Prior to Johnson & Johnson’s 1Q results on April 18, investors were concerned about the outlook for the Pharmaceutical segment. Pharmaceutical (Pharma) is the largest of the three segments, and represents 47% of sales. Investors have worried that growth within the Pharma segment would slow from its historical rate of double digit organic growth to a low single digit rate. A big factor for the decline was an expected slowdown in Remicade, as the drug faced competition from Pfizer’s Inflectra biosimilar, announced late last year.
However, while Remicade sales held steady during the first quarter, other drugs missed expectations and have now raised investor concerns as well. Specifically, Invokana and Xarelto both showed steeper declines than expected due to the competitive landscape.
Going forward, investors are now concerned about these three key drugs. While Remicade estimates have been revised up (as analysts have realized that Remicade is more resilient than once believed), downward revisions in Invokana and Xarelto have more than offset those gains.