The second quarter results were better than analyst expectations, and hence the stock remains strong. The net earnings went up by 172% and the sales increased by 8.5%. Both its main segments, Pharmaceutical products and the Medical devices / diagnostic, did well with growth of 10-12%. These segments comprise nearly 80% of Johnson's sales. Consumer products sales were sluggish, and the growth was around 1.1%. Over the past one year, the stock has appreciated by around 30%, and over the longer term it has done even better. The consistent dividend payments, and high average yield of 2.9% at 66% payout add to the attraction for the stock. The valuations may look a little high, but if the recent trend of sequential increase in net income continues, then Johnson may look better after a few quarters. It has some products in the pipeline which may help the long term growth story of the stock. Patent expirations hurt sales very fast, and the companies have to continuously work to introduce new products / devices to make up for lost sales. Johnson is currently a little better placed on this as it faces relatively lesser losses in this year from expirations (Procit and Aciphex expire in the later half of 2013). Innovation is the main weapon of the pharmaceutical companies, and they survive based on that. Even smaller companies, like PLC Systems (PLCSF), make their mark based on the proprietary technologies they create. Competition is also immense and Johnson has to compete against several local and global players. Compared with many pharmaceutical giants like Merck (MRK) and Sanofi (SNY), Johnson compares well on margins and leverage. However, the competition cannot be ignored, and the company has to keep improving its competitive position in the market. Furthermore, the stock appreciation over the last one year has made it more susceptible to corrections in case of adverse news or earnings slippages.