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J&J pushes OTC sales up by 10.7% in the US

16 April 2015 • by Deborah Wilkes

J&J pushes OTC sales up by 10.7% in the US

Johnson & Johnson's chairman and chief executive officer Alex Gorsky highlights the "solid performance" of the company's Consumer brands in the first quarter of 2015

Johnson & Johnson's OTC sales in the US increased by 10.7% to US$405 million in the first quarter of 2015, as the company's McNeil Consumer Healthcare subsidiary waits for an end to the consent decree filed by the US Department of Justice and the US Food and Drug Administration (FDA) in 2011 following manufacturing problems in the US.

Announcing Johnson & Johnson's latest financial results, chief financial officer Dominic Caruso said the company was waiting for "final FDA certification" after "resolving and remediating the issues around the consent decree".

Caruso said McNeil was now able to ship products from the affected manufacturing plants and replenish shelves on a more consistent basis.

The consent decree affects manufacturing plants in Fort Washington, Pennsylvania; Lancaster, Pennsylvania; and Las Piedras, Puerto Rico. McNeil said in March 2015 that a third-party expert had now "determined that all three sites are in conformity with applicable laws and regulations", and written certification for the facilities had been submitted to the FDA.

The comments were made as McNeil agreed to pay US$25 million to resolve an investigation by the Department of Justice into manufacturing problems at its plant in Fort Washington (click here to read the News story).

Commenting on the first-quarter 2015 results, Louise Mehrotra, vice-president of investor relations, said Johnson & Johnson's share of the adult OTC analgesic market in its home market of the US was approximately 12.0%, up from approximately 11.0% a year ago, and its share of the paediatric market was nearly 43%, up from nearly 38% a year ago.

Impact of negative currency effect

Despite the 10.7% rise in the US, Johnson & Johnson's worldwide OTC sales slipped back by 1.8% to US$993 million in the first quarter of 2015, as an operational rise of 9.6% was curbed by a negative currency effect of 11.4%.

Mehrotra said operational growth at the OTC business had been driven by Tylenol and Motrin analgesics, upper respiratory products outside the US, and new products and relaunches in the digestive health and smoking-cessation categories as well as for the Rogaine brand.

Johnson & Johnson's international OTC sales were down by 8.8% as reported to US$588 million. An operational rise of 9.1% was offset by a negative currency effect of 17.9%.

The OTC business generated 29.3% of worldwide sales at Johnson & Johnson's Consumer division, which fell by 4.7% to US$3.39 billion. A negative currency effect of 8.1% curbed an operational increase of 3.4%.

One of the best-performing businesses

Despite recording worldwide sales down by 1.8%, OTC was one of the best-performing businesses in Johnson & Johnson's Consumer division in the first quarter of 2015.

Mehrotra said operational growth at Consumer had been driven by OTC worldwide and Skin Care, as well as Oral Care and Women's Health outside the US.

The US-based company's domestic Consumer sales rose by 3.8% to US$1.36 billion, but international sales decreased by 9.7% to US$2.03 billion. The international fall comprised an operational rise of 3.1% and a negative currency effect of 12.8%.

Excluding the impact of acquisitions and divestments, worldwide sales at Consumer were up by 4.7% on an operational basis, as US sales increased by 5.1% and international sales rose by 4.5%. Divestments included the sale of the K-Y range of intimate lubricants to RB for an undisclosed sum in 2014.

The Consumer division accounted for 19.5% of Johnson & Johnson's worldwide sales of US$17.4 billion in the first quarter of 2015, which were down by 4.1% compared to the first quarter of 2014. An operational increase of 3.1% was offset by a negative currency effect of 7.2%.

Excluding the impact of acquisitions and divestments, worldwide sales were up by 5.7% on an operational basis.

Chairman and chief executive officer Alex Gorsky said Johnson & Johnson had delivered strong underlying growth in the first quarter, driven by new products and the strength of the core business. He highlighted the "continued robust growth" of the Pharmaceutical business and the "solid performance" of the Consumer brands.

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