J&J's Imbruvica, Invokana fuel Street-beating Q1 sales

Dominic Caruso, Johnson & Johnson chief financial officer
J&J CFO Dominic Caruso

Johnson & Johnson’s ($JNJ) new products delivered again in Q1 2016, helping generate revenues that beat the Street’s estimates even as hep C sales lagged during the quarter.

The New Brunswick, NJ-based pharma giant posted sales of $17.5 billion, nearly matching analysts’ expectations of $17.48 billion. J&J can partly thank oncology drug Imbruvica for that haul. The drug’s worldwide sales shot up to $261 million from $116 million in Q4 2014. Diabetes med Invokana and combo Invokamet also delivered with $325 million in worldwide sales, a 17% increase.

These strong performances helped drive J&J to a Q1 win in pharma. Worldwide pharma sales came in at $8.2 billion in Q1, a 5.9% increase year-over-year.

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Adjusted earnings also improved in Q1. The company’s adjusted earnings per share rang in at $1.68 billion, above the Street’s forecast of $1.65 billion.

Still, it didn’t all come up roses for J&J in Q1. Sales for hep C med Olysio plummeted to $32 million from $234 million in Q1 2015, an 86% drop, as the drug faces some stiff competition from Gilead ($GILD) and AbbVie’s ($ABBV) rival meds.

But despite the hep C miss, the company is “very pleased” with its “strong start for the year,” and sees big things in the months ahead, CFO Dominic Caruso said on J&J’s Q1 earnings call. The company’s pharma pipeline is “very, very robust” and includes new products with billion-dollar sales potential each, Caruso said.

And J&J isn’t too worried about biosimilar competition to Remicade, Caruso said. The company doesn’t expect any biosimilar rivals to take a bite out of sales this year, Caruso said, and J&J will defend patents on its bestseller that expire in 2018 and 2027.

The company is riding that optimism into the rest of 2016. J&J raised its full-year sales guidance to $71.2 billion to $71.9 billion, higher than the forecast of $70.8 billion to $71.5 billion that it set out three months ago. J&J also upped its adjusted full-year earnings guidance to $6.53-$6.68 a share, up from earlier forecasts of $6.43 to $6.58 a share.

It could be a difficult road ahead for J&J, especially after Pfizer ($PFE) and Allergan’s ($AGN) megamerger collapsed under new tax inversion rules. “It’s probably true” that the companies’ return to the market as individual entities creates more competition, Caruso said.

But J&J is “accustomed to looking at various acquisition candidates” and some deal valuations could still prove lucrative, Caruso said. “We’re patient, disciplined, and we’ll look for the right opportunity at the right time with the right valuation.”

- here’s J&J’s earnings statement

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Image Courtesy of Johnson & Johnson

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