J&J's pharma unit 'fastest-growing' in the drug business, CEO Gorsky says

Johnson & Johnson's ($JNJ) new drugs came through again. Thanks to treatments from psoriasis-fighter Stelara to antipsychotic Invega Sustenna, the company's pharma sales were up a whopping 25% in the U.S. for 2014, and 15% worldwide, to $32.4 billion.

Johnson & Johnson CEO Alex Gorsky

CEO Alex Gorsky was quick to brag that J&J's prescription drugs unit is the biggest in the U.S. and the fastest-growing pharma in the business. That's a good thing for the company, particularly in the fourth quarter, because its pharma segment helped buoy less-than-fantastic results in consumer health, which only just brought some key brands back to full supply after 2010's spate of recalls, and its medical devices unit. Fourth quarter sales were down slightly overall, thanks in part to currency effects.

But some tougher times are ahead. Fourth-quarter growth wasn't as high as for the full year, partly because of a slowdown for one of the biggest performers in J&J's pharma business last year, its hep C treatment Olysio. Approved late in 2013, Olysio topped $2.3 billion in global sales for 2014, a big chunk of overall drug revenue. The drug also won a new FDA indication in November, as a combo treatment with Gilead Sciences' ($GILD) blockbuster Sovaldi. But even so, now that Gilead Sciences' hep C combo pill Harvoni and AbbVie's ($ABBV) Viekira Pak are on the market, Olysio's spot in hepatitis C cocktails is precarious.

So, those sales are now at risk. J&J felt the need to point out its pharma growth without hepatitis C--and its 2015 forecast includes the same qualifier. For the fourth quarter, pharma sales would have grown by 11.3% without its hep C franchise, compared with 13.9% including those meds.

Meanwhile, its anticoagulant Xarelto is facing some stepped up competition from Pfizer ($PFE) and Bristol-Myers Squibb's ($BMY) big marketing push on Eliquis. Xarelto has staked out a big piece of the market for warfarin alternatives, but the Pfizer-BMS drug could endanger that. The prostate cancer drug Zytiga saw growth slide a bit during the fourth quarter, thanks to new competition from Medivation ($MDVN) and Astellas' treatment Xtandi. And Novartis' new psoriasis fighter Cosentyx--approved in Japan and now Europe, with FDA's decision coming soon--could prove to be strong competition for Stelara, thanks to some head-to-head trial data.

In fact, Goldman Sachs analyst Jami Rubin last week cut her recommendation on J&J stock to "sell" from "neutral," because she's looking for fewer new drugs this year from the company.

Ironically enough, any softness in the pharma business is expected to be offset in 2015 by the devices and consumer health segments, which are expected to do better this year than in previous years, CFO Dominic Caruso said during a call with analysts.

- read the J&J release

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