Johnson & Johnson’s Q4 net profit up 173% on strong pharmaceuticals business

Company earned a net profit of more than $4.7bn in the three months to the end of December

Johnson & Johnson earned $2.3 billion last year from the sale of Covid-19 vaccine. Reuters

Johnson & Johnson’s net profit jumped more than 2.5 times on an annual basis in the fourth quarter, underpinned by strong growth in the medical devices and pharmaceuticals businesses.

Net profit surged 172.5 per cent to more than $4.7 billion in the three months to the end of December, from the same period a year earlier. This is an almost 30 per cent increase from the previous quarter, when it earned $3.6bn.

Revenue during the quarter increased 10.4 per cent annually to $24.8bn, missing analysts’ expectations of $25.2bn, and it was up by about 6.3 per cent on a quarterly basis.

The company’s full 2021 financial year’s net profit rose 41.9 per cent to $20.8bn, while sales increased almost 13.6 per cent to $93.7bn.

“Our 2021 performance reflects continued strength across all segments of our business … I am honoured to assume the role of CEO, leading our global teams in continuing our work to deliver life-changing solutions to consumers, patients and health care providers” J&J’s newly appointed chief executive, Joaquin Duato, said.

Mr Duato was appointed as the new chief executive this month replacing Alex Gorsky, who led the company as chairman and chief executive for nearly a decade.

J&J's stock was up 2.2 per cent on Tuesday, trading at $166.8 per share.

The company earned $1.6bn and $2.3bn in the fourth quarter and in the 2021 full financial year, respectively, from the sale of Covid-19 vaccines. It expects to generate between $3bn and $3.5bn from vaccine sales in 2022.

The New Jersey-based company earned almost 51 per cent of its revenue, or $12.6bn, from international markets and the remainder from the US in the fourth quarter.

Also in the fourth quarter, it earned more than 57.6 per cent of its revenue from the pharmaceutical business that developed the single-shot Covid-19 vaccine. The division added about $14.2bn, 16.5 per cent more year-on-year, to overall sales in the October-December period.

Joaquin Duato, J&J's chief executive, said the company's 2021 performance reflects continued strength across all segments of business. AP

Its medical devices business, which suffered badly in 2020 because of the pandemic as many hospitals postponed medical procedures or surgeries, earned $6.9bn in the same three months, constituting nearly 27.7 per cent of overall revenue.

Medical devices business was driven “primarily by the market recovery from Covid-19 impacts and the associated deferral of medical procedures in the prior year across all of our businesses including surgery, interventional solutions, vision and orthopaedics”, J&J said.

Its consumer health business, which makes products such as Neutrogena face wash and Listerine, constituted about 14.5 per cent or $3.6bn of overall sales during the quarter. The growth in the division was partially offset by external supply constraints mainly affecting skin health and beauty products, the company said.

J&J said it has $32bn in cash and marketable securities and its free cash flow amounted to $20bn at the end of last year.

“Given our strong results, financial profile and innovative pipeline, we are well positioned for success in 2022 and beyond,” Mr Duato said.

“We are constantly looking at M&A [mergers and acquisitions] as a key source of growth for our business … our position in cash today makes us be more aggressive in that area,” he added.

J&J is also preparing to split pharmaceutical and medical device business from its consumer business. The transaction, which will create two publicly traded companies, is expected to complete by the end of next year.