Johnson & Johnson boosts annual guidance as Stelara leads growth in third-quarter sales

Headline results for the third quarter:

Prescription drug sales

$10.9 billion (forecasts of $10.3 billion)

+5.1%

Overall revenue

$20.7 billion (forecasts of $20.1 billion)

+1.9%

Profit

$4.8 billion

+22.9%

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

What the company said:

CEO Alex Gorsky remarked that the "results represent strong performance, driven by competitive underlying growth in pharmaceuticals and medical devices."

Other results:

  • US pharmaceutical revenue: $6.3 billion, up 4%
  • International pharmaceutical revenue: $4.5 billion, up 6.8%
  • Immunology product sales: $3.7 billion, up 9.3%
    • Stelara: $1.7 billion, up 29.6%, driven by strong uptake in Crohn's disease
    • Remicade: $1.1 billion, down 17.6%, due to increased discounts/rebates and biosimilar competition
    • Simponi/Simponi Aria: $586 million, up 9.6%
    • Tremfya: $290 million, up 69%, boosted by strong uptake in psoriasis
  • Oncology product sales: $2.8 billion, up 6.7%
    • Imbruvica: $921 million, up 30.6%, led by increased patient uptake, higher market share and growth across multiple indications
    • Darzalex: $765 million, up 53.5%, with strong market growth and share gains in the US and EU
    • Zytiga: $741 million, down 22.7%, with strong sales and share growth in the EU more than offset by lower sales in the US due to generic competition
  • Invega Sustenna/Xeplion/Invega Trinza/Trevicta: $851 million, up 13.7%
  • Pulmonary hypertension products (Opsumit, Tracleer and Uptravi): $654 million, down 0.3%, with sales of Tracleer hit by generic competition and cannibalisation from Opsumit
  • Xarelto: $613 million, up 0.1%, with volume growth offset by higher cost for patient access due to increased utilisation in Medicare, higher donut hole utilisation and legislative rebate change
  • Prezista/Prezcobix/Rezolsta/Symtuza: $508 million, up 3.7%

Looking ahead:

Johnson & Johnson now expects full-year revenue of between $81.8 billion and $82.3 billion, up from prior guidance of $80.8 billion to $81.6 billion. The company also forecasts earnings per share in the range of $8.62 to $8.67, lifted from an earlier estimate of $8.53 to $8.63.

Chief financial officer Joseph Wolk said that Johnson & Johnson is open to "a reasonable" deal that would resolve the large number of opioid lawsuits in the US from state and local municipalities, adding "where it makes sense for all stakeholders, we'll look to have a settlement." In August, a judge ordered the company to pay $572 million for contributing to the opioid crisis in Oklahoma, where the state's attorney general had been seeking damages of more than $17 billion, although the drugmaker is appealing the ruling.

What analysts said:

Chris Schott of JP Morgan noted that litigation risk remains a clear overhang on Johnson & Johnson's shares, although he suggested that the quarterly results will likely be well received. Johnson & Johnson did not report litigation expenses for the third quarter, instead noting that its legal costs over the first nine months of the year remained at $832 million, as was disclosed at the end of the second quarter.

Meanwhile, Bernstein analyst Lee Hambright expressed encouragment at the company's reassurances on its legal strategy. "I think they are fighting from a position of strength on...opioids, Hambright said, adding "they both emphasised on the strength of their case but also projected a sense of pragmatism to settle where it's the right thing to do for all stakeholders."

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