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J&J profit edges past Street view after deals delay Stelara competition



© Reuters. Johnson & Johnson company offices are shown in Irvine, California, U.S., October 14, 2020. REUTERS/Mike Blake/ File Photo

By Bhanvi Satija and Patrick Wingrove

(Reuters) -Johnson & Johnson on Tuesday reported quarterly results just above Wall Street expectations, helped by strong sales of its blockbuster psoriasis drug Stelara, which is expected to face fresh U.S. competition from biosimilar versions next year.

A key patent for Stelara expired in the United States last year, but J&J (NYSE:) struck deals with competitors to delay the launches of their biosimilars until 2025. Amgen (NASDAQ:) will be the first to launch its near-copy, Wezlana, next year.

Analysts have said the delay in biosimilar launches would make Stelara a larger contributor to J&J’s 2024 and 2025 sales than previously anticipated.

Sales of the drug are expected to be $10.54 billion in 2024, down 3% from the $10.86 billion in 2023. Fourth-quarter Stelara sales came in at $2.75 billion, topping analysts’ estimates of $2.63 billion.

J&J said it expects entry of Stelara biosimilars in Europe toward the middle of 2024.

The fourth-quarter results did not reveal any “major surprises,” JP Morgan analyst Chris Schott (ETR:) said, adding that the company’s pharmaceutical segment was well positioned to generate mid-single-digit growth despite pending Stelara competition.

J&J’s medical device business, which has benefited from a resurgence in demand for joint replacement and other surgeries delayed during the COVID-19 pandemic, generated revenue of $7.67 billion, topping estimates of $7.49 billion, according to LSEG data.

Chief Financial Officer Joseph Wolk in an interview said not only had demand for medical devices rebounded since the end of the pandemic, but that it had risen further in December.

J&J recorded an $84 million charge in the quarter related to a restructuring program for its orthopedics business. As part of that project, J&J plans to exit certain markets and stop selling some orthopedic products.

J&J’s cancer treatment Carvykti, which had sales of $159 million for the quarter, belongs to a class known as CAR-T therapies that have come under scrutiny over a safety issue.

The company said it was working with the U.S. Food and Drug Administration to update its prescribing information after the agency sent a notice requiring CAR-T therapy makers to add a serious safety warning over a potential link to secondary malignancies. 

Wolk said the drugmaker stills expects Carvykti to reach peak sales of at least $5 billion, despite that safety warning.

The healthcare conglomerate posted a fourth-quarter profit of $2.29 per share that topped analysts’ expectations by one cent, according to LSEG data.

Quarterly revenue of $21.40 billion narrowly beat estimates of $21.01 billion.

J&J also reaffirmed its adjusted operating profit forecast of $10.55 to $10.75 per share for 2024.

Shares of the company, which have shed 3.7% in the past 12 months, were flat at $161.92 in premarket trading.

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