J&J boosts annual guidance as sales, profit climb in Q2

Headline results for the second quarter:

  • Prescription drug sales: $12.6 billion, up 17.2%
  • Overall revenue: $23.3 billion (forecasts of $22.2 billion), up 27.1%
  • Profit: $6.3 billion, up 73.1%

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

What the company said:

"Our second-quarter results showcase Johnson & Johnson's diversified portfolio, driven by strong sales and earnings growth across our medical device, consumer health and pharmaceutical businesses," commented CEO Alex Gorsky. The company cited Stelara, Darzalex, Tremfya, Erleada, Imbruvica and Invega Sustenna/Xeplion/Invega Trinza/Trevicta as being main drivers for the quarter in terms of prescription drug sales, offset partially by biosimilar and generic competition, especially for Remicade. Johnson & Johnson also noted that sales for the period had a 4.1% benefit from favourable currency exchange rates.

Other quarterly results:

  • Immunology product sales: $4.2 billion, up 20.1%
    • Stelara: $2.3 billion, up 34%, showing continued "strong uptake" in Crohn's disease and ulcerative colitis
    • Remicade: $888 million, down 5.1%, weighed down by biosimilar competition
    • Simponi/Simponi Aria: $584 million, up 6.9%
    • Tremfya: $479 million, up 40.2%, led by growth in psoriasis and uptake in psoriatic arthritis
  • Oncology product sales: $3.5 billion, up 26.7%
    • Darzalex: $1.4 billion, up 59.2%, driven by "solid uptake" of the subcutaneous formulation launched last year
    • Imbruvica: $1.1 billion, up 17.7%, with growth partially hit by continued COVID-19-related delays in new patient starts, plus competitive pressures from novel oral agents
    • Zytiga: $563 million, down 0.8%
    • Erleada: $302 million, up 77.6%, showing continued strong global launch uptake
  • Infectious diseases product sales: $1 billion, 17.1%, with growth driven by the contribution of the COVID-19 vaccine in the US and EU
    • Prezista/Prezcobix/Rezolsta/Symtuza: $505 million, down 1%, hit by increased competition
    • COVID-19 vaccine: $164 million, including $51 million in the US, up from global sales of $100 million in the first quarter
  • Invega Sustenna/Xeplion/Invega Trinza/Trevicta: $1 billion, up 16.4%
  • Pulmonary hypertension products: $870 million, up 10.4%, with Opsumit and Uptravi recording "strong sales"
  • Xarelto: $569 million, up 1.8%, with demand partially offset by higher commercial access cost
  • Consumer health: $3.7 billion, up 13.3%

Looking ahead:

Johnson & Johnson now expects sales this year of between $93.8 billion and $94.6 billion, lifted from an earlier estimate of $90.6 billion to $91.6 billion, representing year-over-year growth of 13.5% to 14.5%. Meanwhile, earnings per share are forecast to be between $9.60 and $9.70, boosted from a previous prediction of $9.42 to $9.57.

The revised guidance includes revenue from its single-dose COVID-19 vaccine Ad26.COV2.S, which the company anticipates will generate sales of $2.5 billion this year, even as it weathers concerns about some very rare side effects and questionable efficacy against the Delta variant, as well as production problems at a Baltimore plant. According to chief financial officer Joseph Wolk, Johnson & Johnson expects to produce 500 million to 600 million doses of the vaccine this year.

What analysts said:

Edward Jones analyst Ashtyn Evans remarked that "the company's earnings growth has accelerated, driven by newly launched drugs and a decreasing impact from patent losses," but the current price "does not fully reflect [its] new products." She suggested some legal settlements on the horizon, including the one to resolve US opioid suits, could clear up some uncertainty facing Johnson & Johnson's stock.

Regarding the $2.5-billion sales forecast for its COVID-19 vaccine, Mizuho Securities analyst Vamil Divan said that that projection "bodes well for Pfizer's (shot) and COVID-19 vaccines from Moderna and AstraZeneca." Pfizer and Moderna have previously forecast $26 billion and $19.2 billion in 2021 sales of their coronavirus vaccines, respectively.

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