J&J's OTC sales increase at home and abroad

J&J's OTC sales increase at home and abroad
The performance of Johnson & Johnson's Consumer division was "disappointing", says chairman and chief executive officer Alex Gorsky

17 July 2018 - Deborah Wilkes

Johnson & Johnson's worldwide OTC sales increased by 3.7% on an operational basis in the second quarter of 2018, as sales increased both at home and abroad.

Joseph Wolk, Johnson & Johnson's vice president of investor relations, said growth had been driven by "share gains across multiple brands". "Analgesics, namely Tylenol, and digestive products drove the growth," he added.

During the second quarter of 2018, OTC sales in the company's home market of the US increased by 5.1% to USD454 million, while international OTC sales increased by 2.5% on an operational basis to USD612 million. A positive currency effect of 4.1% meant international sales as reported were up by 6.6%.

Johnson & Johnson's worldwide OTC sales were USD1.07 billion, representing a rise of 3.7% on an operational basis compared to the same period a year earlier. Sales as reported grew by 6.0%, following a positive currency effect of 2.3%.

Commenting on the OTC business outside the US, Johnson & Johnson highlighted the strength of Children's Motrin, smoking-cessation aids and Rhinocort. Johnson & Johnson acquired the rights to AstraZeneca's Rhinocort Aqua (budesonide) nasal spray outside the US in December 2016 in a deal worth USD330 million (click here to read the News story).

OTC was the second-largest business in the Consumer division, accounting for 30.4% of sales.

Consumer's largest business in the second quarter of 2018, accounting for 31.6% of sales, was Beauty with worldwide sales up by 1.8% on an operational basis to USD1.11 billion. The rise as reported was 3.1%.

Worldwide sales by three of the other four Consumer businesses – Baby Care, Oral Care and Wound Care/Other – declined on an operational basis. Women's Health sales were up by 2.2%.

Consumer sales down by 0.4%

Johnson & Johnson's Consumer division reported worldwide sales down by 0.4% on an operational basis to USD3.50 billion in the second quarter of 2018. A positive currency effect of 1.1% meant sales were up by 0.7% as reported.

Domestic Consumer sales dropped by 0.7% to USD1.48 billion, while international sales increased by 1.9% on an operational basis to USD2.03 billion. There was no currency effect so international sales were also up by 1.9% as reported.

Excluding the impact of acquisitions and divestments, Consumer's worldwide sales rose by 0.9% on an operational basis, as US sales decreased by 0.7% while international sales were up by 2.1%.

Profitability at the Consumer division

Adjusted income before tax at the Consumer division was USD0.9 billion, representing around 25.7% of sales.

The Consumer division accounted for 16.8% of Johnson & Johnson's worldwide sales of USD20.8 billion in the second quarter of 2018, which were up by 8.7% on an operational basis. A positive currency effect of 1.9% meant sales rose by 10.6% as reported.

Excluding the net impact of acquisitions and divestments, worldwide sales rose by 6.3% on an operational basis.

Chairman and chief executive officer Alex Gorsky said the strong second-quarter results reflected "double-digit growth" in the Pharmaceuticals division and "accelerating sales momentum" in the Medical Devices division.

Gorsky described the performance of the Consumer division as "disappointing", but noted this was due to "the impact of some one-time events". "We recognise that we need to perform better," he said, "and we believe we are well positioned for a strong second half of this year based on our strong underlying consumption data."

In 2017, sales at the Consumer division rose by just 0.4% on an operational basis. Commenting on the performance, Gorsky said Johnson & Johnson realised there was "more work to do in further accelerating" the Consumer division (click here to read the News story).

Read all about Johnson & Johnson's growth strategy for its Consumer division in our OTCToolbox News Extra titled "Johnson & Johnson aims to be a giant startup". CLICK HERE TO DOWNLOAD.

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