billion, while U.S. sales edged up 0.6 percent to $9.4 billion.
In an interview, Chief Financial Officer Dominic Caruso said revenue was crimped by slower growth in many consumer health product categories and by payers demanding bigger rebates off the prices of prescription drugs in categories with many competing medicines, particularly cardiovascular, diabetes and other primary care drugs.
“The diabetes market is very price sensitive, and (net) prices have been declining for some time,” Caruso noted.
As a result, J&J is exploring the sale of its diabetes care businesses, which make test strips and insulin pumps, but will continue selling lucrative diabetes pill Invokana.
Sales in the prescription drug business rose 0.8 percent to $8.3 billion.
But top seller Remicade, an injected biologic drug for Crohn’s disease, rheumatoid arthritis and other immune disorders, saw sales decrease 6 percent to $1.7 billion.
Near copy, or “biosimilar,” versions of Remicade have cut into its sales in Europe, where they’ve been available for much longer than in the U.S.
Caruso said the launch late last year of Pfizer Inc.’s Inflectra, a biosimilar of Remicade, has had little impact on sales in the U.S. Doctors there are hesitant to prescribe biosimilars, which are relatively new to the U.S. market, if patients are stable and doing well on Remicade.
The Tylenol maker’s consumer product sales rose 1 percent to $3.3 billion, while sales of medical devices and diagnostic equipment increased 3 percent to $6.3 billion.
“The company performed mediocrely in two key areas — pharmaceuticals and consumer products. It managed expenses well, but to continue to increase profits, it has to generate better sales increases,” Erik Gordon, a professor and pharmaceuticals analyst at University of Michigan’s Ross School of Business, wrote in an email.
The company reported spending in the quarter rose only a percent or two for manufacturing, marketing, administration and research and development.
Johnson & Johnson said it now expects full-year earnings in the range of $7 to $7.15 per share, up from its January forecast of $6.93 to $7.08 per share. Analysts had been expecting $7.07 per share, on average. J&J also increased its revenue forecast to a range of $75.4 billion to $76.1 billion, up from $74.1 billion to $74.8 billion. The company said it raised the forecast due to the estimated impact of sales from its planned acquisition of Swiss drug maker Actelion, which is expected to close this quarter.
“They’re growing very, very rapidly,” Caruso said, on sales of Tracleer and other drugs for dangerously high blood pressure in the lungs, and Actelion has experimental medicines for multiple sclerosis and infections in late patient testing.