Johnson & Johnson beat investors’ expectations despite its medtech unit underperforming, with execs pointing to the Asia-Pacific region as a continued source of struggle.
Executives said on the company’s third-quarter earnings call Tuesday that it did not anticipate improvements to that part of the business for the remainder of the year, revising down adjusted full-year operational sales growth for the medtech unit from 6% to around 5%.
Joe Wolk“The strength of a diversified business enables us to more than offset volatility in one part of our business, yet be in a position to once again increase 2024 guidance for the enterprise,” CFO Joe Wolk said on the call.
Driving the regional slowdown was the continued impact of China’s volume-based procurement policy, which has been “exacerbated” by the anti-corruption campaign, medtech leader Tim Schmid said. The company issued a similar explanation last quarter, but described it then as a “short-term pain that we are enduring.”
Schmid added Tuesday that the dynamics in China were “impacting procedures and the engagement by healthcare professionals with companies like ours, especially on premium products.” Because it’s the largest medtech company in China, Schmid said the procurement process was disproportionately impacting J&J. The headwinds are expected to continue through the year and into 2025.
Tim Schmid“Please rest assured, we also believe that this part of the world, especially in Asia-Pacific, will continue to be a growth opportunity,” Schmid emphasized.
Despite the unit’s hurdles, J&J as a whole beat investor expectations, led by $14.6 billion in sales for the pharmaceutical unit. Cancer drug Darzalex led the way, exceeding $3 billion in global sales, a 20.7% increase in reported figures for the quarter compared to the same period in 2023. Cell therapy Carvykti also stood out, reporting $286 million in quarterly sales, up 87.7% versus a year ago.
Jennifer TaubertSales of bispecific antibody Tecvayli were up 20% in the quarter compared to 2023, but flat compared to the second quarter. Jennifer Taubert, EVP and worldwide chair of the innovative medicine unit, attributed the pace in part to physicians treating patients with “longer treatment durations.” The expectation is that there’s still “a lot of growth potential,” Taubert said.
Leaders from the pharmaceutical team did not address shifting priorities in the cardiovascular and metabolic division. Endpoints News reported last month that the unit was folding, largely impacting sales and marketing staff. Work is continuing on a late-stage stroke prevention med, milvexian, that’s partnered with Bristol Myers Squibb.
Sales of its blockbuster blood thinner Xarelto continued to decline, down 5.2% for the quarter, due to “unfavorable patient mix and share loss,” the company reported.