10-18-17 7:21 AM EDT | Email Article

By Emma Court

Hurricane impact occurred because of lost surgery days, not supply disruption

The three recent U.S. hurricanes may affect drug and medical device makers' earnings this season. But exactly how, and to what degree, remains to be seen.

Johnson & Johnson (JNJ) , which reports earnings early and is considered a bellwether for the drug industry, said on Tuesday that weather-related events had a "modest" but limited impact on total overall growth of its medical device unit. Company shares rose 3.4% in Tuesday trade.

Many health-care companies have some manufacturing presence in Puerto Rico, which has spurred government concerns about drug shortages (http://www.marketwatch.com/story/hurricane-maria-devastation-in-puerto-rico-could-cause-drug-shortages-elsewhere-2017-09-26).

Johnson & Johnson itself has seven plants on the island manufacturing consumer goods, medical devices and drugs, according to J.P. Morgan analyst Michael Weinstein.

Read: Hurricane Maria devastation in Puerto Rico could cause drug shortages elsewhere (http://www.marketwatch.com/story/hurricane-maria-devastation-in-puerto-rico-could-cause-drug-shortages-elsewhere-2017-09-26)

But rather than affecting supply, the hurricane impact was felt instead through lost surgery days, Chief Financial Officer Dominic Caruso said.

Though the company can't rule out potential shortages, it is "very well positioned" in terms of future supply, Caruso said, noting that many of the company's products have more than one production site and backup sites outside of Puerto Rico.

Related: What it takes to deliver a cancer therapy during a hurricane (http://www.marketwatch.com/story/what-it-takes-to-deliver-a-cancer-therapy-during-a-hurricane-2017-09-25)

"Considering the magnitude of the storm, our facilities fared well," Caruso said, adding, "the work continues to ramp up to full operations in Puerto Rico" and products newly manufactured in Puerto Rico have already begun to ship out.

Not all health-care companies have spoken out yet about the effect of Hurricane Maria in Puerto Rico. Among those that have, reports have been mixed.

In late September, Baxter International Inc. (BAX) said that a loss of production days due to the hurricane could affect availability of saline -- of which there is already a shortage (http://www.marketwatch.com/story/baxter-faces-federal-criminal-inquiry-into-iv-saline-sales-2017-04-14)-- to U.S. hospitals.

Other drugmakers have said they were less affected (http://www.marketwatch.com/story/hurricane-maria-devastation-in-puerto-rico-could-cause-drug-shortages-elsewhere-2017-09-26). Amgen Inc. (AMGN) has said it doesn't expect a drug supply interruption (http://www.marketwatch.com/story/amgen-reaffirms-2017-guidance-in-wake-of-hurricane-maria-2017-09-25), and AbbVie Inc. (ABBV) said it expects "no patient impact."

See: How Hurricanes Harvey and Irma are affecting health-care companies (http://www.marketwatch.com/story/how-hurricanes-harvey-and-irma-are-affecting-health-care-companies-2017-09-07)

Two other hurricanes, Harvey and Irma, have also likely affected U.S. hospitals (http://www.marketwatch.com/story/how-hurricanes-harvey-and-irma-are-affecting-health-care-companies-2017-09-07) through damaged property, patient relocation and disrupted care.

Johnson & Johnson shares have surged 4.7% over the last three months, compared with a 4% rise in the S&P 500 . The Health Care Select Sector SPDR (XLV) has risen 4.1% over the last three months.

-Emma Court; 415-439-6400; AskNewswires@dowjones.com


(END) Dow Jones Newswires

10-18-17 0721ET

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