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Johnson & Johnson (JNJ) is a global healthcare company that operates through two main business segments: Innovative Medicine and MedTech. The company focuses on developing and distributing therapeutic products in areas such as Immunology, Infectious Diseases, Neuroscience, Oncology, Pulmonary Hypertension, and Cardiovascular and Metabolic diseases, as well as medical devices used in Orthopaedics, Surgery, Interventional Solutions, and Vision fields . Johnson & Johnson's products are distributed to retailers, wholesalers, distributors, hospitals, and healthcare professionals for prescription use .
- Innovative Medicine - Develops and distributes therapeutic products in areas including Immunology, Infectious Diseases, Neuroscience, Oncology, Pulmonary Hypertension, and Cardiovascular and Metabolic diseases. Key products include STELARA and DARZALEX, which are significant contributors to the company's revenue .
- MedTech - Offers medical devices and solutions used in Orthopaedics, Surgery, Interventional Solutions, and Vision fields. These products are primarily used by healthcare professionals such as physicians and nurses .
What went well
- Johnson & Johnson's multiple myeloma franchise is demonstrating exceptional growth, with DARZALEX achieving $3.1 billion in quarterly sales (22% growth), making it the company's first brand to surpass $3 billion in quarterly sales. CARVYKTI is nearing $1 billion in annual sales, reflecting strong demand and capacity expansion. The company is advancing these therapies into earlier lines of treatment, which may drive future growth.
- Despite biosimilar competition for STELARA, Johnson & Johnson's immunology portfolio remains strong, with TREMFYA showing significant growth and differentiation, particularly in inflammatory bowel disease. The successful launch in ulcerative colitis and the upcoming launch in Crohn's disease are expected to support continued growth in this segment.
- Johnson & Johnson maintains confidence in its global market leadership in electrophysiology, with a $5 billion business that grew 14% in 2024. Despite short-term headwinds, the company is expanding its product portfolio, including the successful international launch of VARIPULSE, positioning it to capitalize on the growing electrophysiology market.
What went wrong
- Johnson & Johnson is facing significant headwinds due to biosimilar competition for STELARA, which could lead to substantial erosion in sales and may not be fully offset by other products like TREMFYA.
- A temporary pause of all U.S. VARIPULSE cases due to investigation of neurovascular events introduces uncertainty and may negatively impact growth in their electrophysiology business, especially given competitive pressures in the U.S. market.
- Continued headwinds in China and near-term competitive pressures in the U.S. electrophysiology market could negatively impact Johnson & Johnson's MedTech growth in 2025.
Q&A Summary
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Immunology and TREMFYA Growth Amid STELARA Biosimilars
Q: Will STELARA biosimilars impact TREMFYA's growth?
A: Management is confident TREMFYA will continue to grow despite STELARA facing biosimilar competition. They expect patients needing better therapies to switch to newer treatments like TREMFYA, which has strong differentiation in ulcerative colitis and an upcoming Crohn's launch. TREMFYA is the only dual-acting IL-23 agent in IBD, offering unrivaled flexibility with both subcutaneous and intravenous dosing options. They've invested appropriately in pricing to ensure patient access. -
Operating Margin Outlook
Q: How will margins improve despite lower sales growth?
A: Management anticipates a 150 basis point improvement in operating margins, resulting from focused investments and restructuring efforts. They've prioritized investments in core areas and optimized their corporate infrastructure following the consumer health business separation. They expect operating margin and EPS growth to align more closely with sales growth in 2026 and beyond. -
Intracellular Acquisition and Neuroscience Portfolio
Q: What does the Intracellular deal mean for neuroscience?
A: The company is excited about acquiring Intracellular and its product CAPLYTA. They expect CAPLYTA, used for schizophrenia and bipolar disorders, to become a $5 billion-plus asset, especially with anticipated approval for major depressive disorder later in the year. The acquisition complements their existing neuroscience portfolio without deprioritizing other assets, as depression requires multiple treatment options. -
MedTech Growth and EP Business Challenges
Q: What's the outlook for MedTech growth and EP issues?
A: Management expects MedTech end markets to grow 5–7% in 2025, with procedures normalizing to pre-COVID levels. They acknowledge short-term headwinds in electrophysiology due to a temporary U.S. pause of VARIPULSE cases while investigating reported neurovascular events. However, they remain confident in retaining their global market leadership in EP over the long term. -
Multiple Myeloma Franchise Performance
Q: How is the multiple myeloma franchise performing?
