Johnson & Johnson is no stranger to buyouts, with around half of the healthcare conglomerate’s pharma innovation sourced from outside the company, new CEO Joaquin Duato said on a call with analysts Tuesday. Now, as a consumer health spinoff looms, the helmsman is talking up M&A opportunities amid a sweeping biotech depression.
Mergers and acquisitions have always been an “important component” of J&J’s business strategy, the CEO said on the call, noting that the drug juggernaut has pulled off around 40 acquisitions and major licensing agreements in the past five years.
But despite a major downturn in the biotech sector, J&J is “not opportunistic” in its M&A approach, Duato said. “We are still looking always at the fundamentals of these companies,” he added.
When it comes to pharmaceuticals, the company will weigh external opportunities in its bread-and-butter therapeutic areas like immunology, oncology and neuroscience as well as hypertension and cardiovascular.
“Down the road, we continue to see M&A as an important source of building our pipeline and also fortifying our current portfolio,” Duato said.
The company may soon have some extra cash on hand, too, thanks to an impending separation of its consumer health division, which is expected to occur next year.
The comments came as J&J pulled down $24 billion in total sales for the quarter, rising 3% over the $23.3 billion it made for the same period in 2021. Of that haul, J&J’s pharmaceutical business chipped in $13.3 billion, or $218 million above consensus, on the strength of multiple myeloma med Darzalex and COVID-19 vaccine sales, SVB Securities analysts wrote in a note to clients.
All told, pharma sales jumped 12.4%. The company also credited those gains to the momentum behind Darzalex plus inflammatory disease treatment Stelara, prostate cancer drug Erleada and plaque psoriasis therapy Tremfya as well as the company’s long-acting schizophrenia treatments Invega Sustenna/Xeplion and Invega Trinza/Trevicta.
Breaking out the numbers, Stelara sales clocked in at $2.6 billion—beating out Darzalex’s second-quarter revenues of $2 billion—for a 14% year-over-year rise and a 4% jump above consensus estimates, SVB’s analysts noted.
J&J’s COVID-19 vaccine provided a second-quarter sales boost, too, J&J said. Worldwide, the company’s single-dose vaccine reaped $544 million for the second three months of the year. That was well above consensus estimates of $278 million, the SVB team pointed out.
The company did not disclose sales figures for its new meds Carvykti and Rybrevant. Legend Biotech-partnered CAR-T Carvykti represents J&J’s first cell therapy. It snagged a U.S. multiple myeloma approval in February and won a conditional marketing authorization in the EU in late May.
Rybrevant, for its part, clinched an FDA nod last summer as the first treatment for non-small cell lunger cancer patients with epidermal growth factor receptor exon 20 insertion mutations. Analysts have predicted the med could reach $250 million in peak sales by 2026.
At the same time, declines in Remicade and Imbruvica sales tempered growth. Specifically, J&J noted that Imbruvica kept hold of its market leadership position, though sales still fell thanks to pressure from rivals. Imbruvica made $970 million in the second quarter, down about 6% from the $1.1 billion it made for the same period in 2021.
Meanwhile, Remicade is feeling the squeeze from biosimilar competitors, Jessica Moore, J&J’s vice president of investor relations, said on the company’s earnings call.
Despite the strong sales growth, J&J is scaling back its full-year revenue forecast. Now, the company expects revenue growth between 2.1% and 3.1%, which would amount to a range of $93.3 billion to $94.3 billion. That’s down slightly from the company’s April forecast of revenues between $94.8 billion and $95.8 billion.