Johnson & Johnson had a "disappointing" first quarter, but its fortunes for the second half of the year are looking up, one influential analyst figures. And partly on the strength of some expected launches J&J highlighted Wednesday, the years ahead looked good enough for that long-skeptical analyst to turn bullish.
Facing a variety of competitive pressures to key meds, Johnson & Johnson on Wednesday rolled out plans to launch or file for approval 11 potential blockbusters by 2021.
J&J plans to launch or file for approval with meds to treat prostate cancer, depression, acute myeloid leukemia, myelofibrosis and more over the next few years, the company announced. It also aims to continue expanding markets for its current meds, with 50 label updates planned over that same period.
That's one reason why J.P. Morgan analyst Michael Weinstein this week raised his view of Johnson & Johnson after staying neutral for several years. Weinstein sees a boost later this year: After a second quarter that'll feature no shortage of challenges, prior-year comparators get easier for J&J, making its growth numbers look a lot better for the last two quarters of the year.
Pharma growth should pick up to between 5% and 7% in the second half of 2017 and in 2018, according to Weinstein. New approvals and clinical data “become potential catalysts for an improving pharma business and a reacceleration of top-line growth,” he wrote.
Along with easier comparators and continued growth of existing meds, J&J has three big approvals coming over the next 18 months, and those are key to Weinstein's bullish turn.
Those are sirukumab to treat rheumatoid arthritis, which the drugmaker submitted last September, guselkumab to treat moderate-to-severe plaque psoriasis, submitted in November last year, and apalutamide to treat prostate cancer, which J&J is expected to file late this year, according to the note.
Consensus analyst estimates place sirukumab's 2020 sales at $463 million and guselkumab's sales that year at $533 million. J&J said it expects the drugs to be "approved and launched" this year. J&J's shares are up about 3% since J.P. Morgan published the report.
As MarketWatch notes, Weinstein has been neutral on J&J since April 2013. He raised his rating to overweight on Monday in what he called a “notably contrarian call.”In its first quarter, Johnson & Johnson 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, according to CFO Dominic Caruso. Sales of some key meds weren't up to snuff, however, raising eyebrows among pharma-watchers. Weinstein described the quarter as "disappointing" and predicted similar results for Q2.
J&J reported pharma sales of $8.24 billion for the first quarter, a figure that came up short of consensus analyst expectations by 2%. Pricing and discount pressure continued to play a role in stifling growth.
Speaking with analysts last month, execs said a Pfizer biosim to the big-selling rheumatoid arthritis med Remicade isn’t hurting the brand much, but that blood thinner Xarelto is taking a beating from tough payer negotiations.
Earlier this year, Johnson & Johnson rolled out a “transparency report” aimed at demonstrating high-level trends the business faces. The drugmaker raised list prices an average of 8.5% in 2016 but paid out a total of $11 billion in rebates and discounts. Its average net price increases were 3.5%, according to the report.