updated 4/15/2008 12:53:24 PM ET 2008-04-15T16:53:24

Health products maker Johnson & Johnson reported a 40 percent jump Tuesday in its first-quarter profit, mainly due to the weak dollar boosting foreign revenues and a research charge taken a year ago.

The New Brunswick, N.J.-based maker of contraceptives, medical devices, baby care items and prescription drugs reported net income of $3.6 billion, or $1.26 per share, for the first three months of the year, up from $2.57 billion, or 88 cents a share, a year ago. The year-ago quarter included a charge of $807 million for research and development related to the acquisition of Conor Medsystems Inc., a developer of stents.

Revenues rose 7.7 percent to $16.19 billion from $15.04 billion a year earlier, primarily due to higher sales of consumer health care products such as baby and skin care products in the Listerine line.

Analysts surveyed by Thomson Financial were expecting lower earnings of $1.20 a share on revenue of $15.83 billion.

Despite beating Wall Street estimates, J&J shares were down in midday trading, roughly in the middle of the company’s 52-week trading range of $59.72 to $68.85.

“This is an anemic report. It is the harbinger of, unfortunately, worse things to come” for J&J and the entire pharmaceutical industry, said analyst Steve Brozak of WBB Securities Ltd. “This (earnings) statement is proof positive that we are in a recession, no ifs, ands or buts about it.”

Most sales growth was in the consumer health care division, he noted, not in the high-margin pharmaceuticals division.

Sales of consumer health products jumped 16 percent to $4.06 billion, driven partly by the recent launch of nonprescription allergy drug Zyrtec. Sales of prescription drugs increased only 3.3 percent, to $6.43 billion, and revenues from medical devices and diagnostics rose 7.2 percent to $5.7 billion, with nearly all of those increase coming from sales overseas.

In all three divisions, 11 percent or more of overseas revenue growth — nearly all the growth — came from favorable currency exchange rates. Overall, they boosted total revenues by 5.1 percent for J&J, the world’s No. 6 pharmaceutical company, according to IMS Health.

In the United States, revenue growth was only 0.2 percent in the medical devices and diagnostics division, and 0.9 percent for pharmaceuticals, Brozak noted.

“It was as anemic as you can get without being negative,” he said, due to lack of major new products and significantly lower sales of J&J’s anemia drug Procrit and its stents — tiny metal scaffolds that prop open arteries after they are unclogged.

J&J’s chief financial officer, Dominic Caruso, told analysts during a conference call that the company now expects earnings per share for 2008 to total $4.40 to $4.45, excluding one-time items, up a penny from the $4.39 to $4.44 forecast it gave in January.

He noted that the cost-savings program begun last July has already begun to affect operating costs, partly offsetting the continued impact of generic competition.

“We continue to invest in growth opportunities that are critical to our future and are continuing to manage our costs,” he said.

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