Release Date: October 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Johnson & Johnson (JNJ, Financial) reported strong operational sales growth of 6.3% in the third quarter.
- The innovative medicine segment achieved sales exceeding $14 billion for the second consecutive quarter, with 11 key brands growing double digits.
- DARZALEX became the first product in JNJ's portfolio to reach $3 billion in sales in a single quarter.
- The MedTech segment saw double-digit growth in the cardiovascular portfolio, driven by recent acquisitions and new product launches.
- JNJ increased its adjusted operational EPS guidance for the third quarter in a row, reflecting confidence in its growth trajectory.
Negative Points
- Net earnings for the quarter were impacted by the updated talc litigation settlement proposal and acquired IPR&D expense.
- Adjusted net earnings and diluted earnings per share decreased by 13.3% and 9%, respectively, compared to the third quarter of 2023.
- The MedTech segment experienced headwinds in the Asia-Pacific region, particularly in China, affecting overall growth.
- STELARA sales declined due to unfavorable net patient mix and share loss, with biosimilar competition impacting results in Europe.
- The effective tax rate increased to 19.3% from 17.4% in the same period last year, driven by the tax treatment of acquisitions and OECD Pillar Two.
Q & A Highlights
Q: Can you provide an update on the talc litigation and the next steps for resolution?
A: Joaquin Duato, CEO, stated that Johnson & Johnson is making meaningful progress towards a comprehensive resolution of the talc litigation. Erik Haas, VP of Litigation, added that the case will remain in Texas, and the parties are working on a schedule to resolve issues by the end of the year, aiming for a confirmation hearing early next year.
Q: What are the impacts of one-time items in MedTech for Q3, and how do you plan to achieve high growth next year?
A: Tim Schmid, EVP of MedTech, highlighted the 6.4% operational growth driven by acquisitions like Shockwave and Abiomed. Orthopedics had a softer quarter due to restructuring but is expected to perform better in Q4. The impact of hurricanes and potential IV saline shortages are being monitored.
Q: How do you plan to replace sales lost to STELARA with TREMFYA and other pipeline products?
A: Jennifer Taubert, EVP of Innovative Medicine, expressed confidence in TREMFYA's potential, especially with its recent approval for ulcerative colitis. John Reed, EVP of R&D, added that JNJ-2113, an oral peptide, is progressing well and could expand market opportunities.
Q: Can you elaborate on the growth drivers for CARVYKTI and TECVAYLI in the multiple myeloma portfolio?
A: Jennifer Taubert noted CARVYKTI's strong growth due to demand and capacity expansion. TECVAYLI is seeing good uptake, and future growth is expected from combinations with other treatments. John Reed highlighted TECVAYLI's best-in-class data and potential in combination therapies.
Q: What are the dynamics in the Asia-Pacific region, specifically China, affecting MedTech?
A: Tim Schmid explained that volume-based procurement and anti-corruption campaigns in China are impacting sales. Despite these headwinds, J&J remains confident in the region's long-term growth potential, given the large patient population and strategic importance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
