UPDATED: J&J hikes forecast as standouts Imbruvica, Xarelto crank up pharma growth

Johnson & Johnson CEO Alex Gorsky. (photo courtesy of J&J)

Once again, Johnson & Johnson’s pharma engine powered top-line growth, with top performers Imbruvica, Xarelto and Daklinza all racking up impressive gains. Thanks to that “notable strength,” the healthcare giant hiked its sales and earnings forecasts for the year.

J&J’s pharmaceuticals sales vaulted ahead by almost 9% to $8.7 billion--even after currency effects--which helped jack up overall sales by 3.9%. Meanwhile, consumer sales slipped (down 1.8%) and devices squeaked out a tiny increase (0.8%).

In pharma, "the strong performance was generally across the board, with almost all of the key growth drivers delivering good quarters," Credit Suisse analyst Vamil Divan said in a Tuesday note, calling out the anti-inflammatory meds Simponi and Stelara among the meds beating his expectations.

Standout products? Though it fell short of some anlayst estimates, Imbruvica, the blood cancer drug, racked up global gains and now leads the market in second-line leukemia treatment, J&J said in a Tuesday investor presentation. The drug, shared with AbbVie, brought in $295 million for the quarter, more than half of that overseas.

Then there’s Xarelto, a reliable growth driver, with $594 million in sales, up more than 25%. J&J likes to brag about its market share among oral anticoagulants: Now 16.9% of the overall market, despite blockbuster rivals from Bristol-Myers Squibb and Pfizer, and Boehringer Ingelheim.

Some other big percentage increases--on the prostate cancer med Zytiga and anti-inflammatory Stelara, for instance--were fueled partly by adjustments to the funds J&J had set aside to cover gross-to-net charges. Apparently, the drugs haven’t been hit as hard as expected by discounts and rebates, which surface only after initial sales are booked.

Zytiga’s sales line amounted to $601 million worldwide, and Stelara’s stood at $804 million, a global hike of 41.1%.

J&J will need all the help it can get from these fast-growing products, what with biosimilar competition to its top seller, Remicade, coming down the pike. Pfizer and partner Celltrion say they’re raring to go with their biosim version, but as of last quarter’s earnings call, J&J CFO Dominic Caruso was insisting that Remicade won’t face copycats in the U.S. this year.

Leerink Partners analyst Danielle Antalffy also has a sanguine view, if for a different reason. Though investors have been worried about Remicade knockoffs, the blockbuster med "was not a meaningful contributor to outperformance relative to us and more importantly was not additive to pharma growth overall," Antalffy wrote in a Tuesday note.

Meanwhile, on the flip side of J&J’s pharma growth, the company’s hepatitis C drugs continued to drag down overall pharma growth. To be expected, now that Olysio faces formidable competition from Gilead Sciences’ Sovaldi and Harvoni, AbbVie’s Viekira Pak and Merck & Co.’s new entrant Zepatier, which carries a much lower list price than its predecessors. Gilead’s latest approval for an all-genotype hep C fighter, Epclusa, poses yet another threat.

On the consumer side, J&J saw increases in its over-the-counter meds, which accounted for $1 billion in sales. Pain relievers such as Tylenol pitched in the most--worldwide growth amounted to 13%--while allergy meds, including Zyrtec, faltered on seasonal weakness. J&J’s oral care line also grew strongly, mostly thanks to its Listerine brand, which has added some new products and launched marketing campaigns.

CEO Alex Gorsky touted J&J’s “good momentum” for the first half of the year, citing “notable strength in our pharmaceuticals business” thanks to “continued success of new products.” And Gorsky pointed out that more new meds are on the horizon: Pharma R&D “achieved significant clinical milestones” in the quarter, he said.

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Editor's note: This story was updated with analyst comments.

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