Johnson & Johnson

Chief executive William Weldon

In a sector where many of its rivals are returning to a diversified business model, Johnson & Johnson is one which never gave it up.

Johnson & Johnson is a huge company with a vast portfolio of products across three business divisions - consumer health care, pharmaceuticals and lastly, medical devices and diagnostics.

The company employs a total of around 117,000 employees in more than 250 Johnson & Johnson companies.

It says it is the world's premier consumer health care company, the world’s largest and most diverse medical devices  and diagnostics company, the fourth largest biologics company and the seventh largest pharmaceuticals company.

Transition

Like other companies, J&J is trying to manage the smooth transition from older products to newer ones, and meeting patent expiries with restructuriing and cost cutting programmes.

The company showed its success in this endeavour in the third quarter of 2009, when its profits rose, despite deep cuts into pharma sales caused by new generic competition.

Net earnings across the company's divisions rose 1.1% to $3.4 billion, despite a 5.3% dip in turnover to $15.1bn.

This was made possible by savings in its operating costs, including a 10% reduction to sales and marketing costs and 12% being shaved off R&D overheads.

This has helped the company to raise its full year forecast, which cheered investors.

Nevertheless, analysts were concerned by the steep decline seen in some products. Global pharma sales fell 14.1%, as many of its biggest earners suffered from patent loss or declining markets.

Revenue from antipsychotic Risperdal plunged 40% to $192 million as generic competitors entered the US market, where its sales fell a full 70%. The sustained release version of the drug Risperdal Consta fared better, however, with sales rising 4.4% to $353m.

Epilepsy drug Topamax also saw sales drop 76% under generic attack, while anaemia blockbuster Procrit/Eprex fell 12.4% to $542m, as safety warnings and tougher prescribing guidelines continued to reduce demand.

Alzheimer's treatment Reminyl/Razadyne also suffered a hefty blow, sales falling 29.7%, while ADHD therapy Concerta dropped 28.6% to $284m.

Rheumatoid arthritis blockbuster once again provided the good news, with sales rising 5.9% in the period to over $1bn.

Commenting on the results William Weldon, chairman and chief executive, said: "We continue to successfully manage our broad base of businesses and deliver solid earnings despite the impact of patent expirations and the challenges posed by the current economic environment."

During the quarter, the company gained US approval for its new biologic Stelara (ustekinumab) for the treatment of moderate to severe plaque psoriasis, as well as clearance for Invega Sustenna, an extended release of its new antipsychotic.

Simponi (golimumab), a once-monthly, subcutaneous therapy for active rheumatoid arthritis, active and progressive psoriatic arthritis and severe, active ankylosing spondylitis, gained approval in Europe.

The company also bought rights to a new Alzheimer's therapy from Elan, entered a new HIV collaboration with Gilead, and bought a stake in Dutch vaccines firm Crucell.

Acquisition trail

Johnson & Johnson made three acquisitions of mid-sized companies in 2009.

In May it bought Los Angeles-based biotech firm Cougar Biotechnology for $970 million.

The acquisition brought with it promising pipeline treatment abiraterone acetate. The drug is currently in phase II trials for prostate cancer, and is one of several drugs in the company’s oncology-based pipeline. Cougar will be part of J&J’s Ortho Biotech oncology research & development unit, itself a division of Centocor Research & Development.

Then in July, the company struck a deal with Elan to purchase all of its pipeline drugs to treat Alzheimer’s in return for a $1 billion dollar investment and $500 million to be spent on developing leading compound bapineuzumab.

Administered intravenously once every three months, (bapineuzumab), is currently in phase III. A subcutaneous formulation, administered once a week, is currently in phase II. In addition, a vaccine for Alzheimer’s disease (ACC-001) is also under development.

Finally in September it acquired an 18% stake in vaccines firm Crucell, and the two companies will work together on developing monoclonal antibodies and vaccines for flu and other diseases.

J&J paid 302 million euros ($442 million) in equity and investment in the Netherlands-based firm in order to gain a foothold in the growing vaccines sector.

The partnership will focus on the development of a monoclonal antibody treatment for influenza -dubbed ‘flu-mAb’ - which would be the first of its kind.

See the company's pipeline highlights here

Lead pharma products:

Concerta (methylphenidate HCl)
Intelence (etravirine)
Invega  (paliperidone)
Levaquin (levofloxacin)
Prezista (darunavir)
Procrit/Eprex (Epoetin alfa) 
Remicade (infliximab)
Risperdal (risperidone)Risperdal Consta (risperidone)Topamax (topiramate)

Facts

Founded in 1886 in New Brunswick, New Jersey;incorporated in November 1887; and family-owneduntil listed on the NYSE in 1944.

Company site: www.jnj.com
Company history:  www.kilmerhouse.com
Blog: www.jnjbtw.com
YouTube: www.youtube.com/JNJhealth