A: The franchise is experiencing strong growth, with DARZALEX achieving over $3 billion in quarterly sales—the company's first brand to do so. CARVYKTI is nearing a $1 billion year, with strong demand and capacity expansion. Their bispecific agents are performing well, and they're exploring combinations to bring these treatments into earlier lines of therapy. -
Medical Device Acquisition Strategy
Q: What's the strategy for MedTech acquisitions?
A: External innovation is crucial, focusing on smaller acquisitions to enhance the portfolio. Larger acquisitions like ShockWave and Intracellular are outliers. They highlight strong performance from Abiomed and Shockwave, progressing ahead of expectations and contributing to growth. -
MedTech Organic vs. Inorganic Growth
Q: How does organic investment compare to acquisitions in MedTech growth?
A: The company delivered 6.2% operational growth in MedTech in 2024, or 4.7% excluding the impact of the Shockwave acquisition. They're confident in achieving upper-end growth expectations, driven by new products and recent acquisitions. -
EP Revenue Recognition
Q: Any revenue reversals in EP numbers this quarter?
A: There were no revenue recognition reversals related to VARIPULSE in the quarter.
Guidance Changes
Annual guidance for FY 2025:
- Adjusted operational sales growth: 2.5% to 3.5% (lowered from 5.7% to 6.2% )
- Operational sales growth: 2.5% to 3.5% (midpoint 3.0% or $91.3B) (lowered from 6.6% )
- Reported sales: $89.6B (1% growth) (lowered from $88.6B at 5.4% growth )
- Adjusted operational EPS: $10.75 to $10.95 (raised from $9.91 )
- Reported adjusted EPS: $10.60 (raised from $9.93 )
- Adjusted pretax operating margin: Increase by 300 basis points (raised from decline by 200 basis points )
- Net interest income: $0 to $100 million (lowered from $450 million to $550 million )
- Net other income: $900 million to $1.1 billion (lowered from $1.9 billion to $2.1 billion )
- Effective tax rate: 16.5% to 17.0% (lowered from 17.5% to 18.5% )
- Foreign currency impact: $1.7 billion (2.0%) unfavorable (lowered from $1 billion unfavorable )
- Acquisitions/divestitures impact: Favorable 50 basis points (no prior guidance)
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Can you elaborate on the impact of patient mix issues on U.S. sales of TREMFYA and STELARA, and whether this is specific to Johnson & Johnson or indicative of broader market trends?
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Given the challenges posed by volume-based procurement and the anti-corruption campaign in China, how do you plan to mitigate the headwinds facing your MedTech business in the Asia Pacific region, and what are your expectations for 2025?
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With the upcoming biosimilar competition for STELARA, how confident are you that TREMFYA and JNJ-2113 can replace the sales loss and take market share from entrenched competitors in the immunology space?
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In light of the competitive pressures in the electrophysiology market and the delayed U.S. launch of VARIPULSE, how do you intend to regain share, and what are your expectations for your EP business in 2025?
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Considering the increased R&D investments and recent acquisitions, can you provide more details on where these elevated investments are being directed and how they will impact your operating margins and growth targets for the coming year?
Q3 2024 Earnings Call
- Issued Period: Q3 2024
- Guided Period: FY 2024
- Guidance:
- Adjusted Operational EPS Guidance: $9.91 at the midpoint, flat year-on-year despite $0.92 of acquisition activity .
- Reported Adjusted EPS: Full-year positive impact of $0.02 per share, expecting $9.93 at the midpoint .
- Sales Growth:
- Adjusted operational sales growth: 5.7% to 6.2% (midpoint 6%) .
- Operational sales growth: $89.6 billion (midpoint 6.6%) .
- Reported sales growth: $88.6 billion (midpoint 5.4%) .
- MedTech Adjusted Operational Sales Growth: Closer to 5% .
- Operating Margin: Decline by 200 basis points; improvement by 50 basis points excluding certain impacts .
- Net Interest Income: $450 million to $550 million .
- Other Income: $1.9 billion to $2.1 billion .
- Effective Tax Rate: 17.5% to 18.5% .
- Currency Impact: Incremental positive impact of $200 million, reducing negative impact to $1 billion .
Q2 2024 Earnings Call
- Issued Period: Q2 2024
- Guided Period: FY 2024
- Guidance:
- EPS: $10 to $10.10 per share, including $0.68 dilution from acquisitions .
- Sales Growth:
- Operational: 6.1% to 6.6% (midpoint $89.4 billion) .
- Reported: 4.7% to 5.2% (midpoint $88.2 billion) .
- Foreign Currency Impact: Negative $1.2 billion, with $500 million incremental impact .
