J&J's Remicade sees 'very little' biosim erosion, but payers are sticking it to Xarelto

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J&J beat on earnings in the first quarter despite ​​​​​missing analyst expectations on pharma and consumer health sales.

Johnson & Johnson missed analyst expectations on pharma and consumer health sales in the first quarter as some of its stalwart performers shrank instead of grew. One bit of good news? Remicade is holding its own against Pfizer's new biosim rival, Inflectra.

The drugmaker is seeing “very little impact” from Inflectra competition, a trend it would like to see continue in the face of stepped-up pressure in cardiovascular and metabolic diseases.

Kicking off the first-quarter earnings season on Tuesday, J&J reported adjusted earnings of $1.83 per share, up 5.8% year over year and 3% better than consensus expectations—thanks to some "disciplined" cost moves and a lower tax rate, CFO Dominic Caruso said.

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Increased pricing and discount pressure dogged J&J’s pharma sales, which grew only slightly to $8.24 billion, short of expectations by 2%. The company's cardiovascular and metabolic business was hit hardest—even its reliable growth engine Xarelto suffered a decline—as payers took advantage of competition in those fields to squeeze out savings.

“In certain parts of the portfolio, cardiovascular and metabolics in particular, that’s a little bit more crowded,” Caruso said on Tuesday’s earnings call with analysts. “That’s where the payer community has more influence in rebates," he added.

J&J’s blood thinner Xarelto posted a 9.5% sales decrease to $513 million in the first quarter, as increased rebates offset gains in global market share, the company said. The diabetes drug Invokana fell 12.6% to $284 million—amid stepped-up competition in the SGLT2 field from Eli Lilly and Boehringer Ingelheim's Jardiance—and the anemia med Procrit slipped 9.9% to $247 million.

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On the bright side for J&J, its big-selling rheumatoid arthritis med Remicade is holding strong in the face of a biosimilar attack from Pfizer and partner Celltrion, Caruso said. J&J is seeing “very little impact” from the new entrant.

Coming in ahead of consensus estimates, Remicade suffered a 6% sales decline to $1.67 billion for the quarter. Pfizer launched its knockoff, Inflectra, at a 15% discount late last year “to offer immediate relief in this high-cost area,” a spokesperson said at the time.

“With the long history that we have of Remicade’s efficacy and safety, we believe patients will move slowly to switch to a biosimilar,” Caruso told analysts Tuesday. That could be overly optimistic, however, given Merck & Co.'s experience with the med in Europe, where it holds marketing rights. Biosims there launched earlier and have since caught on, siphoning off significant sales from the brand.

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Meanwhile, J&J has Actelion to boost its 2017 forecast. Predicting it’ll close on that $30 billion purchase in June, the New Jersey drug giant on Tuesday bumped its 2017 guidance to $75.4 billion to $76.1 billion. Adjusted EPS is now expected to come in at $7 to $7.15 for the year.

Despite “challenging dynamics and difficult comparisons,” J&J is on track to deliver on those projections, Caruso said after the drugmaker reported its results.

Elsewhere in its portfolio, ADHD med Concerta is losing steam thanks to a generic entrant from Mylan. The drug lost 19.4% of its U.S. sales on the period to $108 million. J&J’s oncology business grew 17.7% on the quarter to $1.59 billion thanks to big growth in Darzalex and Imbruvica sales.