Pharmaceuticals

Johnson & Johnson’s (JNJ) Pharmaceuticals segment comprises the immunology, infectious diseases, neuroscience, oncology, and cardiovascular and metabolics franchises.

Johnson & Johnson’s 2Q17 Estimates: Pharmaceuticals

Infectious diseases

The infectious diseases franchise consists mainly of HIV products and hepatitis C products. The strong performances of HIV products such as Prezcobix are expected to drive this franchise’s revenue in 2Q17.

On the other hand, the lower sales of hepatitis C products such as Olysio, Sovraid, and Invico due to increased US competition are expected to offset the franchise’s revenue growth in 2Q17.

Cardiovascular and metabolics

The key products in the cardiovascular and metabolics franchise are Xarelto and Invokana. Xarelto is expected to report growth in 2Q17, driven by the increased demand in the US market. Xarelto’s rise in revenue will likely be substantially offset by lower sales of Invokana in 2Q17.

Immunology

The immunology franchise includes many blockbuster drugs such as Stelara, Simponi and Simponi Aria, and Remicade. Stelara is expected to report strong sales in both the US and international markets in 2Q17, while Simponi and Simponi Aria are expected to report strong sales due to their increased penetration in the US market. Remicade’s sales are expected to offset the growth of the franchise in 2Q17.

Oncology

The oncology franchise includes drugs such as Zytiga, Imbruvica, and Darzalex. The strong performances of Darzalex and Imbruvica are expected to drive the growth in the oncology franchise’s revenue in 2Q17, while Zytiga’s lower sales are expected to affect the growth of the franchise in 2Q17.

Neuroscience

The neuroscience franchise consists of drugs such as Concerta, Invega Sustenna, and Xeplion. The franchise’s Invega sales are expected to fall in 2Q17, and JNJ’s divestiture of the active pharmaceuticals ingredients business in 1Q17 is expected to continue to have a negative effect on its revenue. The franchise’s Xeplion sales are expected to report growth in 2Q17.

To divest risk, investors can consider ETFs such as the Vanguard Healthcare ETF (VHT), which holds ~10.0% of its total assets in Johnson & Johnson. VHT also holds 5.1% in Merck & Co. (MRK), 2.8% in Bristol-Myers Squibb (BMY), and 6.1% in Pfizer (PFE).

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