J&J upbeat on 2023 as devices rebound post-COVID, shares jump (updated)

Alvotech SA

20/07/2023 17:37

(Repeats for additional subscribers)
    By Bhanvi Satija and Patrick  Wingrove
       July 20 (Reuters) - Johnson & Johnson  JNJ.N  on
Thursday expressed optimism for strong growth this year, saying
it expected to surpass profit estimates with joint replacement
and other surgeries rebounding after COVID-19 and inflation
tempering, as its shares rose 6%. 
        J&J also told investors it was banking on strong demand
for its cancer drugs, with protections in place for its
blockbuster arthritis drug also bolstering its pharmaceutical
portfolio.
        Shares of the healthcare conglomerate were up 6.2% in
midday trade to $168.61. Shares of other medical device makers
such as Medtronic  MDT.N  and Abbott Laboratories  ABT.N , which
also posted upbeat results, gained more than 3%.
        J&J said it now expects adjusted 2023 profit of $10.70
to $10.80 per share, above estimates of $10.65 per share and its
prior forecast of $10.60 to $10.70 per share.
  
        The drug and device maker also posted
better-than-expected second-quarter earnings of $2.80 per share,
compared with analysts' expectations of $2.62.
  
        It had been "responsibly cautious" in its guidance
earlier this year, but growth across the business gave J&J
confidence to raise its full-year outlook, Chief Financial
Officer Joseph Wolk told Reuters.
    "The qualifiers are now off, and if you look across our
entire portfolio -- just strength across the board," Wolk said
in an interview, noting that despite concerns last quarter,
inflation had steadied. 
    J&J is trying to bolster growth at its pandemic-hit medical
devices business while placing huge bets on its newer cancer
drugs and seeking to counter a potential slowdown in sales of
its Stelara arthritis drug when biosimilars hit as soon as 2025.
       
        Second-quarter sales for the company's medical device
unit were $7.79 billion, topping estimates of $7.55 billion.    
  
        The volume of procedures such as hip and knee
replacements and medical staffing levels needed to deliver them
were expected to be "stable" for the rest of the year, J&J said
after COVID-19 delayed surgeries and triggered healthcare worker
shortages.  
  
        J&J's medical device unit's performance is a positive
early indicator of what’s ahead for other companies in the
sector, Stifel analyst Rick Wise said in a note.    
  
    The company said it expects pharmaceutical sales to grow
more in the second half of 2023. 
        
  
     
  
    Wolk told Reuters that J&J's patent litigation settlement
with Amgen  AMGN.O  over arthritis drug Stelara, which met
expectations with sales of $2.8 billion in the second quarter,
boosted confidence about hitting its target of $57 billion in
pharmaceuticals sales by 2025.
        J&J has also settled with Alvotech  ALVO.O  and Teva
Pharmaceutical  TEVA.TA  over their version of Stelara, delaying
any competition until 2025, with company executive Erik Haas
telling investors no other biosimilars were expected before
then.         
  
    Quarterly sales of its multiple myeloma drug, Darzalex, also
met Wall Street estimates at $2.43 billion, Refinitiv data
showed.  
    Meanwhile, J&J said it would continue efforts to separate
from its consumer health unit Kenvue  KVUE.N , which sells
popular self-care and skincare brands such as Tylenol and
Neutrogena and went public in May.
        J&J will "split off" its shares of Kenvue through an
exchange offer as part of its separation plan that Wolk said
"effectively enables us without a significant cash outlay to
potentially acquire a number of shares." It currently holds
about a 90% stake, according to Refinitiv.  
    Haas, J&J's vice president for litigation, also told
investors it will "aggressively" defend itself amid ongoing
proceedings over its talc products, including its Baby Powder,
amid ongoing lawsuits and bankruptcy proceedings for its related
subsidiary. 
   J&J is facing more than 38,000 lawsuits alleging the products
were contaminated by asbestos and caused cancer, claims it has
denied. It is attempting to resolve the issue through an $8.9
billion settlement in bankruptcy court for the second time.

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J&J's $8.9 billion talc settlement faces US bankruptcy test -
Reuters News    https://www.reuters.com/business/healthcare-pharmaceuticals/jjs-89-billion-talc-settlement-faces-us-bankruptcy-test-2023-06-27/
BREAKINGVIEWS: J&J carves itself up at a discount    https://www.reuters.com/breakingviews/jj-carves-itself-up-discount-2023-04-24/
J&J's Medical Device and Pharmaceutical Sales    https://tmsnrt.rs/46TBs2h
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 (Reporting by Bhanvi Satija in Bengaluru and Patrick Wingrove
in New York; Editing by Anil D'Silva, Mike Harrison and Susan
Heavey)
 ((Bhanvi.Satija@thomsonreuters.com; Outside U.S. +91
9873062788;))