J&J's immunology meds Stelara, Tremfya posted big revenue gains, but pricing is slipping: analyst

Stelara generated nearly $2 billion during the third quarter, Johnson & Johnson reported Tuesday. (J&J)

Johnson & Johnson touted solid growth for its immunology meds Stelara and Tremfya in its latest quarterly results, but Bernstein analysts are spotlighting steep net pricing declines for the meds amid new competition. 

Stelara, used to treat Crohn’s disease, ulcerative colitis, plaque psoriasis and psoriatic arthritis, posted $1.95 billion in third-quarter sales, a 14.7% increase from the same period last year. Tremfya, approved to treat plaque psoriasis and psoriatic arthritis, generated $327 million, a 13.1% jump. The meds won approval in 2016 and 2017, respectively. 

But even as revenues for those meds grow by double-digit percentages, AbbVie’s next-gen plaque psoriasis and rheumatoid arthritis meds, Skyrizi and Rinvoq, are driving prices down, Bernstein analyst Ronny Gal wrote in a note to clients. 

Amid the pandemic, immunology drug volumes are “recovering,” Gal wrote. Still, he pointed out that both J&J meds “reported double digit [year-over-year] decline in pricing, suggesting the need to discount the products to retain share, notably in psoriasis.” 

Stelara’s “implied price" fell 19% versus last year’s third quarter and was flat versus 2020's second quarter, the Bernstein team calculated. Tremfya suffered much more, dropping 47% year-over-year and 23% since the second quarter of 2020. 

J&J execs touted the meds' performance during Tuesday's quarterly conference call, but Vice President of Investor Relations Chris DelOrefice noted that their growth was “negatively impacted by COVID-19, along with an unfavorable prior period pricing adjustment and further investments in rebates offered to enhance access.” Looking forward, J&J execs expect pricing pressure to continue into 2021, whether from higher U.S. unemployment or government efforts to crack down on pharmaceutical prices, they said Tuesday.  

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Despite the pricing pressure, J&J still figures its pharma business can grow. The company's pharma "growth is all based on volume, not price,” J&J's pharmaceuticals chairman Jennifer Taubert said on the call. Overall, for 2021, J&J expects "solid volume-driven above market growth" from its pharma group, Chief Financial Officer Joe Wolk said Tuesday.

Elsewhere in the company’s portfolio, Remicade and Procrit continue to face biosimilar competition, but Gal noted the drugs didn’t drop sequentially from the second quarter. Remicade, which has been under biosim pressure for years, posted $921 million in the third quarter compared with $935 million in the second quarter. Procrit generated $132 million during the third quarter compared with $136 million in the second quarter.

“This appears to reflect the dependency of these products on the contracting cycle, with biosimilar gains of 1-2Q now already realized,” Gal wrote. “This should be positive for Amgen, who is also a defendant in the Epogen market.”