Johnson & Johnson (JNJ.US) Q3 profit exceeds expectations, talc lawsuit progresses

The Zhitong Finance App learned that Johnson & Johnson (JNJ.US) released its third quarter earnings report on Tuesday. The report said that due to the sharp rise in sales of the cancer drug Darzalex, Q3 profit was higher than expected, while the full-year forecast was lowered to include a medical equipment acquisition transaction.

The company's adjusted earnings per share were $2.42, beating Wall Street's estimate of $2.19, according to a statement on Tuesday. Pharmaceutical sales increased by nearly 5%, exceeding analysts' expectations by more than 400 million US dollars. Among them, sales of Darzalex, which treats myeloma, soared by more than 20%. Analysts expect that Darzalex will bring about 11 billion US dollars in revenue to Johnson & Johnson this year.

Johnson & Johnson is struggling to keep growing as it faces loss of exclusive rights to Stelara used to treat psoriasis. Stelara's biosimilars entered the European market this summer and are expected to hit the US market early next year. Despite this, the company received new approvals to expand the use of its cancer and immunology drugs, which gave the company support.

Joe Wolk, Chief Financial Officer of Johnson & Johnson, said in an interview: “We are pleased with the overall performance of the company. This puts us in a great position to put a strong end to this year.”

Additionally, Johnson & Johnson has made progress in resolving lawsuits relating to the presence of talc in its products. The talc powder case has long been a burden on the company's investor sentiment. In September of this year, 83% of the plaintiffs accepted their settlement of about $8 billion. In a favorable legal ruling this month, a federal bankruptcy judge in Texas said he would let one of Johnson & Johnson's subsidiaries continue to handle talc claims in his court, which helped the company avoid previous adverse rulings against it by the New Jersey Court of Appeals.

This quarter, Johnson & Johnson also spent $1.7 billion to acquire V-Wave Ltd., a company developing an implant device to treat heart failure. Affected by this, the company lowered its adjusted profit forecast for 2024 to $9.98 per share, below the earlier minimum estimate of $9.97 per share. Excluding fees associated with the acquisition of V-Wave, the earnings per share forecast was $10.15, up 10 cents from the previous forecast.

According to information, Johnson & Johnson divested its consumer health division last year and established Kenvue (KVUE.US) to focus on the more profitable field of prescription drugs and medical devices. Since then, Johnson & Johnson has made a number of acquisitions, including the $13.1 billion acquisition of cardiac device manufacturer Shockwave Medical and the $1.25 billion acquisition of an atopic dermatitis drug from Numab Therapeutics AG in May.

Although revenue from Shockwave and other acquisitions helped Johnson & Johnson's medical device business increase revenue by nearly 6%, it was still slightly below market expectations. Wolk pointed out that sales in the Asia-Pacific region were affected by the Korean doctors' strike.

Wolk said Johnson & Johnson is still seeking “small-scale acquisitions” that provide the best value, but the company is still open to larger acquisitions. “We have an 'appetite', but it's not something we want.”