Johnson & Johnson to spend big on tax cuts

Johnson & Johnson to spend big on tax cuts

Johnson & Johnson is promising to spend more on research in the healthcare sector after changes to the US tax system.

But for now, the world’s biggest healthcare company — which employs more than 2,700 people across 11 sites in Ireland — isn’t providing many details on how it may use the extra money from lower tax rates.

“We’re going to look at all of our opportunities but it’s going to be a significant increase,” J&J’s chief financial officer Dominic Caruso said.

“We’re now up to the most significant R&D spending we’ve done in our history and we expect to expand on that going forward.”

He declined to provide a specific amount.

J&J provided a 2018 profit forecast that was higher than analysts anticipated, joining companies that are seeing benefits from the tax overhaul passed into US law late last year.

The healthcare conglomerate, whose businesses include prescription medicines, medical devices and consumer brands such as Johnson’s baby care, makes almost half of its revenue outside of the US, and also benefited from the weaker dollar in the past year.

J&J said its group profit for this year will be $8 to $8.20 a share, excluding some items, higher than the $7.86 average of estimates. Revenue is projected to be $80.6bn-$81.4bn, in line with estimates.

J&J is a major IDA client company, employing people in Dublin, Cork and Limerick. Last October, its Janssen Sciences Ireland subsidiary announced a €300m expansion to its Ringaskiddy facility, which will be built over the coming two years and bring on stream 200 more jobs, adding to the 555 already employed there.

J&J, the first big US drugmaker to report financial results this year, topped profit estimates for the fourth quarter. Earnings were $1.74 a share, excluding some items.

On a net basis, J&J had a quarterly loss of $10.7bn after taking a one-time charge of $13.6bn related to accounting changes caused by tax legislation, to bring back to the US years of aggregated foreign earnings.

At the end of 2016 that amounted to $66bn, according to the group’s most recent annual report.

There were some disappointments in the pharmaceuticals business, J&J’s biggest.

Sales of blockbuster arthritis treatment Remicade, now facing competition from cheaper versions, came in lower than analysts anticipated.

The decline was offset by sales in newer drugs such as psoriasis drug Stelara.

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