J&J lifts profit outlook on strong demand for top-seller Stelara

By Bhanvi Satija and Patrick Wingrove

(Reuters) -Johnson & Johnson on Tuesday raised its 2023 profit forecast, helped by resilient demand for its blockbuster anti-inflammatory drug Stelara and recorded a $21 billion gain from the spin off of its consumer health unit.

The company’s shares were up about 1% in premarket trading.

Investors are focused on how J&J, now a standalone pharmaceutical and medical devices company, will reach its goal of $57 billion in drug sales by 2025. That year the company will face fresh competition from the first copycat version of its arthritis drug Stelara and a potential slowdown in its sales.

“A sharpened focus on Innovative Medicine and MedTech appears to be creating a solid foundation for future sustained growth,” Cantor Fitzgerald analyst Louise Chen said.

J&J’s third-quarter total sales of $21.35 billion came in above analysts’ estimates of $21.04 billion, according to LSEG data.

Stelara, which is set to lose some patents by late 2023, brought in sales of $2.86 billion, above estimates of $2.61 billion.

The company’s innovative medicine unit reported quarterly sales of $13.89 billion, of which Stelara accounted for more than 20%.

J&J has signed settlements to delay the launch of copycat rivals of Stelara until 2025, which may help the drug continue to significantly contribute to the company’s sales.

While the company doesn’t expect a decline in Stelara U.S. revenue until 2025, European sales of the drug could drop from the middle of next year after a key patent expires, J&J CFO Joseph Wolk told Reuters. “We could see a little bit of an impact.”

Sales at Johnson & Johnson (NYSE:JNJ)’s medical device unit came in at $7.46 billion for the quarter, missing estimates of $7.58 billion.

Sales of the company’s devices used in abdomen surgeries took a hit from a slowdown in demand for procedures such as bariatric surgery, as well as increased competition in the United States.

Excluding its consumer health unit, J&J now expects 2023 adjusted profit of $10.07 to $10.13 per share, compared with its previous outlook of $10.00 to $10.10 per share.

J&J finalized the biggest shake-up in its 137-year history in August through an exchange of its shares with former consumer health unit Kenvue (NYSE:KVUE), leaving the pharmaceutical giant with a reduced 9.5% stake in its former unit.

Excluding items, J&J reported a profit of $2.66 per share, above estimates of $2.52.