Johnson & Johnson ((JNJ)) has held its Q4 earnings call. Read on for the main highlights of the call.
Invest with Confidence:
- Follow TipRanks' Top Wall Street Analysts to uncover their success rate and average return.
- Join thousands of data-driven investors – Build your Smart Portfolio for personalized insights.
Johnson & Johnson’s recent earnings call revealed a mixed sentiment, showcasing robust growth in sales and innovation, particularly in its Innovative Medicine and MedTech sectors. However, the company’s earnings were negatively impacted by challenges such as the introduction of STELARA biosimilars and recent acquisitions, along with hurdles faced in the Chinese market and decreased margins.
Robust Sales Growth in 2024
Johnson & Johnson reported a strong operational sales growth of 7% for 2024, excluding the COVID-19 vaccine. Notably, Sprabato surpassed $1 billion in annual sales, contributing to the company’s impressive portfolio of 26 platforms each generating at least $1 billion in annual revenue.
Strong Performance in Innovative Medicine
The Innovative Medicine segment showed remarkable strength with sales exceeding $14 billion for the third consecutive quarter. This growth was driven by double-digit increases in key brands such as DARZALEX, CARVYKTI, and TECVAYLI, with oncology, neuroscience, and pulmonary hypertension segments performing exceptionally well.
Major Product Approvals and Pipeline Advancements
In 2024, Johnson & Johnson secured 27 major market approvals and initiated 16 Phase III studies. Significant FDA approvals included TREMFYA for ulcerative colitis and RYBREVANT for non-small cell lung cancer, highlighting the company’s ongoing commitment to expanding its pipeline.
Significant Investment in R&D and M&A
The company invested approximately $50 billion in R&D and M&A activities in 2024, including a strategic acquisition agreement with Intracellular Therapies. This investment underscores Johnson & Johnson’s commitment to driving strategic growth and maintaining its competitive edge.
MedTech Growth and Innovation
Johnson & Johnson’s MedTech sector reported over $30 billion in annual sales for the second consecutive year, with notable growth in cardiovascular and vision segments. The company launched 15 major products and acquired ShockWave, enhancing its innovation and market position.
Earnings Decline in Q4 2024
The company experienced a decline in net earnings for Q4 2024, reporting $3.4 billion with a diluted EPS of $1.41, down from $1.70 a year ago. This represents an 11.1% decrease in adjusted net earnings, highlighting the financial challenges faced in this period.
Impact of STELARA Biosimilars
STELARA sales declined by 13.6% due to competition from biosimilars, significantly impacting Johnson & Johnson’s worldwide growth by 490 basis points, illustrating the competitive pressures in the pharmaceutical market.
Negative Impacts from Acquisitions and Currency
Earnings per share in Q4 2024 were negatively affected by $0.22 due to acquired IPR&D expenses related to the ZWave acquisition. Additionally, currency fluctuations posed further challenges to the company’s financial performance.
Challenges in China
Macroeconomic pressures in China, including Volume-Based Procurement (VBP), continued to impact Johnson & Johnson’s performance, reflecting the complex and challenging operating environment in this key market.
Decreased Margins in Innovative Medicine and MedTech
Margins in both Innovative Medicine and MedTech sectors decreased, primarily due to strategic investments and acquired IPR&D expenses, with Innovative Medicine margins falling from 37.4% to 32.5% and MedTech from 15.5% to 10.8%.
Forward-Looking Guidance
Looking ahead to 2025, Johnson & Johnson expects an operational sales growth of 3%, despite significant headwinds such as the introduction of U.S. biosimilars for STELARA and macroeconomic pressures in China. The company projects nearly 9% growth in adjusted operational earnings per share. Key pharmaceutical assets like DARZALEX and ERLEADA, alongside new products such as CARVYKTI and TECVAYLI, are anticipated to drive sales growth. MedTech expansion is expected from recent acquisitions like ShockWave and Abiomed, with a favorable impact from acquisitions and divestitures projected to be approximately 50 basis points.
In summary, Johnson & Johnson’s earnings call presented a balanced narrative of robust sales growth and innovation, countered by the challenges of biosimilar competition and strategic investments. Looking forward, the company remains optimistic about its financial outlook for 2025, supported by a diversified business model and a strong pipeline of innovation.
