Johnson & Johnson (JNJ) recently provided an update on its Pharmaceuticals business. Since its last Pharmaceuticals business review in 2009, the company gained approval for six new drugs and has two candidates under regulatory review.
According to IMS Health, the global pharma market, which is currently valued at $850 billion, is expected to grow to more than $1 trillion by 2015. Johnson & Johnson is looking to strengthen its pharma product portfolio and plans to file for approval of 11 new products and more than 30 line extensions in the 2011-2015 timeframe.
While the company intends to focus on emerging markets, it will remain focused on developed markets as well. During 2011, Johnson & Johnson intends to launch seven products in Japan, which is the second largest pharma market in the world.
Johnson & Johnson spent about $4.4 billion on its pharma pipeline in 2010. The company’s main focus areas include: Neuroscience; Cardiovascular and Metabolism; Immunology; Oncology and Infectious Diseases/Vaccines.
Key candidates in the Neuroscience segment include bapineuzumab (phase III ongoing for Alzheimer’s disease), an every-three-month formulation of Invega Sustenna (schizophrenia), and Nucynta ER (under US regulatory review for chronic pain with US filing for the treatment of diabetic peripheral neuropathic pain planned in the near future).
While Invega Sustenna has been developed in collaboration with Alkermes (ALKS), Johnson & Johnson has a collaboration agreement with Grunenthal GmBh for Nucynta.
Rivaroxaban is Johnson & Johnson’s key candidate in the Cardiovascular and Metabolism pipeline. The company, along with partner Bayer (BAYRY) is currently seeking approval for the use of rivaroxaban for two indications: the prevention of stroke in patients with atrial fibrillation and the prevention of venous thromboembolism, the most common cause of re-hospitalization following total knee or hip replacement surgeries.
Rivaroxaban, a potential blockbuster candidate, is currently in two large scale phase III studies which are scheduled to complete later this year. While one study is evaluating rivaroxaban in the treatment and prevention of recurrent deep vein thrombosis and pulmonary embolism events compared to warfarin, the other study is being conducted to see whether the addition of rivaroxaban to standard of care can provide better protection to patients with acute coronary syndromes.
Another interesting candidate in the Cardiovascular and Metabolism pipeline is canagliflozin, which is being developed for type II diabetes in collaboration with Mitsubishi-Tanabe Pharmaceutical. US and EU regulatory filings for this candidate are slated for the first half of 2012.
Sirukumab, a key candidate in the Immunology pipeline, which has delivered products like Remicade, Simponi and Stelara, is being studied for rheumatoid arthritis and lupus nephritis. Johnson & Johnson is also working on expanding Remicade’s label and is currently seeking EU and US approval for the use of Remicade in the treatment of pediatric ulcerative colitis.
Meanwhile, Simponi is currently in phase III development for the treatment of ulcerative colitis and juvenile idiopathic arthritis. It is also being evaluated as an intravenous formulation for rheumatoid arthritis (phase III) and the treatment of sarcoidosis (phase II).
Finally, Stelara is being evaluated for additional indications like the treatment of psoriatic arthritis (phase III), the treatment of Crohn’s disease (phase IIb), and the treatment of sarcoidosis (phase II). Stelara is also scheduled to enter into a phase II study for the treatment of primary biliary cirrhosis.
The Oncology pipeline received a boost recently with the approval of prostate cancer medication, Zytiga. Pipeline candidates include siltuximab (CNTO 328), which is in late stage development for Castleman’s disease and multiple myeloma. The candidate is also being studied for smoldering myeloma, prostate cancer, muscular dystrophy syndrome and anemia.
The key candidate in the Infectious Diseases and Vaccines pipeline is hepatitis C virus (HCV) treatment, telaprevir, which gained approval in the US recently under the trade name, Incivek. Incivek is marketed by partner, Vertex Pharmaceuticals (VRTX). EU approval could come later this year.
Johnson & Johnson has another HCV candidate in its pipeline — TMC435 (phase III) is being studied with once daily dosing in treatment naïve and treatment failed patients. Meanwhile, the 2011 acquisition of Dutch biopharmaceutical company Crucell should not only help strengthen Johnson & Johnson’s portfolio, it should also allow the company to build a presence in the vaccines market, given Crucell's expertise in the manufacture, discovery and commercialization of vaccines.
Neutral on Johnson & Johnson
We currently have a Neutral recommendation on Johnson & Johnson. Even though Johnson & Johnson has been facing challenges in the form of OTC product recalls, pricing austerity in the EU and generic competition, we believe that the company’s diversified business model, lack of cyclicality and strong financial position will help it in tough situations.
The company’s target of filing for approval of 11 new products and more than 30 line extensions in the 2011-2015 time-frame should help it lessen the impact of the genericization of key products in the pharma portfolio.
Johnson & Johnson’s Pharmaceuticals business, which posted sales of $22.4 billion in 2010, accounted for 36% of the company’s total revenues. However, sales declined 0.6% in 2010.
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