Johnson & Johnson posts higher Q2 drug sales, raises full-year outlook

Johnson & Johnson reported Tuesday that sales were up 3.9 percent during the second quarter to $18.5 billion, beating analyst estimates of $18 billion, boosted by an 8.9-percent increase in revenue from its pharmaceuticals unit, which generated $8.7 billion. Meanwhile, quarterly net income was down 11.5 percent to $4 billion. 

CEO Alex Gorsky remarked "we continue to see good momentum through the first half of 2016, delivering solid results in the second quarter, supported by strong underlying growth across our enterprise." He attributed the "notable strength" seen in Johnson & Johnson's prescription drug business to the continued success of new products, adding the company also "achieved significant clinical milestones" in advancing its pipeline.

Remicade, which accounted for roughly 20 percent of the company's total drug sales during the quarter, posted a 6.7-percent increase in revenue to $1.8 billion, outpacing expectations of $1.7 billion. Sales of Remicade in the US were 13.6 percent higher at $1.2 billion, offsetting a 23.2-percent decline in exports, which have been hit by the entry of biosimilar competition in Europe, including the introduction of Hospira's Inflectra last year.

In April, the FDA approved Celltrion's application for Inflectra, which will be marketed in the US by Pfizer for the treatment of multiple indications, including rheumatoid arthritis. Meanwhile, Johnson & Johnson chief financial officer Dominic Caruso suggested the company would defend the drug's patent, which is due to expire in 2018, adding he does not anticipate any early launch of a biosimilar product. For related analysis on the biosimilars market, see Spotlight On: Biosimilars – what lessons for the US market can we learn from Europe?

In other financial results, Johnson & Johnson reported that revenue from Stelara surged 41.1 percent year-over-year to $804 million, besting projections of $699 million, while sales of Zytiga advanced by 10.1 percent to $601 million, versus forecasts of $551 million. Xarelto amassed $594 million in revenue, up from $472 million in the year-ago period, coming in ahead of expectations of $564 million. Meanwhile, Imbruvica saw sales nearly double during the quarter, posting revenue of $295 million, compared with $154 million the same time last year. The company noted that pharmaceutical sales jumped 13.2 percent in the US to $5.1 billion, and gained 4.9 percent in international markets to reach $3.5 billion.

Looking ahead, Johnson & Johnson now expects 2016 per-share earnings to range from $6.63 to $6.73, up from previous guidance of $6.53 per share to $6.68 per share. The company also raised its revenue forecast to between $71.5 billion and $72.2 billion, versus its earlier estimate ranging from $71.2 billion to $71.9 billion. Meanwhile, analysts are anticipating earnings of $6.61 per share on sales of $71.7 billion.

Separately, Caruso explained that Johnson & Johnson will consider deals of any size for its three main businesses, while the company would be more interested in less risky licencing agreements for its pharmaceuticals unit. "We're agnostic whether [deals are] big or small," Caruso noted, adding that the company will not pursue a mega-merger with another company. "It would be very hard to do something transformational for [Johnson & Johnson]," Caruso cautioned, continuing "we do look at areas where we might not be in the market today, where we might add a whole other therapeutic focus."

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