- Pharmaceuticals yet again shouldered the majority of Johnson & Johnson's year-long sales growth, with oncology medications being a particular bright spot for the company's bottom line.
- The big drugmaker reported drug sales of $9.68 billion for the fourth quarter and $36.26 billion for the full-year 2017 — up 17.8% and 8.3%, respectively. The performance narrowly beat consensus estimates, which pegged drug sales at $9.66 billion for the last three months of the year.
- Across J&J's portfolio, Darzalex notched the largest gains. The multiple myeloma treatment had fourth quarter sales of $371 million, a more than 85% increase year-over-year due in part to label expansions. Cancer meds Imbruvica and Zytiga also experienced solid sales growth of roughly 50% in the fourth quarter compared to the same period in 2016.
Market analysts expect that the newly approved U.S. tax code will energize biopharma M&A after a somewhat lackluster 2017, a trend that was supported by Sanofi SA's and Celgene Corp.'s multibillion-dollar takeouts of Bioverativ Inc. and Juno Therapeutics Inc. earlier this week.
Given the hubbub, analysts were curious as to whether the new laws have caused J&J — a blue chip company that carried more than $15 billion in cash and cash equivalents by the end of September — to rethink its dealmaking strategy.
The short answer is no.
"Even though you see more activity in the early part of this year, I just want to remind you that we were extremely active last year — doing an excess of $35 billion of acquisitions last year, obviously in advance of corporate tax reform," Dominic Caruso, J&J's chief financial officer, said on a Jan. 23 investor call.
CEO Alex Gorsky noted that his company remains focused on earlier-stage investments, and will keep on the lookout for potential acquisitions.
"Ultimately, we've also got the flexibility to move depending on what opportunities present themselves," he said during the call. "Because, frankly, the way we've been able to manage our balance sheet, because of our overall strong position, should an opportunity to present itself we always have the prerogative to engage at that point in time. I expect that's the way we'll navigate our way through 2018."
In the meantime, J&J is enjoying sales growth across all six of its main pharmaceutical categories. The $30 billion acquisition of Actelion Pharmaceuticals Ltd. provided the big pharma with a string of pulmonary arterial hypertension drugs, which together brought in more than $1.3 billion in 2017. The oncology franchise grew significantly as well, increasing 25% year-over-year to $7.26 billion.
Cancer drugs offer highlights, misses
Within oncology, Zytiga (abiraterone acetate) sales were 20% above consensus, according to a Jan. 23 note from Jefferies analyst Jeffrey Holford. The prostate drug is facing more serious generic threats, however, after a U.S. administrative court last week invalidated one of its patents. J&J's Caruso argued that a 30-month stay should help protect the drug in the near-term.
Sales for Imbruvica (ibrutinib), while up both on the quarter and on the year, also fell 3% below consensus. Holford acknowledged that the miss could affect AbbVie Inc., which is partnered on the drug, as well.
Darzalex (daratumumab)'s performance was more of a mixed bag. While Holford's note says the drug's $371 million in fourth quarter sales came in 10% above consensus, a different note on Genmab A/S — which partners with J&J on Darzalex — from Jefferies analyst Peter Welford indicates the sales were "shy" of a $386 million estimate.
Full-year sales of Darzalex were $1.24 billion for J&J. Genmab A/S executives have estimated $1.1 billion to $1.3 billion in annual sales for the drug.