USA —Johnson & Johnson, a prominent healthcare conglomerate, is brimming with optimism as it anticipates a year of strong growth, surpassing profit estimates.
The resurgence of joint replacement surgeries and other medical procedures post-COVID-19, coupled with inflation steadying, has fueled this confidence.
Consequently, the company’s shares have soared by 6%. Moreover, the demand for cancer drugs remains robust, and the protection of their blockbuster arthritis drug further enhances their pharmaceutical portfolio.
The healthcare industry is witnessing a positive wave, with other medical device makers such as Medtronic and Abbott Laboratories also reporting upbeat results, gaining more than 3% in shares.
In line with this success, Johnson & Johnson now expects its adjusted 2023 profit to range between US$10.70 and US$10.80 per share, surpassing previous estimates of US$10.65 per share and their own prior forecast of US$10.60 to US$10.70 per share.
In the second quarter, the company’s earnings came in at an impressive US$2.80 per share, surpassing analysts’ expectations of US$2.62.
Chief Financial Officer Joseph Wolk attributed their previous cautiousness to the prevailing uncertainties but acknowledged the newfound strength across their entire portfolio.
Inflation, a concern in the previous quarter, has now stabilized, providing the much-needed impetus for J&J’s optimistic outlook.
While Johnson & Johnson is recovering from the impact of the pandemic on its medical devices business, it has invested significantly in newer cancer drugs to offset potential sales slowdowns in their Stelara arthritis drug when biosimilars arrive in 2025.
The second-quarter sales for the medical device unit stood at an impressive US$7.79 billion, surpassing estimates of US$7.55 billion.
The company’s medical device growth has been driven by various factors, including electrophysiological products used to assess heart electrical systems and wound closure products.
Furthermore, the acquisition of Abiomed, a cardiovascular medical technology company, in December has played a vital role in fueling this growth.
The pharmaceutical business at Johnson & Johnson has also witnessed substantial growth, with total pharmaceutical sales exceeding US$13.73 billion, a remarkable increase of more than 3% from the previous year.
Excluding sales of the Covid vaccine, the pharmaceutical division still recorded a staggering US$13.45 billion.
Johnson & Johnson remains focused on developing drugs across various disease areas, which have contributed to this growth.
Notable performers in their pharmaceutical portfolio include Darzalex, Erleada, and the blockbuster drug Stelara, which treats multiple immune-mediated inflammatory diseases.
The company’s confidence in reaching its target of US$57 billion in pharmaceutical sales by 2025 is further reinforced by its patent litigation settlement with Amgen over Stelara.
Despite facing competition from biosimilars for its arthritis drug Remicade, Johnson & Johnson remains bullish about the potential of upcoming drug launches, such as the oral treatment Milvexian, which aims to prevent blood clots.
While Johnson & Johnson’s pharmaceutical and medical device businesses are thriving, the company is also taking strategic steps to separate from its consumer health unit, Kenvue.
This unit, responsible for popular self-care and skincare brands like Tylenol and Neutrogena, went public in May.
To enable this separation, Johnson & Johnson plans to reduce its stake in Kenvue through an exchange offer, providing an opportunity for its shareholders to exchange their shares for Kenvue’s common stock.
In the face of ongoing lawsuits and bankruptcy proceedings related to its talc products, including Baby Powder, Johnson & Johnson is steadfast in its commitment to defend itself vigorously.
The company is facing over 38,000 lawsuits alleging asbestos contamination in its products leading to cancer, allegations it has consistently denied.
Seeking resolution, Johnson & Johnson has made a US$8.9 billion settlement in bankruptcy court for the second time.
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