Johnson & Johnson (J&J) has raised its earnings forecasts for the year based on surging pharma sales driven mainly by new hepatitis C drug Olysio.
The question now is how much J&J can rely on Olysio (simeprevir) to maintain that sales trajectory in the face of imminent competition from Gilead Sciences’ combination product Harvoni (sofosbuvir/ledipasvir), which has just been approved in the US.
J&J reported pharmaceutical sales up 18% to $8.3bn, with Olysio – known as Sovriad in Japan – adding $796m to the pot after being approved in the US towards the end of last year and in Europe in May.
The tally for the drug is actually a little down on the second quarter however, when it made $831m, which may reflect competition as well as the dissipation of pent-up demand for the drug since launch.
J&J’s top five drugs for the third quarter of 2014
| Product | Therapy area | Sales ($m) |
| Remicade | Immunology | 1,782 |
| Olysio | Infectious diseases | 796 |
| Zytiga | Oncology | 568 |
| Stelara | Immunology | 543 |
| Prezista | Infectious diseases | 446 |
The launch of Harvoni will have a major impact on Olysio because a sizeable chunk of its turnover is thought to come from combined use with Gilead’s Sovaldi (sofosbuvir), a regimen which will be more expensive than Harvoni, and of course additional competition is looming from AbbVie, Bristol-Myers Squibb and Merck & Co.
Morningstar analyst Damien Conover believes Olysio sales will drop by around 50% next year in the face of competition from Harvoni and other new drugs.
J&J chief executive Alex Gorsky has been priming investors not to expect accelerating sales for Olysio and the company emphasised the underlying growth in its business excluding the drug on its conference call yesterday. At 8% worldwide and 14% in the US, the pharma division is delivering growth even without the hepatitis star, it asserted.
Other big earners included blood thinner Xarelto (rivaroxaban), up 68% to $414m, as well as prostate cancer therapy Zytiga (abiraterone acetate) which climbed 22% at $568m. There were decliners too however, with antipsychotic Risperdal Consta (risperidone) falling 13% to $284m and multiple myeloma therapy Velcade (bortezomib) nudging down nearly 4% to $389m.
For the moment all eyes are on the hepatitis C franchise and while Gorsky would not be drawn on the prospect of a price reduction for Olysio in response to Harvoni’s launch, he did insist that J&J remains firmly committed to the product and hepatitis C as a franchise.
“We believe that Olysio … has very good safety and efficacy and given the size, complexity and diversity of this patient population, physicians will continue to need multiple treatment options,” he told investors.
“We plan to remain competitive in the hepatitis C category and we will work with payers to maintain access for Olysio in the marketplace.”
Overall, revenues at J&J were up 5% to $18.5bn – with consumer health sales largely flat at $3.6bn and medical devices/diagnostics down by around 5% to $6.6bn.
The company’s earnings per share came in at $1.50, a rise of 10%, and it has now raised its full-year EPS forecast to $5.92-$5.97 from an earlier prediction of $5.85-$5.92.