Johnson & Johnson reported better-than-expected second-quarter results on Tuesday, driven by sales of the cancer drug Darzalex and its COVID-19 vaccine.
How Did JNJ Perform in Q2?
The pharmaceutical giant initially cut its full-year adjusted profit guidance due to concerns that a stronger dollar might hurt its overseas sales. Microsoft and IBM both shared the same concerns.
However, J&J’s pharmaceutical units turned out to be strong enough to weather the storm, even amid global inflation and supply shortages. The company decided to fight inflation by raising the prices of painkillers and mouthwash products.
“We do know that while folks are looking to generally cut back spending, that’s been in entertainment, dining out,” CFO Joseph Wolk said.
Wolk also talked about customers’ habits to save money by cutting back on expenses other than health and beauty products.
“… When it comes healthcare, better health, looking better, products like Aveeno, Neutrogena, Tylenol, Listerine, they seem to do really well, and consumers will prioritize those,” Wolk added.
Q2 sales of the cancer drug Darzalex came at $1.99 billion surpassing the expected $1.84 billion number.
Even J&J’s Covid-19 vaccines managed to perform much better than expected amid various reports over safety concerns and production hurdles. The vaccine sales came in at $544 million to crush the analyst estimate of $138 million.
The pharma giant previously halted the vaccine sales but managed to modify the shot’s manufacturing capacity and get back on track in the meantime.
Nearly half of J&J’s sales profit came from oversea sales, bringing it to a total of $24.02 billion, beating the consensus estimates of $23.80 billion. The company reported adjusted earnings per share (EPS) of $2.59, topping the consensus estimates of $2.54 per share.
This affected the full-year adjusted profit outlook as the company now expects a profit of $10.00 to $10.10 per share, versus its initial forecast of $10.15 to $10.35.
Sanofi and GSK Partnership: A Threat?
Sanofi and GlaxoSmithKline are cooperating to launch their Covid vaccine this year in their efforts to catch up to the competition and take part in the already formed market. The new protein-based vaccine is said to be highly effective against the omicron variant and will be able to target both the original and the Beta strains.
Sanofi said that the vaccine can be used as a first dose or as an effective booster shot, showing 65% efficacy against symptomatic infections for adults who never contracted Covid before, and 75% efficacy for those who were already infected.
Talking about the omicron variant, Sanofi said that the efficacy percentage was 72% when used as a primary vaccine and 93% when used on patients already infected with Covid. The reported results were based on a trial of 13,000 people.
Both Sanofi and GSK are well known for years for making traditional protein-based flu vaccines, but so far they haven’t been able to compete with the likes of Phizer and Moderna whose mRNA technology allowed them to enter the market much faster.
Now both companies seem ready to launch their vaccines later this year as Roger Connor, president of GSK vaccines, pointed out.
“Our vaccine candidate has the potential to make an important contribution to public health as the pandemic evolves further,” Connor said.
As a result, some analysts see a threat to JNJ’s covid vaccine sales, especially if a shot developed by Sanofi/GSK proves to be highly effective against new variants.
Summary
Johnson & Johnson shares slipped on Tuesday after the company was forced to cut its full-year profit outlook despite a robust revenue generation from Covid vaccine sales.
