Magazine
#7 Johnson & Johnson
One Johnson & Johnson Plaza, New Brunswick, NJ 08933
Tel: (732) 524-0400 Fax: (732) 524-3300
www.jnj.com
| Headcount (total) | 118,700 | |
| Year Established | 1887 | |
| Pharma Revenues | $24,567 | -1% |
| Total Revenues | $63,747 | +4% |
| Net Income | $12,949 | +22% |
| R&D Budget | $5,095 | -3% |
| 2008 Top Selling Drugs | |||
| Drug | Indication | Sales | (+/-%) |
| Remicade | rheumatoid arthritis | $3,748 | +13% |
| Topamax | epilepsy | $2,731 | +11% |
| Procrit/Eprex | anemia | $2,460 | -15% |
| Risperdal | antipsychotic | $2,126 | -38% |
| Levaquin | infection | $1,591 | -3% |
| Risperdal Consta | antipsychotic | $1,309 | +16% |
| Concerta | ADHD | $1,247 | +21% |
| Aciphex/Pariet | acid reflux | $1,158 | -15% |
| Duragesic | chronic pain | $1,036 | -11% |
| Velcade | myeloma/lymphoma | $787 | +47% |
Account for 71% of total pharma sales, down from 74% in 2007.
PROFILE
Last year, I pointed out that Johnson & Johnson’s pharma revenues were pretty top-heavy; around 75% of that money came from eight products. That number’s down to 71% this year (and J&J split one of the reported products in two), but five (!) of those drugs — Topamax, Levaquin, Aciphex, Duragesic and Risperdal — got hit by generic exposure in different markets, contributing to a 1% drop in overall drug revenues. Risperdal in particular got demolished, shedding $1.3 billion in annual revenues. In addition to the generic erosion of those top sellers, Procrit dropped 15% of its revenues last year, after a 9% drop in 2007. The EPO biologic continued to decline because of new labeling and dosing rules, leaving J&J with another hole to fill.
It got worse in 1Q09; overall pharma revs fell 10% overall, with half of that coming from currency fluctuations. Risperdal shed another 66% in year-on-year revenues, dropping from $809 million in 1Q08 to $279 million in 1Q09. Even strong sellers like Remicade fell short in that quarter, posting growth of only 3%. Only Concerta posted double-digit sales growth in 1Q09, reaching $344 million in revenues. These declines led the company to cut a reported 900 jobs (6% of U.S. pharma sales) in April 2009.
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The Lowe Down
The thing to remember about Johnson & Johnson is that they’re not completely a drug company. They’re more like a drug store, with all the other aisles included (save maybe the one with the big candy bars and nacho chips). A solid majority of the company’s profits come from non-pharmaceutical sales, which gives them a different character from most of the others on this list. That said, they’re a pretty fierce pharmaceutical competitor, with a reputation for making shrewd outside deals. Still, one of those shrewd deals is currently in the process of melting down in their hands: their Schering-Plough biologics agreement. That one’s all tangled up in the not-so-polite fiction that S-P isn’t in the process of being bought out by Merck. I suppose you could argue that J&J wasn’t prepared for such an imaginative approach, but this business has a way of expanding one’s horizons. Things look flat for the near term over there. But they have some big bets on the table, with collaborations in cardiovascular, cancer, and infectious disease that could pay off big. And even if they all don’t, there’s still all those several hundred products stacked up in the other aisles . . .—Derek Lowe |
How’d the other two parts of J&J’s fabled three-column structure do? Consumer products were up 11% in 2008, but was down 9% in 1Q09, while Medical Devices and Diagnostics revenues rose 6% for the year, but fell 3% in 1Q09. So J&J’s got some work to do, and it’s not just in the pharma business.
With all those top sellers falling down the charts, where is the new revenue going to come from? While J&J’s past earnings statements tended to highlight only the biggest (billion-plus) sellers, its most recent one highlighted a couple of up-and-comers. HIV treatment Prezista posted a 65% boost to $122 million in revenues in 1Q09, while Risperdal followup Invega was up 38% to $91 million. Meanwhile, sales of Velcade, another next-wave drug for J&J, posted only 4% growth in 1Q09, after posting a 47% jump in FY08 to $787 million. J&J only records international sales of Velcade; Millennium (Takeda) handles U.S. marketing.
The company has been pinning some of its blockbuster hopes on rivaroxaban, a next-gen oral anticoagulant that could become a multi-billion-dollar product. Approved in the EU as Xarelto (where it’s marketed by Bayer Schering), the drug would be the first new treatment of this kind in the U.S. since 1954, and could put a dent in Sanofi-Aventis’ $4.0 billion Lovenox franchise. Despite favorable results against Lovenox and a strong (15-2) recommendation from an advisory committee, rivaroxaban was delayed by the FDA in May 2009, which sent a complete response letter to J&J. The company hasn’t divulged the contents of the letter, but a spokesman said that no new clinical trials were requested. The NDA was submitted in July 2008.
J&J is also awaiting the FDA’s approval of Stelara, a new biologic treatment for plaque psoriasis. Stelara is approved in the EU and Canada, but the FDA in May pushed off its approval timeline by three months. In June 2008, an advisory committee recommended the drug, but in December, the agency requested more info, including a REMS proposal. As with rivaroxaban, the new delay does not involve the need for more trials.
Stelara was developed in partnership with Medarex, using its UltiMAB technology. That same technology was employed to develop J&J’s Simponi, a once-a-month TNF-alpha inhibiting injection that received approval in April 2009 for rheumatoid arthritis, psoriatic arthritis, and ankylosing spondylitis. Schering-Plough owns the European rights to Simponi (and predecessor Remicade), from a 1998 distribution agreement, and it seems that the Merck/SP merger was structured so that the combined company could keep control of SP’s portion of the Remicade/Simponi pot. (More on that structure in Merck’s and SP’s profiles.)
J&J’s not taking that lying down, especially when it has a chance to take hold of the revenue streams for both drugs. There was speculation that J&J might step in and trump Merck’s $41.1 billion bid for SP, but it looks like J&J is taking the arrangement to court instead. In May 2009, J&J filed for arbitration, contending that the merger fulfills the change-of-control clause in the 1998 agreement. Analysts’ consensus is that Merck/SP will avoid arbitration by giving J&J a larger cut of the revenues from both drugs.
Things look bleak at the top for J&J, but there’s at least a hint of the cavalry on its way. And with $11.0 billion in cash on hand at the end of last year, J&J’s in a position to make some deals.
For the full J&Jprofile, including pipeline and patent information, download the PDF.
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