Johnson & Johnson’s Pharmaceuticals Segment in 3Q16


Dec. 12 2016, Updated 8:05 a.m. ET

Pharmaceuticals segment

Johnson & Johnson’s (JNJ) Pharmaceuticals segment comprises the following franchises: Immunology, Infectious Disease, Neuroscience, Oncology, and Cardiovascular and Metabolics.

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Immunology franchise

The major blockbuster drugs under Johnson & Johnson’s Immunology franchise are Remicade, Stelara, and Simponi/Simponi Aria. The Immunology franchise revenues rose 18.0% to $3.1 billion in 3Q16, including operational growth of 17.8% and a 0.2% positive impact of foreign exchange.

The Immunology franchise saw strong performance in the US markets, including increased penetration for Stelara and Simponi Aria. The inventory levels had a positive impact on the US exports. Also, the international markets have shown positive growth across major regions.

Infectious Disease franchise

Johnson & Johnson’s (JNJ) Infectious Disease franchise consists mainly of HIV products and Hepatitis C products. The HIV products include Prezista and Prezcobix, while the Hepatitis C virus (or HCV) products include Olysio, Sovraid, and Invico.

The revenues for the Infectious Diseases franchise fell 0.7% to $842 million in 3Q16, including an operational decline of 0.3% due to lower sales of Hepatitis C products. During the quarter, the company launched Odefsey for the treatment of HIV.

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Neuroscience franchise

Johnson & Johnson’s Neuroscience franchise’s drugs include Concerta, Invega Sustenna, and Xeplion. The Neuroscience franchise revenues fell 0.8% to ~$1.5 billion in 3Q16, including an operational decrease of 2.2% and partially offset by a 1.4% positive impact of foreign exchange.

Invega Trinza and Xeplion were the growth drivers for its long-acting injectable products. However, its US sales were affected by lower sales of Invega due to competitive products.

Oncology franchise

Johnson & Johnson’s Oncology franchise grew 29.7% to ~$1.5 billion during 3Q16, including an operational increase of 29.7%. The growth was driven by increased sales of Zytiga and Imbruvica, as well as a strong uptake of Darzalex.

The company also launched Darzalex in ten countries in the European region. Zytiga competes with Dendreon’s (DNDN) Provenge while Imbruvica competes with Gilead Sciences’s (GILD) Zydelig.

Cardiovascular and Metabolics franchise

Johnson & Johnson’s (JNJ) Cardiovascular and Metabolics franchise reported a decrease in revenues of 5.9% to ~$1.5 billion in 3Q16. The decrease was due to lower sales of Invokana following the increase in price.

The franchise’s decrease in revenues was partially offset by increased sales of Xarelto. Xarelto, a blood thinner, competes with Boehringer Ingelheim’s Pradaxa, Bristol-Myers Squibb’s (BMY), and Pfizer’s (PFE) Eliquis. Invokana, a diabetes drug, competes with AstraZeneca’s Farxiga.

For broad-based industry exposure, you can consider the Fidelity MSCI Healthcare Index ETF (FHLC), which holds 10% of its total assets in JNJ.


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