"[T]his was one of the most challenging quarters for year-over-year comparisons in our history."

-- Chief Financial Officer Dominic Caruso

That's a pretty telling statement, considering that Johnson & Johnson (NYSE:JNJ) is over 100 years old. But it's definitely not an exaggeration. Just look at what happened this quarter:


Year-Over-Year (decrease)

Reason for Drop



Generic competition from Teva Pharmaceuticals (NASDAQ:TEVA), Mylan (NASDAQ:MYL), and many others



More generic competition

Drug-eluting stents


Competition in U.S. -- down 58.7% domestically -- from new entrants: Medtronic (NYSE:MDT), Boston Scientific (NYSE:BSX), and Abbott Labs (NYSE:ABT).

Duragesic / fentanyl


Issues from defective patches that needed to be recalled.



Like Amgen's (NASDAQ:AMGN) anemia drug, there's still lingering safety concerns



Generic competition in Canada contributed. You'd think that investors would have more acid reflux in this market.

Source: Johnson & Johnson's financial results and conference call.

If this were any other company, we'd be talking about "The Slaughter in New Brunswick," but Johnson & Johnson is a nicely diversified company that can take hits like the above and still do well enough. Overall sales fell just 7.4% year over year.

The blow to the bottom line was dampened even more because management could obviously see many of the drops coming. With Risperdal and Topamax -- previously multibillion-dollar drugs -- now facing generic competition, a hit to gross margins was inevitable. On the plus side, Johnson & Johnson was able to reduce manufacturing costs by 6.3%. Cuts in other areas and a reduced share count meant that earnings per share fell just 1.7%.

Going forward, the comparisons should get easier for Johnson & Johnson. Levaquin, with $751 million in U.S. in the first half of the year, will begin seeing U.S. generic competition in the middle of 2011, but it also has a few new drugs that should be able to help grow revenue. Sales of HIV drug Prezista were up 59% year over year, and Simponi, it's follow-on to anti-inflammatory Remicade, was recently approved.

Getting through a quarter like this relatively unharmed says a lot about a company. If there ever was a buy and hold company, Johnson & Johnson seems to be it.

Buy into this Foolishness:

Johnson & Johnson is an Income Investor recommendation. To see how dividend-paying stocks can offer both secure income and the opportunity for growth, take a free look at this newsletter with a 30-day free trial.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.