Johnson & Johnson lifts annual revenue guidance as Q2 drugs sales top estimates, led by Darzalex, Imbruvica, Tremfya

Headline results for the second quarter:

Prescription drug sales

$10.5 billion (forecasts of $10.3 billion)

+1.7%

Overall revenue

$20.6 billion (forecasts of $20.3 billion)

-1.3%

Profit

$5.6 billion

+41.8%

Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

"We delivered solid second-quarter underlying sales growth and strong earnings growth," remarked CEO Alex Gorsky, adding "our pipelines continue to progress with the launch of new products and several regulatory submissions and approvals, which positions us well to deliver the next wave of transformational products and solutions."

Meanwhile, chief financial officer Joe Wolk commented "if you look at our earnings growth this year, we're maintaining it, it's two times the rate of sales growth," adding "we think that's very healthy, and we look to the long term, so this gives us a great opportunity to invest in our portfolio, to either accelerate, fortify or even add to our pipeline going forward so that we do solidify not just the next six months, but many, many, many more years to come."

Other results:

  • US pharmaceutical revenue: $5.8 billion, -2%
  • International pharmaceutical revenue: $4.7 billion, +6.5%
  • Stelara: $1.6 billion, +16.1%, due to "strong uptake" in Crohn's disease
  • Remicade: $1.1 billion, -16.2%, hit by increased discounts/rebates and biosimilar competition
  • Imbruvica: $831 million, +34.1%, boosted by increased patient uptake globally, higher market share and growth across multiple indications
  • Invega Sustenna/Xeplion/Invega Trinza/Trevicta: $818 million, +13.6%
  • Darzalex: $774 million, +51.6%, with "strong market growth and share gains" in the US and EU, as well as "strong growth in Japan and Latin America
  • Zytiga: $698 million, -23.3%, with lower sales in the US due to generic competition, partially offset by "strong" performance in the EU
  • Pulmonary hypertension products (Opsumit, Tracleer and Uptravi): $690 million, +3.8%
  • Xarelto: $549 million, -19.2%, negatively affected by higher Medicare Part D utilisation and rebates, higher donut hole utilisation and legislative rebate change in the US
  • Simponi/Simponi Aria: $563 million, +2.7%
  • Prezista/Prezcobix/Rezolsta/Symtuza: $535 million, +8.7%
  • Tremfya: $235 million, +86.5%, following a "strong launch uptake"

Looking ahead:

Johnson & Johnson now expects full-year revenue of between $80.8 billion and $81.6 billion, lifted from an earlier range of $80.4 billion to $81.2 billion, while it reaffirmed that it anticipates earnings per share in the range of $8.53 to $8.63.

Meanwhile, Joaquin Duato, who oversees Johnson & Johnson's pharmaceuticals and consumer businesses, said the company is better positioned than other drugmakers to deal with price pressure on medicines in the US because it markets a wide range of therapies, sells evenly to all of the various payers and has had "very robust volume growth." Duato added "we do believe that if we are able to do exceptionally well with getting our new breakthrough medicines to patients we are very well positioned in the context of price erosion."

What analysts said:

SVB Leerink analyst Danielle Antalffy indicated that other income, such as the $2-billion pretax gain from the sale of Johnson & Johnson's advanced sterilisation products unit, increased earnings per share by approximately $0.20 in the quarter. The analyst, who cited the decline in Xarelto revenue as an apparent weakness, also expressed concern over ongoing litigation related to the opioid crisis in the US.

Meanwhile, BMO Capital Markets analyst Joanne Wuensch stated "we expect questions on the maintained earnings per share guidance, but we point to the continued-to-be-improving strength across its franchises despite pharma headwinds."

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