OTC medicines impact J&J's earnings guidance
NEW BRUNSWICK, N.J. Johnson & Johnson on Tuesday updated its earnings guidance for full-year 2010 to $4.65 to $4.75 per share, reflecting the impact of the voluntary recalls announced earlier this year of certain over-the-counter medicines and the suspension of manufacturing at the McNeil Consumer Healthcare facility in Fort Washington, Pa., among other factors.
J&J realized overall sales of $15.3 billion for the second quarter of 2010, an increase of 0.6% as compared to the second quarter of 2009. Over-the-counter and nutritional sales specifically in the United States were down 27.5% to $492 million, the company reported. OTC sales outside of the U.S. totaled $649 million, up 2.9%.
The McNeil recalls and the closure of its Fort Washington, Pa. is expected to result in a $600 million sales impact for 2010, J&J CFO Dominic Caruso told analysts Tuesday morning.
Through a combination of identifying alternative sources of product and shifting production of those OTC medicines once manufactured in Fort Washington to other J&J facilities, Caruso suggested supply would be ramping back up to historical levels toward the end of 2010, beginning of 2011. “Certainly in 2011 we will have alternative sources of supply ready,” he told analysts. Caruso also noted that the quality issues associated with McNeil Consumer in both the Fort Washington and Puerto Rico plants were limited to those facilities.
The product recalls and subsequent Fort Washington closure aren’t the only factors influencing sales of OTC medicines, Caruso noted. Consumers that had migrated to private-label purchases are continuing to buy private label, he said. “Share that private label had been able to obtain during the economic downturn has been ‘sticking’ a little longer than previous economic downturns,” Caruso said.