Johnson & Johnson's (JNJ) first-quarter profit declined 2.5%, with sales hurt by the stronger U.S. dollar, a slowdown in consumer health-care product sales and generic competition for prescription drugs.

The weak economy continues to hurt the health-care giant's results, with sales coming in lower than Wall Street expectations for the second quarter in a row. J&J's consumer unit, which had posted strong sales growth for much of last year, is now seeing sluggish sales.

To bolster profits, the New Brunswick, N.J., maker of Band-Aid bandages and Tylenol pain reliever has offset some of the pressure on the top line by cutting costs, including last week's disclosure of the elimination of about 900 positions, or 6% of its U.S. pharmaceuticals work force.

J&J said net income for the first three months of the year was $3.5 billion, or $1.26 a share, compared with $3.6 billion, or $1.26 a share, a year earlier.

The per-share earnings in the latest quarter exceeded the mean estimate of analysts surveyed by Thomson Reuters of $1.22 a share.

Sales dropped 7.2% to $15 billion for the quarter from $16.2 billion a year earlier, falling short of the Thomson estimate of $15.4 billion. Unfavorable currency-exchange rates accounted for six percentage points of the decline.

Shares of J&J rose 1.2% to $51.74 in pre-market trading.

J&J Chief Executive William Weldon acknowledged "challenging economic and near term business pressures," but said in a press release the company was in a good position for long-term growth.

J&J's biggest unit, pharmaceuticals, had sales of $5.8 billion for the quarter, down 10.1% from a year earlier. While sales rose for Concerta for attention deficit hyperactivity disorder and the Remicade anti-inflammatory drug, sales of the Remicade antipsychotic nosedived due to last year's expiration of U.S. patent protection. Also, anemia drugs Procrit and Eprex posted a combined sales decline, continuing a two-year trend.

"Our results continue to be impacted by generic competition for some of our products," Louise Mehrotra, vice president of investor relations, said on a conference call with analysts Tuesday morning.

The company's medical-device and diagnostics unit had sales of $5.5 billion, down 2.9% from a year earlier. Surgical-care products and joint reconstruction products were positive but lower sales of drug-eluting stent devices contributed to the decline.

J&J's flagship coronary stent Cypher is fighting for market share against Abbott Laboratories' (ABT) new Xience stent, which is also marketed by Boston Scientific Co. (BSX) under the name Promus. For the quarter, J&J drug-eluting stent sales tumbled about 37%, to $252 million from $400 million. Coated stents are tiny scaffolds that prop open heart arteries and use medication to keep scar tissue from closing them off again.

Consumer sales dropped 8.7% to $3.7 billion. Sales of over-the-counter version of allergy drug Zyrtec, which had been strong for much of 2008, suffered from comparisons to a year-earlier period in which inventory was built up in connection with the product launch.

The U.S. market for over-the-counter health products dropped by 2% to 3% in the first quarter, "and competition from private label has intensified," said Mehrotra.

-By Peter Loftus, Dow Jones Newswires; 215-656-8289; peter.loftus@dowjones.com

(Mike Barris contributed to this article.)