What You Need To Know About Johnson & Johnson’s Top Selling Drugs

Johnson’s Q2 revenue

– Second quarter sales totaled $19.5 billion, up 9.1%.• First quarter sales were $18.1 billion, up 3.5% from last year.

– Pharma sales account for 44% of sales, up from 41% in Q1.• Drug sales are driving Johnson’s revenue growth.

Johnson & Johnson’s revenue is accelerating.

Pharma is driving Johnson’s growth

• Drug product sales jumped 21% year-over-year to $8.5 billion in Q2.• An acceleration from the

10% YoY growth in Q1.• U.S. pharma sales surged

36.6% from a year ago.• International sales were

up 6.9%.

Pharma is driving Johnson’s growth• Infectious disease revenue jumped 81.6% from last year.

• An acceleration from the 47% YoY growth in Q1.• Oncology sales were up 25.5% from a year ago.

• A deceleration from the 28.7% YoY growth in Q1.• Immunology revenue grew 17.4% in the past year.

• An acceleration from the 6.3% YoY growth in Q1.

Infectious disease

Revenue rose 81.6% year-over-year to $1.762 billion in the second quarter.1. Edurant (HIV) sales jumped 64.3% to $92 million.

• A deceleration in growth of 88% in Q1.• Up from $81 million in Q1.• Marketplace enrollment and Medicaid expansion are driving access to HIV drugs.

2. Prezista (HIV) sales rose 13.1% to $492 million.• A deceleration from 21% YoY growth in Q1.• Up from to $445 million in Q1.

3. Olysio (hepatitis C) sales totaled $831 million.• Up significantly from sales of $354 million in Q1.• Only $106 million in Q2 sales from overseas.• The majority of Olysio’s sales are for use alongside Gilead’s Sovaldi.

• May indicate ongoing Sovaldi sales growth.• Olysio may lose share if the FDA approves competing drugs from AbbVie and Bristol-

Myers.

Infectious disease continued

2 drivers supporting revenue growth:1. The ACA supports HIV adherence rates, pricing, and volume growth.

• HIV was the biggest category for drug claims in exchange plans during Q1, representing 55% of all specialty drug claims, far more than the 21% rate for non-exchange

2. Unleashing demand for hepatitis C treatment.• Doctors held off on treatment ahead of approval for Olysio and Gilead’s Sovaldi.

• Oral treatment rather than injection therapy.• Shorter treatment periods.• Less reliance on side effect laden peg interferon and ribavirin.

Source: Express Scripts

OncologyRevenue rose 25.5% year-over-year to $1.11 billion in Q2.

1. Zytiga (prostate cancer) sales grew 42.3% to $562 million.• Down from growth of 48.8% in Q1.• Up from to $512 million in Q1.

• Medivation and Astellas’ Xtandi likely to receive a label expansion to include the pre-chemo indication threatening Zytiga market share.

2. Velcade (MCL and multiple myeloma) sales increased by 6.3% to $403 million.• Down from growth of 15.6% in Q1.• Down from $408 million in Q1.

3. Imbruvica (MCL and CLL) sales are still not broken out.• Developed with Pharmacyclics.• Shows up in “other oncology” revenue line.• Other oncology revenue up 30.6% to $146 million in Q2.

Oncology continuedAn aging population and new targeted therapies are driving cancer spending higher.

ImmunologyRevenue rose 17.4% to $2.63 billion in the second quarter.

1. Stelara (psoriasis/psoriatic arthritis) sales up 42.3% to $528 million.• Acceleration from growth of 31.8% in Q1.• Up from $456 million in Q1.• Facing a new competitor in Celgene’s Otezla.

2. Simponi (rheumatoid arthritis/psoriatic arthritis) sales up 61% to $282 million.• Acceleration from 9.3% YoY growth in Q1.• Up from $259 million in the first quarter.

• Comparison’s become tougher as approvals are annualized.

3. Remicade (rheumatoid arthritis) sales up 7.9% to $1.8 billion.• Acceleration from 0.6% growth in Q1.• Up from $1.61 billion in the first quarter.• Threat from biosimilars looms.

Immunology continuedImmunology treatment spending is expected to climb,

helping offset risks to Remicade from biosimilars.

• Rising prevalence of rheumatoid arthritis and psoriasis.• Biologics carry higher prices and offer longer patent protection.• No clear pathway to approval in the U.S. for biosimilars.

Other drugs of interest

Xarelto– Factor Xa drug approved as an anticoagulant alternative to the widely used warfarin.– Competes against Boehringer’s Pradaxa and Bristol-Myers & Pfizer’s Eliquis.– Xarelto sales grew 91% to $361 million in Q2.

• Up from $319 million in Q1. Invokana– The first SGLT2 inhibitor approved for type 2 diabetes in March 2013.– J&J doesn't break out sales of Invokana

• Contributed 2.5% to U.S. pharma growth rate.• Market share in non-insulin/metformin scripts of 2.3%, up from 1.8% in Q1.• Most successful diabetes launch since Merck’s Januvia, according to management.• AstraZeneca’s SGLT2 drug Farxiga hasn’t derailed Invokana.

2 more intriguing drugs posting significant growth in Q2.

Earnings impact•Johnson has beat analyst expectations in each of the past four quarters.

•Operating margin continues to improve, supporting future dividend pay-outs.

Fool-worthy thoughts•Year-over-year growth accelerated thanks to new drug launches.•Olysio is a major contributor to growth; however, AbbVie and Bristol-Myers looming drugs could impact its use alongside Sovaldi.

• AbbVie’s NDA was submitted in April.• Bristol-Myers NDA was submitted in April.

•An approval in pre-chemo mCRPC for Medivation and Astellas’ Xtandi could hurt Zytiga sales by year end.

• Xtandi label expansion PDUFA date is September 18th.

•Xarelto sales continue to climb and could benefit if Portola’s factor Xa antidote succeeds in phase 3 trials.

• Enrollment began in May 2014.

•Invokana traction continues, but other SGLT2 diabetes drugs are coming from competitors.

.Crush non-dividend paying counterparts over

the long term.