Johnson & Johnson’s revenue trend
Johnson & Johnson’s (JNJ) top line increased by 3.9% to ~$18.5 billion for 2Q16. It was driven by an operational growth of 5.3% in revenues. This was offset by the negative currency impact of 1.4%. At constant exchange rates, the Consumer segment’s revenues rose by 3.9%, while the Pharmaceuticals segment’s revenues rose by 12.8% and the Medical Devices segment’s revenues grew by 3.9% during 2Q16. The company’s 2Q16 revenues are $18.5 billion—higher than analysts’ estimates of $18.0 billion. This is 5.9% growth at constant currencies—compared to $17.8 billion for 2Q15.
The above graph shows that foreign exchange rates had a constant negative impact on Johnson & Johnson’s (JNJ) growth rate in each quarter. This is mainly because nearly 48% of Johnson & Johnson’s total revenues are reported from sales outside the US. The company operates over 134 manufacturing facilities and eight innovation and research centers worldwide.
Performance during the last quarter
Johnson & Johnson’s revenues have increased over the past few year following the restructuring of its business segments and strong performance of a few of its key products including Xarelto, Zytiga, Remicade, Stelara, and Olysio.
Geographically, US markets contributed nearly 51.9% of the total revenues at $9.6 billion for 2Q16—an increase of ~7.4% in revenues—compared to 2Q15. The international markets reported operational growth at constant currencies. However, they were substantially offset by the negative impact of currencies. In the international markets, Europe contributed ~22.2% of the total revenues at $4.1 billion for 2Q16—a decrease of ~1.5% compared to 2Q15. The Asia-Pacific and Africa markets contributed ~17.8% of the total revenues at $3.3 billion for 2Q16—an increase of ~1.7% over 2Q15. The Western Hemisphere, excluding the US, contributed ~8.1% of the total revenues at $1.5 billion for 2Q16—an increase of 2.7% compared to 2Q15.
The segment-wise revenues and performance of blockbuster drugs will be discussed later in this series. Key drugs like Stelara compete with Amgen (AMGN) and Pfizer’s (PFE) Enbrel and Abbott’s (ABT) Humira. Zytiga competes with Dendreon’s (DNDN) Provenge.
To divest risk, investors can consider ETFs like the Fidelity MSCI Healthcare Index ETF (FHLC). FHLC holds 10.7% of its total investments in Johnson & Johnson.