Johnson & Johnson's revenue missed expectations and it again cut its 2010 profit forecast, citing recalls of Tylenol and other medicines which it said are the subject of a U.S. criminal investigation.
J&J said it received a grand jury subpoena from the U.S. Attorney's Office in Philadelphia related to the recalls, but declined to comment further. The federal prosecutor's office said it could not confirm or comment on investigations.
J&J , whose shares fell 2.4 percent, said global sales of consumer products fell 5.4 percent in the second quarter to $3.6 billion.
Four recalls in the past year hurt the company, as did the late April closure of a plant in Fort Washington, Pennsylvania, where 40 children's products ran afoul of U.S. regulators' quality-control safeguards and were taken off the market.
The Food and Drug Administration typically takes the lead on these kinds of manufacturing issues, so I'm surprised it has escalated to a subpoena from another government authority, said Morningstar analyst Damien Conover.
The recalls crimped quarterly sales by $200 million, or about 5 cents per share, and the plant closing will likely undermine full-year sales by $600 million, Chief Financial Officer Dominic Caruso told investors on a conference call.
J&J cut its full-year 2010 profit view to between $4.65 and $4.75 per share, from $4.80 and $4.90 in April. It cited the closure of the plant, which is now undergoing a costly upgrade, and price pressures in Europe on its prescription drugs.
A slowdown in sales growth for its medical devices and diagnostics also hampered the results. Device sales rose 4.1 percent in the second quarter, compared with the prior quarter's 12.5 percent advance, in part because of waning demand for its Cypher heart stent.
The diversified healthcare company earned $3.45 billion, or $1.23 per share, in the quarter. That compared with $3.21 billion, or $1.15 per share, a year earlier.
Excluding items, J&J earned $1.21 per share, matching the average forecast of analysts polled by Thomson Reuters I/B/E/S.
J&J's global quarterly sales edged up 0.6 percent to $15.33 billion, below the Thomson Reuters forecast of $15.64 billion.
J&J's shares fell to $58.17 in late-morning trading.
(Reporting by Ransdell Pierson; Editing by Derek Caney and Robert MacMillan)