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Johnson & Johnson’s Pharmaceuticals Segment: 3Q16 Estimates

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Pharmaceuticals segment

Johnson & Johnson’s (JNJ) Pharmaceuticals segment is comprised of the following franchises: immunology, infectious disease, neuroscience, oncology, and cardiovascular and metabolics.

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Immunology franchise

The major blockbuster drugs under the immunology franchise are Remicade, Stelara, and Simponi/Simponi Aria. The revenues for Remicade are expected to rise following the label expansion into the Japanese market as well as the absorption of the impact of patent expiration by other markets. Revenues for Simponi/Simponi Aria are expected to rise due to increased market penetration of the drugs in US markets.

The company also expects Stelara, a blockbuster drug for the treatment of psoriasis, to rise 15.0% annually, with strong growth in US as well as international markets. Stelara competes with Amgen’s (AMGN) and Pfizer’s (PFE) Enbrel.

Infectious disease franchise

The infectious disease franchise consists mainly of HIV (human immunodeficiency virus) products and hepatitis C products. For HIV products, the successful launch of Prezcobix in 2015 and the increased demand for HIV products will drive the growth of HIV products in 3Q16.

Hepatitis C virus (or HCV) products include Olysio, Sovraid, and Invico. The revenues for HCV products have fallen substantially as a result of increased competition in US markets.

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Neuroscience franchise

The neuroscience franchise consists of drugs such as Concerta, Invega Sustenna, and Xeplion. Concerta is expected to report positive growth in 3Q16 revenues due to the reclassification of generic competitors in the US market. Invega Sustenna and Xeplion are expected to have positive growth in 3Q16 following higher demand in long-acting injectable products worldwide.

Oncology franchise

Zytiga’s revenues are expected to rise due to improved sales in the United States, Asia, and Latin America, partially impacted by lower sales in the European markets. Imbruvica is expected to report a rise in revenues for 3Q16 following the approval of new indications in the United States and Europe. Imbruvica competes with Gilead Sciences’ (GILD) Zydelig.

The strong uptake of Darzalex will also contribute to the rise in oncology revenues in 3Q16.

Cardiovascular and metabolics franchise

The key products for Johnson & Johnson’s cardiovascular and metabolics franchise are Xarelto and Invokana. The revenues for both of these drugs are expected to rise in 3Q16 following an increased demand for them in US markets.

To divest some of your risk, you can consider the iShares Global Healthcare (IXJ), which holds 8.2% of its portfolio in Johnson & Johnson.

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