Johnson & Johnson's (JNJ) Tuesday posted an unexpected fall in quarterly revenue, sending its shares as much as 2.6 percent lower, as a drop in prescription drug sales overshadowed gains in medical devices and consumer products such as Band-Aids.

"There was nothing in the earnings report that would renew investor interest," A.G. Edwards analyst Jan Wald said, referring to the disappointing sales, plunging revenue from drugs now facing generic competition and waning company earnings growth.

The results underlined the company's need for new revenue growth and the reason J&J is still in the battle to acquire heart-device maker Guidant Corp (GDT).

The diversified health-care company said it earned $2.18 billion, or 73 cents per share in the fourth quarter. That compared with $1.22 billion, or 41 cents per share, in the 2004 quarter, when J&J took an $800 million tax-related charge.

The New Brunswick, N.J.-based company's earnings matched the Reuters Estimates forecast.

But J&J said overall company sales fell 1.1 percent to $12.6 billion in the quarter. Analysts polled by Reuters Estimates, on average, had expected them to rise 3.5 percent to $13.20 billion.

J&J expects earnings this year of about $3.78 to $3.85 per share, reflecting growth of 9 percent to 11 percent. Although the growth rate would match or exceed Wall Street expectations, it represents a slowdown from the 13 percent profit gains seen in 2005 and the 18 percent growth seen in 2004.

The company also told analysts in a morning conference call that 2006 sales should grow 6 percent to 8 percent, similar to growth seen in 2005, but far below the 13 percent sales gains chalked up in 2004.

Andrew Heyward, an analyst for Wells Fargo's Ragen MacKenzie unit, described the quarter as "lackluster."

"As we head into the new year, we just don't see a lot of place for momentum," Heyward said.

J&J assured analysts a number of its experimental products could prove successful by 2008 and help revive earnings growth.

"But that is an awfully long time to look out for pharmaceuticals," said Wald, who expressed disappointment with the company's drug pipeline.

Global sales of prescription drugs fell 6.1 percent in the quarter to $5.48 billion, while sales of medical devices rose 3.7 percent to $4.82 billion. Sales of consumer products, which include Band-Aids and J&J's Tylenol painkiller, rose 2 percent to $2.31 billion.

J&J's prescription drugs have enjoyed stellar revenue growth in recent years. But the growth has vanished due to new competition from generic forms of its Duragesic pain patch and Sporanox anti-fungal drug. And safety concerns have battered demand for its Natrecor heart failure drug and anemia treatments.

Sales of Duragesic plunged 33 percent to $359 million in the quarter, while Sporanox fell 29 percent to $98 million. Combined sales of Procrit and similar anemia drug Eprex fell 6 percent to $798 million. Attention deficit drug Concerta edged up 1 percent to $208 million, held back by concerns about safety of such treatments among children.

Schizophrenia drug Risperdal, the company's biggest medicine, saw sales rise 6 percent to $897 million, while arthritis treatment Remicade vaulted 16 percent to $692 million.

Sales of the company's Cordis line of heart devices -- including the Cypher stent used to prop open clogged arteries -- rose 10 percent to $1 billion, shy of Wald's forecast.

J&J was mute on its bidding war with Boston Scientific Corp. (BSX) over Guidant.

Guidant's board has deemed Boston Scientific's latest $80 per share offer superior to J&J's $71 bid and analysts are closely watching to see whether J&J will raise its bid, or walk away from the deal, which it first cut in December 2004.

J&J must respond by midnight tonight to keep the deal alive. Boston Scientific's offer expires Wednesday.

The companies are competing for Guidant's stake in the $10 billion annual market for heart rhythm management devices, although some Guidant devices have recently been recalled due to safety problems.

J&J shares were down $1.51 at $59.68 in afternoon trading on the New York Stock Exchange. In 2005, the company's stock fell 5.2 percent, compared with a 1 percent gain for the American Stock Exchange Pharmaceutical Index, which tracks large U.S. and European drugmakers.