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- 04/19/2017

Mixed quarterly results from Johnson & Johnson

Pharma Horizon

Johnson & Johnson even if reported pharmaceutical and consumer product sales under their expectections, it managed to beat Wall Street expectations thanks to cost controls and lower taxes.

The giant healthcare company has seen its revenues climbing 1.6 per cent year on year in the first three months of 2017 to $17.77bn, however missing analyst estimates of $18bn.
This was also probably due to pharmaceutical sales constrained by competition and pricing pressure.

Three key drugs miss estimate.  Sales of blood thinner Xarelto, diabetes medicine Invokana and cancer drug Zytiga didn’t perfom as expected.

However the newer blood cancer drugs Darzalex and Imbruvica demonstrated very strong growth, while 

and Remicade saw its revenue down 6% due to the competition from a biosimilar, but still did better than what analysts predicted. 
With this picture J&J made a bold bet early this year when has gone forward with  $30 billion purchase of Swiss drugmaker Actelion, a leader in treatments for a rare type of high blood pressure. The acquistion of the swiss company will accomplish its aim of gaining a new drug category.
Forecast sale from J&J after Actelion acquisition  are of $75.4 billion to $76.1 billion and adjusted earnings of $7.00 to $7.15 per share, contributing 35-40 cents to earnings per share in 2018.

J&J is the first major pharmaceutical company to report quarterly results since Republican attempts to overhaul the Obamacare failed.

Even if J&J  forecasts do not include expectations of tax reform, Chief Financial Officer Dominic Caruso is confident that Washington will come through with a lower U.S. corporate tax rate at some point.


J&J said it expects business to accelerate over the rest of the year, helped by the introduction of new products. The company said it was continuing to evaluate its options for certain diabetes businesses, including possible partnerships or divestitures. That does not include its diabetes drugs.

“Johnson & Johnson’s first-quarter results are in line with our expectations and we are confident we will achieve the full-year financial guidance we established at the beginning of the year,” said Alex Gorsky, Chairman and Chief Executive Officer. “The pending acquisition of Actelion demonstrates our ongoing commitment to bringing innovation to patients with significant unmet needs, and provides a unique opportunity for us to expand our portfolio with leading, differentiated in-market medicines and promising late-stage products.  We look forward to the associates from Actelion joining the Johnson & Johnson Family of Companies.”


Sources: Financial Times, Bloomberg, CNBC