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Johnson & Johnson’s Consumer Segment in 2Q17

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The consumer segment

Johnson & Johnson’s (JNJ) consumer segment reported revenue of $3.5 billion in 2Q17, a growth of 1.7% from the revenue of $3.4 billion reported in 2Q16. This figure includes 2.3% growth in operating revenue, and was partially offset by a 0.6% foreign exchange impact.

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Baby care franchise

The baby care franchise reported revenue of $494 million in 2Q17, a 6.8% decline from 2Q16. This figure includes a 6.5% decrease in operating revenue, mainly due to trade discounts.

Beauty franchise

The beauty franchise reported revenue of $1.1 billion in 2Q17, a 10.2% growth from 2Q16. The growth was driven by the inclusion of revenue from acquired Vogue International, Light Mask, and NeoStrata in the United States, and increased revenue from Neutrogena Sun products due to seasonal stocking effects. Lower sales in the EMEA (Europe, the Middle East, and Africa) markets, and the goods and service tax transition in India affected the overall growth.

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Oral care franchise

The oral care franchise reported revenue of $394 million in 2Q17, a 2.2% decline in revenue from 2Q16. This figure includes a 1.7% decrease in operating revenue. The decline was driven by lower sales in US markets due to trade discounts, while the strong performance of Total Care Zero in Japan and whitening products in China and Korea offset the growth.

Over-the-counter franchise

The over-the-counter franchise reported revenue of $1.0 billion in 2Q17, a 1.0% growth from 2Q16. This figure includes 2.1% growth in operating revenue. The growth was driven by strong performance by Tylenol and Quickmist.

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Women’s health franchise

The women’s health franchise reported revenue of $276 million in 2Q17, a 2.5% decrease from 2Q16. The sales were impacted by the divestiture of the Tucks brand to Blistex in July 2016.

Wound care and others

The wound care franchise reported revenue of $232 million in 2Q17, a marginal growth of 0.4% from 2Q16. The growth was driven by strong performance by Band-Aid and Neosporin products.

To divest company-specific risks, investors could consider the Fidelity MSCI Healthcare ETF (FHLC), which has a 10.3% exposure to Johnson & Johnson (JNJ). FHLC also holds 5.6% of its total assets in Pfizer (PFE), 2.7% in Bristol-Myers Squibb (BMY), and 2.2% in Eli Lilly and Company (LLY).

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