Despite Resistance From Medical Devices Business, JNJ Could Post Decent Q2 Results?

JNJ is expected to announce Q2 results on July 19, 2016. Its medical devices business may hamper revenue growth, but the growth in the pharma business, the consumer healthcare segment and vision care business should enable JNJ to post decent results for the quarter.

1) Pharma Business Will Derive Support From Immunology And Oncology Drugs

• We estimate that pharmaceuticals business accounts for 50% of J&J’s valuation
• J&J’s pharma revenues totalled $31.4 billion in 2015, and we expect the figure to grow 7% in  2016
• This growth would be provided by oncology and immunology drugs are likely to be key growth drivers. Drugs such as Simponi, Stelara & Imbruvica have seen strong uptake in recent quarters, growing at > 30% within 1year. We expect this trend to be visible in J&J’s Q2 results.

      Three New Products Are Driving Oncology Business

• Though Oncology is one of the smallest segments of J&J in terms of revenue (7% in 2015), it is expected to grow by nearly 30% in 2016
• Darzalex, Yondelis and Imbruvica will drive this growth, with the combined revenue for these drugs jumping nearly 190% this year. Darzalex and Yondelis got approval in late 2015.

     Immunology Continues To Well

• Immunology Drugs contributed 33% to JNJ’s 2015 pharma revenues and accounts for 30% of its pharma division’s valuation according to our estimates.

The segment’s sales could grow by nearly 12% in 2016, driven by Remicade, Simponi and Stelara. We expect J&J’s Q2 results to reinforce our expectations.

2) Within Medical Devices Segment Vision Care, Orthopedics Could Boost Sales

• Medical Devices segment accounts for 37% of valuation of J&J
• It could see its 2016 revenues fall by 1%. This could be due to lower Cardiovascular and Diabetic devices sales. However, within medical devices segment Vision Cares and Orthopedics revenues could grow by 2% and 3% respectively by the end of 2016. This could help to keep the growth rate of medical devices stable.

Have more questions about Johnson & Johnson? See the links below.

• Drugs, Devices, Consumer: What’s Johnson & Johnson’s Revenue and Earnings breakdown?
• How Increased Focus On Pharmaceuticals In The Last 5 Years Has Helped J&J?
• By How Much Can J&J’s Revenue And EBITDA Grow Over The Next 3 Years?
• What Percentage Of Its Revenue Could J&J Lose Solely Due To Patent Losses Over The Next 5 Years?
• If Remicade Biosimilar Hits The U.S. Market In 2017, Does J&J Face Any Meaningful EPS Decline?
• Considering Recent Divestitures, Should J&J Trim Its Medical Devices Segment Further?
• Despite The Revenue Fall, J&J’s Business Has A Silver Lining
• Three Things To Watch Out For J&J This Year
• Here Is Why J&J Could See Growth As It Reports Its Q1 2016 Results
• Why We Are Slightly Bullish On J&J?

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