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A Segment-by-Segment Breakdown of JNJ’s 1Q16 Earnings

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Business segment performance

The overall business of Johnson & Johnson (JNJ) is classified into three business segments: the pharmaceuticals segment, the consumer segment, and the medical devices segment.

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Pharmaceuticals revenue

The pharmaceuticals segment, which contributed nearly 46.8% of JNJ’s total revenue in 1Q16, reported revenue of $8,178 million, a rise of 5.9% over 1Q15. This consisted of an operational rise of ~8.5%, which was partly offset by a negative currency impact of ~2.6% during the quarter.

The segment’s operational performance was largely offset by the competition of hepatitis C products in the infectious disease franchise.

Consumer revenue

The consumer segment contributed nearly 18.3% of JNJ’s total 1Q16 revenue. It reported revenue of $3,195 million in 1Q16, a fall of 5.8% compared to 1Q15. This consisted of an operational fall of 0.2% and a negative currency impact of 5.6%.

The segment’s operational performance was mainly driven by oral health products and over-the-counter products. Revenues from babycare products and wound care products offset the segment’s growth in 1Q16.

Medical devices revenue

The medical devices segment contributed nearly 34.9% of JNJ’s total revenue at $6,109 million in 1Q16. This was a fall of 2.4% over 1Q15. The segment saw an operational rise of 0.5% and a negative currency impact of 2.9% during the quarter.

The medical devices segment reported a fall in revenue due to the impact of the divestiture of JNJ’s Cordis business in 4Q15 and its ortho-clinical diagnostics franchise in mid-2014. A negative currency impact also contributed to the fall.

The segment’s key growth drivers included orthopedics and surgery and vision care. Growth was substantially offset by lower sales in cardiovascular and diabetes care.

We’ll discuss the company’s key products separately in the coming articles. Key drug Stelara competes with Abbott Laboratories’ (ABT) Humira, and Xarelto competes with Bristol-Myers Squibb (BMY) and Pfizer’s (PFE) Eliquis.

Investors can consider ETFs such as the iShare US Pharmaceuticals ETF (IHE), which holds 9.3% of its total assets in Johnson & Johnson, in order to divest risk.

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