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Will Pharmaceuticals Keep Fueling J&J’s Performance in Q2 2018?

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Nov. 20 2020, Updated 4:10 p.m. ET

J&J’s pharmaceuticals business performance

The majority of Johnson & Johnson’s sales come from its pharmaceuticals division. The company also operates across medical devices and consumer business segments. In fiscal 2017, J&J generated ~50% of its total sales of $76.5 billion from its pharmaceuticals business. The trend continued in the first quarter of fiscal 2018.

However, the company had witnessed a bump in its pharmaceuticals business during the first half of fiscal 2017, which recuperated to a certain extent during the second half of the year. The company expects continued growth momentum in its pharmaceuticals business in Q2 2018.

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J&J’s pharma business growth drivers

Johnson & Johnson has a strong product portfolio that has been gaining additional indications, leading to higher revenue growth. The expanded indications for J&J’s cancer drugs Darzalex and Imbruvica, along with the core products including Zytiga, telara, Invega Sustenna, and Simponi, are expected to augment the company’s pharmaceuticals sales in the rest of fiscal 2018 and beyond. However, PAH (pulmonary arterial hypertension) sales are expected to be a drag for J&J in the second quarter of fiscal 2018 due to increasing generic competition for Tracleer in international markets. For a brief discussion of J&J’s PAH business, check out this article. The product was added to J&J’s portfolio through the acquisition of Actelion in 2017. Also, the competition from biosimilars of J&J and Merck’s (MRK) Remicade should continue to hurt J&J’s sales in the second quarter.

The company has a robust pharmaceutical products pipeline and expects to file applications for ten products from 2017 through 2021. As per Johnson & Johnson, each of these products has a potential market opportunity of over $1 billion. The company has already received approval for two of these products, Tremfya and Erleada, which are witnessing a strong uptake. Tremfya reported sales of $72 million in the first quarter of fiscal 2018 and is expected to register higher sales in the second quarter.

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