Johnson & Johnson's ($JNJ) hep C sales have been nosediving, and the fourth quarter provided more of the same on that front. But in the quarter, a strong dollar took a toll on the company's top line, too, dragging sales below analyst estimates.
The pharma giant's top line sank 2.4% to $17.81 billion in Q4, it said, missing Wall Street's $17.88 billion prediction. But stripping out the impact of acquisitions and sell-offs--as well as its hep C treatments, which plummeted 86.3%, thanks to hefty new competition from Gilead ($GILD) and AbbVie ($ABBV)--Q4 sales grew 4.4%, J&J said. Currency had a negative impact of 6.8%.
Adjusted earnings, on the other hand, beat out analyst expectations, coming in at $1.44 to best a $1.42 forecast.
|Johnson & Johnson CFO Dominic Caruso|
While hep C therapy Olysio may have been hurting, other new drugs continued to expand by leaps and bounds. Worldwide sales of oncology drug Imbruvica more than doubled, going to $235 million from $92 million in 2014's Q4. Diabetes therapy Invokana and its combo sister Invokamet also skyrocketed, vaulting ahead by 85.1%; the anti-inflammatory treatment Stelara jumped 36.1%, too.
Overall, these quick-launching meds helped bring 2015 pharma sales to $31.4 billion, an operational increase of 4.2%, J&J said. And with a lot of these newer drugs, the company expects to snag new indications in 2016, promising more sales.
But even with those label expansions, the new launches can't keep up this pace forever, CFO Dominic Caruso acknowledged on the company's earnings call. The New Jersey drugmaker predicted 2016 full-year sales between $70.8 billion and $71.5 billion, and while it expects that to include "healthy growth … from pharma," it'll be a "slightly lower rate of growth" compared with 2015 as the newcomers begin to mature, he said.
|Johnson & Johnson CEO Alex Gorsky|
As CEO Alex Gorsky stressed, however, the company has historically generated half its growth from M&A--and he expects that proportion to hold true in the future. Last year, the market for pickups "was premium-priced," he told investors, pointing out J&J's commitment to discipline when it comes to dealmaking. But "we remain very active in a number of different areas, and while we didn't necessarily close on a larger deal, I would not assume we were not engaged and involved," he said.
J&J has the resources to make some big moves in the new year, too. The company boasts a "higher level of cash than we typically hold," Caruso said, and it's "actively looking for the right opportunities to deploy that capital."
Meanwhile, J&J is working on restructuring its lagging medical device business, which posted an 8.7% sales slide for 2015. Last week, it announced plans to cut 3,000 jobs in a bid to save $1 billion.
- read J&J's release
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