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Pfizer’s spoiler on Johnson & Johnson’s earnings rally

Tuesday, October 18, 2016 13:22
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The world’s largest healthcare company Johnson & Johnson’s (NYSE:JNJ) third-quarter earnings per share came in 3 cents higher than analysts’ forecasts.

J&J came in two cents above estimates with adjusted third quarter profit of $1.68 per share and with revenue beating the street forecast as well. The company raised its full-year forecast, thanks in part to increased drug sales.

But it wasn’t a good day for the stock, which ended down after rival drugs group Pfizer (NYSE:PFE) announced overnight said it would release a cheaper version of JNJ’s immune drug Remicade – before offering the knock-out blow on Tuesday when it confirmed its Inflectra injection, a biosimilar version of Johnson & Johnson’s JNJ blockbuster drug Remicade, will be available in the US in late November.

Pfizer also enumerated that its drug would be 15% cheaper than J&J’s current wholesale prices.

With annual US sales of $5bn and its wide use to also treat Crohn’s disease and psoriasis, Remicade is J&J’s biggest product. Biosimilar drugs are close copies intended to provide savings compared with costly branded products. Inflectra is already available in Europe.

But Pfizer is playing for high stakes in the US backyard for both companies. J&J is appealing an August federal court decision that invalidated a US Remicade patent, setting the stage for a February court battle with Pfizer. Should Pfizer launch Inflectra and later lose the court fight, that could entitle J&J to triple damages.

In the meantime, analysts predicted US Remicade sales will fall 15 to 20% in 2017 – even though J&J on Tuesday predicted the vast majority of patients taking Remicade are unlikely to switch to a biosimilar.

Of course, should US voters opt to elect drug price crusader Hillary Clinton as the next White House occupant next month, the spat between J&J and Pfizer may be compared with re-arranging the deck chairs on the Titanic ship.

J&J shares closed down 2.6% at $115.39 while Pfizer was up 0.6% at $32.69 on Tuesday.

Story by ProactiveInvestors


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