New Brunswick, N.J. – Johnson & Johnson, the world’s largest maker of health-care products, will start a $10 billion share buyback to bolster the stock price until the company can bring new products to market.
The company will use its AAA credit rating to finance an unspecified portion of the repurchases, which have no time limit, Johnson & Johnson said Monday in a statement.
Shares of the company rose as much as 1.9 percent, the most since May, while the perceived risk of holding its bonds reached a two-year high.
J&J will lose patent protection next year for its anti-psychotic drug Risperdal, the world’s 10th- best-selling medicine with $4.2 billion in 2006 sales.
In the past year, revenue from heart stents and the anemia drug Procrit fell after studies linked them to risks of heart attacks. At the same time, J&J plans to introduce as many as 10 new drugs by 2011.
“The stock is cheap because it faces three issues: the loss of exclusivity next year on Risperdal, declining sales of Cypher stents and safety concerns about Procrit,” said Michael Krensavage, an analyst with Raymond James in New York, in a telephone interview Monday. Krensavage rates the shares a “strong buy.”
