(Reuters) - Johnson & Johnson reported slightly better-than-expected third quarter profit and raised its full-year forecast on Tuesday as increased demand for cancer drugs and immune disorder treatments powered strong results for its pharmaceutical unit.
Shares of the healthcare conglomerate were up 2.3 percent at $137 in morning trading after it raised its adjusted 2018 earnings forecast to a range of $8.13 to $8.18 per share from a prior view of $8.07 to $8.17.
Solid prescription drug sales helped offset continued disappointment in the medical devices segment. Executives on a conference call said that business would start to grow in-line or better than the market by 2020.
“We are not satisfied with the performance in medical devices,” Chief Financial Officer Joseph Wolk said after the unit’s quarterly sales missed Wall Street estimates.
Pricing pressure has impacted all categories in orthopedics, the company said, adding that it will consider both transformative acquisitions and smaller, tuck-in deals to support the business.
The company has been selling off certain businesses, such as diabetes care devices, to focus on better performing units and development of new products.
Overall sales rose 3.6 percent to $20.35 billion in the quarter, exceeding analysts’ average estimate of $20.05 billion, according to Refinitiv data.
Pharmaceuticals sale rose 6.7 percent to $10.35 billion, fueled by double-digit sales growth for prostate cancer drug Zytiga and Stelara for Chrohn’s disease and psoriasis
Zytiga sales surged 43 percent to $958 million, blowing past the consensus estimate of $795 million, according to Barclays. Stelara sales jumped 16.5 percent to $1.31 billion, above expectations of about $1.27 billion.
Sales of rheumatoid arthritis drug Remicade fell 16.3 percent to $1.38 billion due to increasing competition from cheaper biosimilar versions.
Newer blood cancer drug Darzalex brought in sales of $498 million, falling short of lofty Wall Street estimates of about $510 million.
Medical device sales were down 0.2 percent at $6.59 billion, while consumer products sales rose 1.8 percent to $3.42 billion, helped by the U.S. relaunch of the Johnson’s baby brand.
Excluding items, the company earned $2.05 per share, edging past analysts’ average forecasts by 2 cents.
Wolk said on Tuesday that while J&J was supportive of more transparency in drug pricing, the company does not believe a Trump administration proposal for requiring the list price of medicines at the end of television ads would be helpful.
He said including those prices in commercials could be somewhat confusing and “act as a deterrent to good responsible healthcare.”
Reporting by Manas Mishra in Bengaluru; Editing by Shailesh Kuber, Arun Koyyur and Bill Berkrot