Dive Brief:
- Johnson & Johnson's pharmaceutical worldwide sales increased by 8.9% in the second quarter compared to a year prior, with $8.7 billion in overall sales. U.S. pharmaceutical revenue jumped higher, growing by 13.2%, while international sales growth was more muted.
- Four drugs drove growth for the drugs unit: altogether Imbruvica, Xarelto, Stilara and Simponi pulled in $637 million in new revenue, representing 90% of overall sales growth. Notably, sales of Stilara hit $570 million, while Imbruvica recorded a 91.6% in worldwide growth as Q2 sales nearly doubled to $295 million.
- But Johnson & Johnson's litigation costs also skyrocketed last quarter, totaling $600 million prior to tax adjustments—a 326% increase from the $141 million spent prior to tax adjustments for litigation in 2015.
Dive Insight:
"We continue to see good momentum through the first half of 2016, delivering solid results in the second quarter, supported by strong underlying growth across our enterprise," said Alex Gorsky, Chairman and Chief Executive Officer.
The company has many reasons to be optimistic: U.S. sales grew by a marked amount last quarter; the pharmaceutical subsidiary secured approval of Darcylex, Trevicta and an additional Imbruvica indication in the EU; the FDA granted yet another breakthrough indication to Imbruvica; and pipeline clinical trials are advancing with few setbacks, according to the conference call this morning.
But buried in the details J&J reported increases litigation expenses as the company faces numerous lawsuits over Risperdal-induced gynecomastia and a potential link from their talcum powder to ovarian cancer.
According to financial statements, the company spent $600 million in litigation costs last quarter before tax considerations. This is sharply higher than the $66 million in expense reported last quarter and over four times the total from last year.
Of course, the reported expenses are shared across all J&J subsidiaries and this quarter's uptick in litigation expenses may just be a return to the norm. In 2014, the company reportedly paid $1.1 billion in litigation before provisions for taxes on income, and in 2013 litigation costs surpassed $2 billion according to the company's annual reports.