Johnson & Johnson’s Q4 Earnings: A Mixed Bag
Despite beating earnings expectations for the fourth quarter and full-year 2024, Johnson & Johnson’s (JNJ) stock took a hit, falling over 3% to $143 per share on Wednesday morning. The company faces several challenges, including increased competition from generics for its blockbuster drug Stelara, ongoing legal battles related to talc, and softer demand for medical devices in China.
CFO Joe Wolk: Managing Risk and Focusing on Growth
In an interview, CFO Joe Wolk acknowledged investors’ concerns, but expressed confidence in the company’s ability to navigate these challenges. “We’re not contracting; we’re actually calling 3% growth and 9% on an operational basis,” Wolk said, highlighting the company’s resilience. He also emphasized that Johnson & Johnson has the financial resources to cover potential losses related to the talc lawsuit.
The Impact of Generic Competition on Stelara
Investors are closely watching how generic competition will affect Stelara’s sales. Drawing parallels with AbbVie’s (ABBV) Humira, analysts believe the impact may be muted. Despite facing several competitors, Humira maintained a 96% market share in its first year without patent protection. However, Stelara faces an additional hurdle with the Medicare prices set last year as part of the Inflation Reduction Act.
Filling the Revenue Gap: Neuroscience and M&A
As Stelara’s patent exclusivity comes to an end, investors are wondering what Johnson & Johnson has in store to replace the lost revenue. The company has been expanding its presence in the neuroscience space, focusing on products that could compete in the growing Alzheimer’s market, currently dominated by Biogen (BIIB) and Eisai. Johnson & Johnson recently announced a $14.6 billion deal to acquire mental health disorder drugmaker Intra-Cellular (ITCI). “We’ve really built out the neuroscience franchise where we hope to have a No. 1 position over the coming years,” Wolk said.
A Focus on Long-Term Growth
While Johnson & Johnson faces short-term challenges, the company’s strategic moves in the neuroscience space and its commitment to innovation position it for long-term growth. As the company navigates the current headwinds, investors will be watching closely to see how these efforts pay off.
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