Image source: Johnson & Johnson.

Johnson & Johnson (NYSE:JNJ) sales may have dropped 5.7% in the past year, but investors may benefit from ignoring the headline revenue decline and focusing instead on the company's plans for the future. That's because the majority of the revenue drop is tied to the performance of its flash-in-the-pan hepatitis C drug Olysio and currency exchange headwinds the company has little control over. If you toss aside the hepatitis C and currency impact and take into account non-recurring items like acquisitions and divestitures, Johnson & Johnson's global sales actually rose 6.5% in 2015, which is a whole lot better than the headline would have you believe.

Pop then drop
When Johnson & Johnson and Gilead Sciences (NASDAQ:GILD) won FDA approval for their respective hepatitis C drugs Olysio and Sovaldi in late 2013, they ushered in a new era oral HCV treatments that significantly improved outcomes and reduced treatment duration.

Initially, Sovaldi ended up having an edge in treating patients because Olysio stumbled in treating patients with the relatively common Q80K polymorphism, but doctors soon discovered that while Sovaldi matched up better than Olysio in less compromised patients, patients with tough-to-treat hepatitis C responded best to a combination therapy consisting of both Olysio and Sovaldi.

As a result, Olysio's sales outpaced industry watchers projections, surging to $2.3 billion in 2014.

Olysio's time in the spotlight, however, was never thought to be long-lived. That's because everyone recognized that Gilead Sciences' next-generation Harvoni, a single-tablet therapy for genotype 1 hepatitis C, would relegate the Sovaldi plus Olysio combination therapy to niche status. Harvoni won FDA approval in late 2014, and as a result, Olysio's sales fell to just $621 million in 2015.

Because Olysio's sales pop in 2014 could be viewed as a one-time "bonus," it may be more helpful to consider how Johnson & Johnson's results would look without it. On that basis, investors might have more to cheer about, because removing Olysio's sales from Johnson & Johnson's last two years of results leads to pharmaceuticals segment revenue increasing to $30.8 billion last year from $30 billion in 2014. That's a big improvement over the 2.7% drop to $31.4 billion in 2015 from $32.3 billion in 2014 that was reported.

Exchange headwinds
Olysio's impact is meaningful, but currency was an even bigger drag on Johnson & Johnson's results last year.

The company reports that on an ex-currency, operational basis, its sales improved by 1.8%, but currency conversion on sales outside the U.S. resulted in a 7.5% headwind that drove sales negative.

The significance of currency's effect is even more dramatic when you consider Johnson & Johnson's financial performance on a regional basis. In 2015, domestic revenue grew 2.6%, but international sales fell 13.1% because of a massive 14.2% currency drag.

Obviously, investors shouldn't ignore results that include currency altogether because currency can boost sales sometimes, too, but focusing on the operational results does paint a different picture in terms of how management is executing at the company.

For example, removing the impact of currency, the company's consumer and pharmaceuticals business grew by 2.7% and 4.2% last year, respectively, and the medical device business saw its sales decline by just 1.4%.

Looking ahead
Johnson & Johnson is enjoying rapid growth for its diabetes drug Invokana and its psoriasis drug Stelara, both of which are billion-dollar blockbusters, and demand remains high for other top sellers, including the schizophrenia drug Invega Sustenna and the anticoagulant Xarelto.

Revenue from those drugs could be supplemented nicely in the future by new products, including Darzalex, a new therapy for multiple myeloma, and Invokamet, a combination therapy consisting of Invokana and metformin, a widely used, front-line diabetes drug. Sales growth could also benefit from expanding the label of its cancer drug Imbruvica, a therapy co-marketed by AbbVie that industry watchers think may have $5 billion in peak sales potential.

Given Johnson & Johnson has a lot of needle-moving drugs on the market, or heading to the market soon, the most important number in the company's fourth-quarter financials may not be reported sales, but its operational guidance for 2016. If Johnson & Johnson can do better than the 4.5% and 6% it's forecasting, investors ought to send its shares higher.