For better or worse, health-care conglomerate Johnson & Johnson (NYSE:JNJ) functions as a team -- a large one, with more than 200 operating companies as members. And as with any good team, when a few of the members are just not getting the job done, others usually step in to help pick up the slack.
Such has been the case over the past few months, as sparkling play from medical devices and diagnostics has helped the company recover from turnovers in the pharmaceutical segment. Earnings for the period climbed 11.5%, to $0.87 per share, on revenues that rose 6.6%, to $12.3 billion.
Johnson & Johnson's drug segment has had trouble holding on to the ball lately. In the recently completed third quarter, worldwide pharmaceutical sales lost ground, slipping 0.5%, to $5.5 billion. While several drugs, most notably Risperdal and Remicade, continue to see strong results, they were not enough to offset flagging sales of pain reliever Duragesic and other treatments that are struggling against generic competition.
This trend is not a new development: Pharmaceutical sales -- particularly domestic -- were the weak link last quarter, and they didn't look too sharp the game before that either. With drug retailers like Walgreen (NYSE:WAG) reporting strengthening sales of low-priced generic alternatives, I wouldn't expect the segment to suddenly become the JNJ team's growth leader.
Meanwhile, consumer products had a solid offensive performance, with sales climbing by double digits to reach $2.2 billion. Domestic revenues were up 5.1%, while those generated in international markets increased at three times that rate. Once again, the Aveeno line of skin care products was cited as being a standout performer, and demand for Splenda -- which controls more than half of the artificial-sweetener market -- also remains strong.
The most reliable playmaker lately, though, has been the segment that makes medical devices and diagnostic equipment. Last quarter was no exception. It lit up the scoreboard with sales of $4.6 billion -- a healthy 14.3% increase. All eight of the units that make up the segment -- which range from Vistakon's contact lenses to LifeScan's blood glucose monitoring instruments -- have carried their own weight.
It is the company's Cypher drug-coated stent, though, that continues to lead the way. The device, which is typically used to help prevent the reblockage of a cleaned coronary artery, has now been implanted in more than 1.5 million heart patients across the globe. Johnson & Johnson is locked in battle with BostonScientific's (NYSE:BSX) rival Taxus product, which seems to have surrendered some market share over the past few months.
With the medical devices segment again producing, and consumer products also chipping in, the net result was another winning quarter for Johnson & Johnson. Given the way this team is playing, its solid fundamentals and its fan-friendly track record of dividend increases, it may be worth joining the bandwagon.
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Fool contributor Nathan Slaughter owns none of the companies mentioned in this article.