- Pretax Operating Margin: Decline by 120 basis points .
- Net Interest Income: $300 million to $400 million .
- Other Income: $1.5 billion to $1.7 billion .
- Effective Tax Rate: 17.5% to 18.5% .
- Segment-Specific Guidance:
- Innovative Medicine sales growth lower in the second half .
- No future COVID-19 vaccine sales .
- Limited third-quarter sales for REMICADE and SIMPONI in Europe .
Q1 2024 Earnings Call
- Issued Period: Q1 2024
- Guided Period: FY 2024
- Guidance:
- Operational Sales Growth: 5.5% to 6.0% ($88.7 billion to $89.1 billion) .
- Reported Sales Growth: 4.7% to 5.2% (midpoint $88.2 billion) .
- Foreign Currency Impact: Negative $700 million .
- Adjusted Operational EPS: $10.60 to $10.75 (midpoint $10.68) .
- Reported Adjusted EPS: Negative $0.03 impact, remaining $10.65 .
- Interest Income: $550 million to $650 million .
- Shockwave Acquisition Impact: $0.10 dilution per share .
Q4 2023 Earnings Call
- Issued Period: Q4 2023
- Guided Period: FY 2024
- Guidance:
- Operational Sales Growth: 5% to 6% ($88.2 billion to $89 billion) .
- Adjusted Operational EPS Growth: 7.4% ($10.55 to $10.75) .
- Adjusted Pretax Operating Margin: Improvement by 50 basis points .
- Other Income and Expense: $1.2 billion to $1.4 billion .
- Net Interest Income: $450 million to $550 million .
- Effective Tax Rate: 16% to 17% .
- Innovative Medicine Sales Growth: Stronger in the first half .
- MedTech Operational Sales Growth: Consistent throughout the year .
Recent developments and announcements about JNJ.
Financial Reporting
- Reported Sales: $22.5 billion, a 5.3% increase compared to Q4 2023, with operational growth of 6.7% and adjusted operational growth of 5.7%.
- Earnings Per Share (EPS):
- Reported EPS: $1.41, down 17.1% year-over-year.
- Adjusted EPS: $2.04, down 10.9% year-over-year.
- Net Earnings: $3.43 billion, a 17.0% decrease compared to Q4 2023.
- Reported Sales: $88.8 billion, a 4.3% increase compared to 2023, with operational growth of 5.9% and adjusted operational growth of 5.4%.
- Earnings Per Share (EPS):
- Reported EPS: $5.79, up 11.3% year-over-year.
- Adjusted EPS: $9.98, a slight increase of 0.6% year-over-year.
- Net Earnings: $14.07 billion, a 5.6% increase compared to 2023.
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Innovative Medicine Segment:
- Worldwide operational sales (excluding COVID-19 vaccine) grew 7.5%.
- Strong performance from DARZALEX, ERLEADA, CARVYKTI, and TREMFYA.
- Neuroscience products like SPRAVATO also contributed significantly.
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MedTech Segment:
- Worldwide operational sales grew 6.2%, driven by electrophysiology products, Abiomed, and wound closure products.
- Operational Sales Growth: Expected between 2.5% and 3.5%.
- Adjusted Operational EPS: Projected between $10.75 and $10.95, reflecting a strong growth of 8.7% at the midpoint.
- Significant progress in the pipeline, including:
- RYBREVANT + LAZCLUZE overall survival data.
- Initiation of TAR-200 submission.
- Approval of the OTTAVA general surgery robotic system.
- U.S. Sales: $13.2 billion in Q4 2024, a 10.0% increase year-over-year.
- International Sales: $9.3 billion in Q4 2024, a slight decline of 0.7% year-over-year.
Earnings Report
Johnson & Johnson (JNJ) Q4 and Full-Year 2024 Earnings Results
Johnson & Johnson (JNJ) has released its Q4 2024 and full-year 2024 earnings results, showcasing strong financial performance and significant growth in key areas. Below are the highlights:
Q4 2024 Financial Highlights
Full-Year 2024 Financial Highlights
Key Growth Drivers
2025 Guidance
Pipeline and Innovation
Regional Performance
CEO Statement
Joaquin Duato, Chairman and CEO, highlighted 2024 as a transformative year for JNJ, emphasizing the company's focus on innovation and improving care for diseases with high unmet needs, such as multiple myeloma, lung cancer, and heart failure.
Conclusion
Johnson & Johnson's 2024 results reflect robust growth across its segments, driven by innovation and strategic investments. The company is well-positioned for continued success in 2025, with strong guidance and a promising pipeline.
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