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EARNINGS

J&J, Merck Profits Rise in Quarter

January 23, 2002|From Reuters

Pharmaceuticals heavyweights Johnson & Johnson and Merck & Co. posted higher fourth-quarter profits, but generic competition and slowing sales growth of arthritis medicine Vioxx helped stifle results at Merck.

Along with posting an 18% rise in profit, Johnson & Johnson named longtime company executive William Weldon to take over as chairman and chief executive of the maker of Tylenol and Band-Aids. Weldon succeeds retiring J&J chief Ralph Larsen, who has held those posts since 1989, and becomes the firm's sixth chairman in J&J's 116-year history.

CIBC World Markets analyst Mara Goldstein said she was surprised that Larsen was passing the baton so soon to Weldon, his pharmaceuticals chief.

"People knew Larsen was going to be stepping down, but it wasn't expected this year," said Goldstein, who added that Weldon was known for turning the company's once-sleepy pharmaceuticals unit into a powerhouse operation.

Merck, the world's third-largest seller of prescription drugs, posted a 5% rise in profit as cost cutting helped to offset slowing sales of key drugs.

Whitehouse Station, N.J.-based Merck reported earnings of $1.86 billion, or 81 cents a share, in line with analysts' estimates. That compares with $1.76 billion, or 75 cents a share, a year earlier.

Merck reaffirmed that it expects little or no earnings growth in 2002. The company shocked Wall Street last month when it warned that 2002 profit would be flat as generic competitors continued to eat away at its prescription drug sales.

J&J posted earnings of $1.1 billion, or 36 cents a diluted share, compared with $936 billion, or 30 cents, a year earlier.

Before special charges, including remaining one-time costs associated with the company's acquisition of Alza Corp. last year, earnings per share for the fourth quarter were 39 cents a share.

"J&J's results were pretty solid, and in line with expectations," said CIBC analyst Goldstein.

On the New York Stock Exchange, Merck shares rose $1.29 to close at $59.29, while J&J's stock slid 58 cents to $59.12.

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