Johnson & Johnson’s (NYSE:JNJ) oncology drugs portfolio is much smaller than that of Roche. However, for J&J the oncology drugs sales growth has been faster in the recent years, and this trend is expected to continue in the coming years, while Roche will likely see slower sales growth, as it faces biosimilar competition for three of its top selling drugs. In this note we compare the oncology drugs segment for J&J and Roche. You can view our interactive dashboard analysis ~ How Does Johnson & Johnson’s Oncology Drugs Portfolio Compare With That of Roche? ~ for more details. In addition, you can see more of our data for Healthcare companies here.
J&J’s Oncology Drugs Portfolio Is One-Third In Size Than That of Roche.
- J&J’s oncology drugs portfolio sales grew from $4.5 billion in 2014 to $9.8 billion in 2018.
- Roche’s oncology sales grew from $26.6 billion in 2014 to $28.3 billion in 2018.
- J&J’s 2018 oncology sales were one-third of the sales generated by Roche.
- J&J’s oncology portfolio includes (2018 sales):
- Imbruvica:`$2.6 billion (27% of total oncology sales)
- Darzalex: $2.0 billion (21% of total oncology sales)
- Velcade: $1.1 billion (11% of total oncology sales)
- Zytiga: $3.5 billion (35% of total oncology sales)
- Others: $0.6 billion (6% of total oncology sales)
- Roche’s oncology portfolio includes (2018 sales):
- Avastin: $7.0 billion (25% of total oncology sales)
- Herceptin: $7.1 billion (25% of total oncology sales)
- Rituxan: $5.3 billion (19% of total oncology sales)
- Perjeta: $2.8 billion (10% of total oncology sales)
- Kadcyla: $1.0 billion (3% of total oncology sales)
- Tecentriq: $0.8 billion (3% of total oncology sales)
- All Others: $4.2 billion (15% of total oncology sales)
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J&J’s Oncology Sales Have Grown At Much Faster Pace In The Recent Years, When Compared To The Growth Rate of Roche.
- J&J’s oncology sales (2014-2018) have grown at an average annual rate of 22.4%.
- This compares with 1.6% average annual growth rate for Roche during the same period.
- This can be attributed to strong growth in Darzalex and Imbruvica sales for J&J, and slower growth for Roche’s key drugs – Avastin and Herceptin – and a decline in Rituxan sales.
Looking Forward, Both J&J And Roche Could See Slowing Oncology Drugs Sales.
- J&J’s oncology drugs sales could increase from $9.8 billion in 2018 to $11.5 billion in 2022, according to our estimates.
- This reflects a growth rate of 4.1%, which is much slower than 22.4% growth rate witnessed between 2014 and 2018.
- Roche’s oncology drugs sales could grow from $28.3 billion in 2018 to $28.8 billion in 2022, in our view.
- This reflects a growth rate of <1.0%, and it compares with the 1.6% average growth rate witnessed between 2014 and 2018.
J&J’s Oncology Revenues Growth Will Be Impacted By Lower Zytiga Sales.
- J&J’s blockbuster drugs Darzalex and Imbruvica will likely continue to see strong sales growth. Imbruvica’s presence in chronic lymphocytic leukemia drugs market is meaningful. Currently, Roche’s Rituxan is the leader in the space, but it has lost market exclusivity, and will soon face biosimilar competition, while Imbruvica’s patent is protected till 2026.
- Darzalex operates in the tough multiple myeloma market, where Celgene’s Revlimid is the leader, but Darzalex has shown strong uptick in demand, and this trend is expected to continue, given its approvals in combination therapies.
- However, much of the growth from Imbruvica and Darzalex will be offset by an expected decline in Zytiga sales. Zytiga is the leader in the prostate cancer hormonal therapy market, with sales of $3.5 billion in 2018.
- However, the U.S. Court of Appeals for the Federal Circuit rejected a request by Johnson & Johnson for a temporary restraining order blocking sales of generic versions of Zytiga in November 2018.
- Zytiga could see a sharp decline in sales over the next few years, as it faces biosimilar competition.
Roche’s Oncology Revenues Growth Will Be Led By Its Newer Drugs.
- Roche has already lost its market exclusivity for Rituxan, Herceptin and Avastin, its three top selling drugs, and it could face biosimilar competition over the next few months. As such, these three drugs will likely see a dip in sales.
- However, this decline will likely be more than offset by growth in its newer drugs, such Tecentriq, Kadcyla, and Perjeta, among others. These drugs have shown steady growth in the recent past, and this trend will likely continue in the coming years, given their patents do not expire anytime soon.
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EPS Attributable To Oncology Drugs Has Been On A Rise For J&J, And It Will Likely Continue To Grow, While In the Case of Roche, It May Peak In 2019, And It Could See A Decline In The Coming Years.
- EPS attributable to J&J’s oncology drugs grew from $0.36 in 2014 to $0.99 in 2018, and it could grow to $1.26 in 2022, in our view.
- We assume the company’s overall adjusted net income margin to calculate the earnings attributable to the oncology segment.
- In the case of Roche, EPS attributable to oncology drugs grew from $0.95 in 2014 to $1.08 in 2018, and it could peak around $1.10 in 2019, and decline thereafter to $0.98 by 2022, led by slower revenues, as well as lower expected adjusted net income margin, as the company will likely spend more for pushing its new drugs.
Roche’s Earnings Are Much More Dependent On Its Oncology Drugs Portfolio, When Compared To J&J.
- Oncology drugs contribution to J&J’s total EPS grew from 6.0% in 2014 to 12.1% in 2018, and it could grow to 14.3% in 2022, in our view. This is much less than Roche.
- Roche’s oncology drugs contribution to its overall EPS declined from 48.5% in 2014 to 46.6% in 2018, and it could decline further to 44.5% in 2022, in our view.
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