Strong Oncology Drug Sales Propel Johnson & Johnson's Q4 Earnings Above Expectations Amid Patent Cliff Challenges

According to the Zhicheng Finance APP, Johnson & Johnson (JNJ.US) reported better-than-expected fourth-quarter results, driven by strong sales of its cancer drugs, which offset the decline in demand for the company's best-selling psoriasis treatment.

It is reported that Johnson & Johnson is facing a multi-billion-dollar patent cliff as its second-largest drug, Stelara, encounters competition from generic drugs in the U.S. and Europe. The company is counting on new drugs, including its best-selling cancer treatment Darzalex, to offset the declining demand for psoriasis medications.

Data shows that the company's adjusted earnings per share were $2.04, including a $0.22 charge related to the acquisition of medical device manufacturer V-Wave, marking an approximate 11% decrease year-over-year but surpassing analysts' expectations of $2.01. Revenue reached $22.5 billion, a 5.3% increase year-over-year, exceeding analysts' forecast of $22.42 billion.

After the earnings report was released, the stock rose nearly 2% during pre-market trading on Wednesday.

Johnson & Johnson stated that the global sales of its anticancer drugs increased by 19%, with Darzalex’s sales reaching $3.08 billion, a year-on-year increase of more than 20%. The sales of the innovative pharmaceuticals division were $14.33 billion, and the sales of the medical technology division were $8.19 billion, representing year-on-year growth of 4.4% and 6.7%, respectively.

Stelara sales fell 14.7% to $2.35 billion, against analyst expectations of $2.25 billion.

CFO Joe Wolk stated in an interview that Darzalex remains a key pillar, noting that the $13.1 billion acquisition of Shockwave Medical has also contributed to growth. Johnson & Johnson reported that Shockwave's sales reached $258 million this quarter and $564 million for the full year.

Earlier this month, Johnson & Johnson also agreed to pay nearly $15 billion to acquire Intra-Cellular Therapies Inc. (ITCI.US), a company that produces a drug approved for bipolar depression. Wolk stated that the drug, named Caplyta, could be a "magic pill," with the potential to generate $5 billion in annual revenue if proven effective for other neurological disorders.

"We want to be number one in neuro," said Wolk, referring to Johnson & Johnson's approved treatment for major depressive disorder, Spravato, and its pipeline of drugs for Alzheimer's disease and other related conditions.

Looking ahead to 2025, Johnson & Johnson expects sales to be between $90.9 billion and $91.7 billion, representing year-over-year growth of 2.5% to 3.5%, with adjusted operating earnings per share ranging from $10.75 to $10.95.

The company is awaiting court approval for an $8 billion deal to resolve thousands of claims related to talc products. The final outcome, which may be announced this quarter, will eliminate one of the long-standing concerns investors have had about Johnson & Johnson's business.

Additionally, three of Johnson & Johnson's drugs, including Stelara, have been included in the initial list of 10 drugs facing U.S. government price negotiations in 2026. None of the company’s products, however, appear on the latest list of 15 drugs up for price negotiations in 2027. Wolk stated that Johnson & Johnson has not joined other industry peers in requesting an incoming Trump administration to pause price negotiations, and the company holds an "optimistic" view toward the future of the pharmaceutical industry under Trump's leadership.

He said, "I think when a pro-business, pro-innovation government wants to understand the dynamics of a specific industry, opportunities arise. We see a positive momentum in their desire to engage in dialogue."