Segment-wise performance

Johnson & Johnson (JNJ) reported a revenue increase of ~2.9% between 2Q16 and 2Q17. The company’s business is broken down into three business segments: Pharmaceuticals, Consumer Products, and Medical Devices. At constant exchange rates, the company reported growth across all segments.

A Look at Johnson & Johnson’s Segment-Wise Performance

Segment-wise revenue

The pharmaceutical segment, which contributes nearly 45.8% of Johnson & Johnson’s total revenue, reported revenue of $8.6 billion in 2Q17, a fall of 0.2% from 2Q16. The 2Q17 revenue consisted of an operational increase of ~1.0% and a currency impact of ~1.2%. Operational performance was driven by strong performance by Darzalex and Imbruvica in the oncology franchise, and substantially offset by lower sales in the immunology, infectious disease, neuroscience, and cardiovascular franchises. Excluding acquisitions and divestitures, the pharmaceutical segment reported 0.5% growth in worldwide sales.

The consumer segment, which contributed nearly 18.5% of the company’s 2Q17 revenue, reported revenue of $3.5 billion in 2Q17, a rise of 1.7% from 2Q16. The increase in revenue was due to an operational increase of 2.3% and partially offset by a currency impact of 0.6%. Operational performance was mainly driven by beauty products, over-the-counter products, and wound care products. Revenue from baby care products, oral care products, and women’s health products offset the segment’s growth. Excluding acquisitions and divestitures, the consumer segment reported a fall of 0.8% in worldwide sales.

The medical device segment contributed nearly 35.7% of the company’s total revenue, reporting revenue of $6.7 billion in 2Q17, an increase of 4.9% from 2Q16. There was an operational increase of 5.9% and a currency impact of 1.0%. The medical devices segment reported an increase in revenue due to the acquisition of Abbott Medical Optics, and was partially impacted by the divestiture of Cordis in 4Q15. Key growth drivers included the advanced surgery, vision care, cardiovascular, and orthopedics franchises. Growth was substantially offset by lower sales in the surgery and diabetes care franchises. Excluding the impact of acquisitions and divestitures, the medical device segment reported a growth of 1.1% in worldwide sales.

To divest risk, investors could consider the Vanguard Healthcare ETF (VHT) which has a 9.9% exposure to Johnson & Johnson. VHT also has a 6.1% exposure to Pfizer (PFE), a 5.1% exposure to Merck and Co. (MRK), and a 2.8% exposure to Bristol-Myers Squibb (BMY).

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