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Why Other Drugmakers Want to Be More Like J&J

October 12, 2009 Drugs No Comments

By Jacob Goldstein

Why Other Drugmakers Want to Be More Like J&JJohnson & Johnson’s third-quarter earnings, out today, provide the latest reminder of why other drugmakers want to be more like J&J.

In a nutshell: It’s a tough time to be in the prescription drug business, what with stiff competition from generics manufacturers and payers pushing for lower costs on branded drugs. So it’s nice to have other lines of business propping up sales.

J&J said prescription drug sales fell 14% compared to the year-earlier period, but the company’s overall sales for the quarter fell by only 5%. That’s because medical device sales rose a bit, and sales of consumer products fell only slightly. The relatively modest overall decline, combined with cost-cutting at the company, allowed J&J to post higher profits. (For more, here’s a J&J earnings story from Dow Jones Newswires.)

Earlier this year, Pfizer CEO Jeff Kindler said he’s “a great admirer of J&J and Abbott’s business model.” Kindler pointed out that he is “breaking the company down into smaller units so we aren?t dependent on any single product.” Pfizer’s Wyeth deal will move the company into vaccines, and get it back into the consumer health business.

Like J&J, Abbott is in a wide range of health-related businesses, including prescription drugs, medical devices and consumer products. We should know soon how diversification worked for Abbott in recent months — the company is scheduled to release third-quarter earnings tomorrow morning.

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