Johnson & Johnson Roundup: Latest Updates Suggest Growing Push In Pipeline

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Johnson & Johnson

Johnson & Johnson (NYSE:JNJ) is now heavily reliant on its pharmaceutical business for future growth, considering the recent performance of its medical devices and diagnostics segments. We are currently conservative in our forecasts owing to fall of Olysio. However, recent developments suggests that J&J is trying everything it can to rejuvenate its pipeline. Positive data for pipeline drugs could lead to our forecasts being conservative and more than expected success could add additional $5-$6 billion in annual revenues by 2021. This could lead to an upswing of about 10% in J&J’s stock price. Here are recent updates that suggest this possibility.

Our current price estimate for Johnson & Johnson stands at $105, which is at a slight premium to the market price.

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See our complete analysis for Johnson & Johnson

Johnson & Johnson Is Not Giving Up On Hepatitis C

Johnson & Johnson has announced that it will collaborate with Achillion Pharmaceuticals to develop and market its hepatitis C drugs, as well as invest $225 million to acquire an equity stake. [1] The overall value of the deal is around $1.1 billion which means some serious commitment on part of J&J. Initially the companies will focus on certain drugs which have been granted fast-track status by the U.S. FDA for treatment of chronic Hepatitis C. The deal makes sense as hepatitis C has emerged as a lucrative market and J&J’s own hepatitis C drug Olysio has succumbed to competitive pressure.

New Drug Approved

Johnson & Johnson recently got FDA approval for its schizophrenia drug Invega Trinza. ((Johnson & Johnson’s Schizophrenia Drug Wins FDA Approval, The Wall Street Journal, May 19 2015)) The new drug is an injection which will be administered every three months (4 times a year). However, the patients must be treated with Invega Sustenna prior to this administration. It seems that the company is seeking long term improvement of patients instead of suppressing symptoms in the short term. The ease of administration (just once in 3 months) should improve patient convenience. According to WHO, schizophrenia affects 21 million people world wide.

Optimistim About Pipeline

J&J plans to file at least 10 new drugs for regulatory approval by 2019, each of which has the potential to become a blockbuster product with annual sales of more than $1 billion. The company also announced its plans of 40 line extensions of current and new drugs. The announcement comes at a time when the consensus is that it will be difficult for J&J to sustain growth of its pharmaceutical business, partially because of the fall of hepatitis C drug Olysio, which was earlier expected to be a big growth driver.

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Notes:
  1. Johnson & Johnson and Achillion in $1.1 Billion Tie-Up, The Wall Street Journal, May 19 2015 []