Johnson & Johnson: pharmaceutical sales growthfor now

JNJ In its Q4 results, J&J confirmed an impressive overall performance for 2007, with total sales increasing by 14.6% on 2006 figures.

While the growth of its Pharmaceutical division was respectable, like many of its Big Pharma peers, Datamonitor forecasts this division's revenues to suffer over the next few years due to the impact of generic competition.

The company's Medical Devices & Diagnostics and Consumer divisions generated sales of $36.2 billion for the year, growing by 7.2% and 48.3% respectively. The sharp increase in Consumer sales reflects the acquisition of Pfizer Consumer Health. However, accounting for almost half of total sales in 2006, the Pharmaceutical division is most highly geared to impact the company's overall performance.

Pharmaceutical sales growth was 6.9% across 2006-07, rising to $24.9 billion. While this is an improvement on the growth rates of 0.9% and 4.2% in 2005 and 2006 respectively, it is still somewhat lower than the 14.2% CAGR across 2001-04.

The increase in Pharmaceutical sales was driven primarily by central nervous system products. Antipsychotic sales grew by $0.5 billion due to uptake of long-acting Risperdal Consta and the launch of Invega. Migraine treatment, Topamax, delivered a 15.4% increase, rising to $2.5 billion.

In other areas, Remicade and Velcade provided further gains. Against this, J&J's portfolio was impeded by few significant decliners. Most notably, sales of anemia treatment, Procrit, fell along with other class members due to labeling and guideline changes.

From 2008, Datamonitor does, however, expect J&J's Pharmaceutical sales to slip into decline. Although Risperdal Consta and Invega are hoped to retain patients against competition from generic Risperdal mid-2008, sales from the company's antipsychotic drug franchise are forecast to fall overall. Similarly, Topamax also faces generic erosion from 2008. As two of the company's three largest products in 2007, the loss of Risperdal and Topamax will have a significant impact.

Despite a number of new launches, Datamonitor has forecast J&J's total Pharmaceutical sales to decline by -2.1% CAGR across 2007-12. As the company's largest division, this will pose a drag on overall performance. However, the increasing contribution from other divisions will allow J&J greater flexibility to maintain growth.

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