Johnson & Johnson’s (JNJ) pharmaceuticals segment consists of its immunology, infectious disease, neuroscience, oncology, and cardiovascular and metabolics franchises.
The major blockbuster drugs under this franchise are Remicade, Stelara, and Simponi/Simponi Aria. The revenues for Remicade are expected to increase following label expansion in the Japanese market, as well as absorption of the impact of patent expiry by other markets. Revenues for Simponi/Simponi Aria are expected to increase due to increased market penetration of the drugs in the US markets.
The company also expects Stelara, a blockbuster drug for the treatment of psoriasis, to grow at 15% annually with strong growth in the US markets 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 products and Hepatitis C products. For HIV products, the successful launch of Prezcobix during 2015 and the increased demand for HIV products will drive the growth of HIV products during 4Q16.
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 the US markets.
The neuroscience franchise consists of drugs like Concerta, Invega Sustenna, and Xeplion. Concerta is expected to report positive growth in its 4Q16 revenues due to the reclassification of generic competitors in the US market. Invega Sustenna and Xeplion are expected to have positive growth in 4Q16 following higher demand in long-acting injectable products worldwide.
Zytiga is expected to report increased revenues due to improved sales in the US, Asia, and Latin America, partially impacted by lower sales in European markets. Imbruvica is expected to report an increase in the revenues for 4Q16, following the approval of new indications in the US and European markets. Imbruvica competes with Gilead Sciences’ (GILD) Zydelig. Also, the strong uptake of Darzalex will also contribute to the growth of oncology franchise revenues during 4Q16.
Cardiovascular and metabolics franchise
The key products for the cardiovascular and metabolics franchise are Xarelto and Invokana. The increase in Xarelto revenues is expected to surpass the decrease in Invokana in 4Q16 following increased demand of Xarelto in the US markets.
Investors can consider ETFs like the iShares US Pharmaceuticals ETF (IHE), which holds 9.7% of its portfolio in Johnson & Johnson in order to divest the risk.