JnJ - looking good

- $30 Billion acquisition of Actelion was successful and benefits are flowing in already.
- Completed the sale of Codman to Integre for over $1 Billion.
- Janssen Pharma has been busy getting clearance for new drugs and acquiring new businesses.
- JNJ declared a $0.84 dividend.

JnJ shares were up 2% after the company posted another strong quarter. This was thanks to the strong performance by the pharmaceuticals business and the Actelion acquisition as well as other small recent acquisitions. JnJ also had a few sales of non-strategic businesses within the JnJ portfolio.

How did the company do compared to Wall Street's expectations?

1) Third-Quarter Sales of $19.7billion an increase of 10.3% which was a $370m beat

2) Third-Quarter Earnings Per Share was $1.37

3) Adjusted Third-Quarter Earnings Per Share of $1.90 an increase of 13.1% which beat expectations by $0.10

The consumer business did fairly with $3.4 Billion in Sales for the quarter, showing an increase of 2.9% with the most growth coming from non-U.S. sales. Baby care products took a hit but that impact was not felt much because the portfolio is well spread out. OTC products like Tylenol, an analgesic product, international smoking cessation aids, OGX, and Neutrogena beauty products continued to perform well in their categories.

Pharmaceuticals business was by far the biggest winner. During the quarter JnJ sold their brand Compeed to HRA Pharma. Pharma sales were up 15.4% to $9.7 Billion where Actelion contributed 7.9%. Strong growth came from the sale of new drugs such as Darzalex which treats patients with multiple myeloma and Imbruvica which is an oral treatment for certain B-Cell malignancies, a type of blood cancer. Other drugs that contributed to the growth were Stelara, Xarelto, Zytiga, Invega, Sustenna etc. These drugs treat everything from immune-mediated inflammatory diseases, metastatic cancer, prostate cancer, all the way to schizophrenia.

The medical devices business was another strong performer with Sales of $6.6 Billion for the quarter, an increase of 7.1%. Both U.S. and non-U.S. markets growing at 4.6% and 9.6% respectively. The growth in this portfolio was driven by the electrophysiology products in the Cardiovascular (heart related) business and Acuvue which is the contact lenses brand in Vision Care business.

The company acquired TearScience a company that manufactures products dedicated to meibomian gland dysfunction, and Sightbox which is an e-commerce business that makes vision care affordable by providing a subscription service that connects consumers with eye care professionals for their contact lens needs.

We like JnJ here at Vestact as an anchor position for our offshore portfolios. We think this giant still has legs to run; especially the Pharma and Medical Devices businesses. This Elephant can dance baby!