Johnson & Johnson (NYSE:JNJ) preview through market eyes after Q3 results


With the third quarter results of Johnson & Johnson (NYSE:JNJ), the company’s stock price dropped just a bit even after it crossed the consensus estimates by keeping the overall outlook quite the same for the 2014 year. It was probably due to the decrease in the sales of the company’s new drug Olysio with heavy competition from Sovaldi- Gilead Sciences (NASDAQ:GILD) drug.

Johnson & Johnson (NYSE:JNJ) gained approval for the Hepatitis C drug that they created named Olysio in the U.S. last November and for Europe this May. The sales of the drug have doubled since the second quarter of the current year which made around $831 million. With the approval from Europe, this completely impacted it further as a hit. The drug reaped in more than about $1.98 billion sales only in its initial nine months of the current year.

Johnson & Johnson’s (NYSE:JNJ) pharmaceutical division was at 6.8% but when including Olysio, it jumped up to 18.1%. Without the drug, the company would have surely been around 7.2% hence the decline of the drug’s usage may be a major concern for the company.

Drugs like Sovaldi and Olysio can gain billions in dollars of revenue with both strong demand as well as steep pricing. The demand comes from high efficacy in the drug as well as short treatment windows instead of traditional therapies.

There are around 150 million people in the whole world who suffer from Hepatitis C. the sales of Sovaldi in Q2 of 2014 were $3.5 billion with the excess to earn around $10 billion in 2014. Gilead Sciences (NASDAQ:GILD) built up this success by combining their drug with an agent thereby allowing patients to take only one of the pills instead of having to take a combination of both.

Competition may certainly be stiff for J&J (NYSE:JNJ) but the market offers such vast opportunities and benefits that it can’t be ignored. The company can increase its cash flows by high margins as well as strong pricing.

The cancer drugs of Johnson & Johnson’s (NYSE:JNJ) have been witnessing strong growth especially its Zytiga drug. The sales of the drug increased 36.5% for the initial nine months in 2014 as it is still on the verge of increasing market share around the world. However, a new rival known as Xtandi has surfaced. This rival was approved as a treatment for chemo-naïve patients who are victims of prostate cancer.

Xtandi was being given to those patients who were already receiving chemotherapy therefore it wasn’t really competing with Zytiga. With the trial results stating otherwise, Xtandi proved to be a good shot as a cancer drug. J&J (NYSE:JNJ) may lose its lead in the game if measures aren’t taken.

Remicade, Johnson & Johnson’s (NYSE:JNJ) biggest drug is to lose patent protection in 2015 in Europe. This region makes most of the company’s sales but the European Commission reported to approve another drug in its place which is lower priced. Remicade makes around 25% of J&Js revenues from pharmaceutical activities.