J&J reports sales slip as Weldon exits

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J&J CEO Alex Gorsky
J&J CEO Alex Gorsky
Johnson & Johnson CEO Bill Weldon closes out his tenure with a 0.2% drop in overall sales for the first quarter of 2012, compared with the same period the year before. The company saw its biggest slides in consumer sales, which fell 2.4% during the quarter, compared with sales for the same period the year before. The company said it is raising its non-GAAP EPS guidance by two cents to $5.07 to $5.17.

Jefferies analyst Jeffery Holford indicated in a research note that he was nonplussed by the up-tempo guidance provided on Tuesday because it was based on currency gains, as opposed to product movements.

Consumer sales pinched at the company's numbers, falling 2.4% for the first quarter, compared to the same period last year. US consumer sales fell 2.2% during the quarter, compared with 2011, and international sales slid 2.5%. The company blamed the continued shutdown of its Fort Washington, PA, plant for some of the sales pain. The plant was shut down as part of an FDA consent decree due to subpar manufacturing practices of products including Motrin and Children's Tylenol.

CFO Dominic Caruso told investors it's taken longer for the company to fill shelves with its roster of recalled products, such as Children's Tylenol. A company spokesman told MM&M that it was not releasing information about the sales or marketing strategy that may accompany the products' reintroduction.

Johnson & Johnson's biggest consumer losers were baby care, which saw sales fall 3.7% for the quarter, compared with the same period last year, and women's health which was down 11%, compared with the same period the year before.

Generics for its bacterial infection drug Levaquin ate into US prescription sales, as did the shutdown of a third-party maker of its Doxil (doxorubicin HCL liposome)/Caeylx(pegylated liposomal doxorubicin hydrochloride) drug. Despite the 11% falloff in US prescription sales for the quarter, international prescription sales were up 16.5%, pushing overall prescription sales to $6.1 billion, a 1.2% increase over the first quarter of 2011. Remicade was a major engine behind this bump.

Tuesday's results were a last for Weldon. Alex Gorsky takes over as CEO next week. Gorsky won't have much of a honeymoon -- Justice Department lawyers want to ask him about J&J's Risperdal marketing practices. The company has been accused of misrepresenting the drug. An Arkansas judge last week fined the company $1.2 billion over allegations that the company misrepresented the drug, and Louisiana, South Carolina and Texas courts have all levied lesser but nonetheless enormous fines against the company over the drug.

Last week, Vice Chair Sheri McCoy, who was passed over for the CEO job in favor of Gorsky, moved on to another embattled giant -- cosmetics firm Avon, where she will serve as CEO.

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