Headcount: 134,400
Pharma Revenues: $54,75  (+4%)
Net Income: $13,326 (-19%)
R&D: $15,805 (+7%)

In 2023, J&J prioritized its R&D investment within the Innovative Medicine segment to focus on its most promising assets. This resulted in exiting certain programs primarily in infectious diseases and vaccines, including the discontinuation of its respiratory syncytial virus adult vaccine program, hepatitis and HIV development. The associated restructuring expenses amounted to $479 million and included the termination of program costs and asset impairments.

For the year, Innovative Medicine sales grew 4%, driven by oncology assets Darzalex, Erleada, Tecvayli, and Carvykti, and immunology flagships Stelara and Tremfya, and Spravato in neuroscience. This growth was partially offset by Zytiga with sales down 50%, Imbruvica down 14%, and Remicade, with sales down 22%. Topping off these declines, international Covid-19 vaccine sales plummeted 94%.

Acquisitions & Investments

During the year and extending into 2024, J&J bolstered its oncology and immunology assets via key acquisitions. In an all-cash merger transaction for approximately $2.0 billion, J&J acquired Ambrx Biopharma, Inc., gaining its synthetic biology technology platform to design and develop next-gen antibody drug conjugates (ADCs). Ambrx’s ADC technology incorporates the advantages of highly specific targeting monoclonal antibodies securely linked to a potent chemotherapeutic payload to achieve targeted and efficient elimination of cancer cells without the prevalent side effects typically associated with chemotherapy.

This past May, J&J entered an agreement to acquire Proteologix Inc., a biotechnology company focused on bispecific antibodies for immune-mediated diseases, for $850 million in cash, with potential for an additional milestone payment. Proteologix’s portfolio includes PX128, a bispecific antibody targeting IL-13 plus TSLP, which is ready to enter Phase I development for moderate to severe atopic dermatitis (AD) and moderate to severe asthma, and PX130, a bispecific antibody targeting IL-13 plus IL-22, a preclinical candidate for moderate to severe AD. Both assets are designed for infrequent dosing intervals, offering patient convenience.

In addition to PX128 and PX130, the acquisition adds other bispecific antibody programs with applications across a variety of other diseases, boosting capabilities to create novel bispecific programs.

J&J also recently entered an agreement with Numab Therapeutics to acquire global rights to an investigational first-in-class bispecific antibody, NM26, for approximately $1.25 billion in cash.

NM26, entering Phase II studies, targets two clinically proven pathways, IL-4R alpha subunit (IL-4Rα) and IL-31, in atopic dermatitis (AD), the most common inflammatory skin disease, and is highly heterogeneous with different disease-driving mechanisms in distinct patient subpopulations. NM26 targets IL-4Rα, which triggers Th2-mediated skin inflammation, and IL-31, which impacts skin itching. In addition to potentially transforming the standard of care for AD, NM26 could also be efficacious in other inflammatory skin diseases involving Th2 inflammation and itch.

Collaborations

An alliance with Sanofi aims to develop and commercialize the Phase III vaccine candidate for extraintestinal pathogenic E.coli (9-valent) developed by Janssen. Janssen received $175 million upfront, along with development and commercial milestones, as well as royalties and sales milestones.

Extraintestinal pathogenic E. coli is a leading cause of sepsis, a life-threatening bloodstream infection accompanied by severe illness and widespread organ damage. Antimicrobial resistant (AMR) E. coli strains are a major driver behind the global AMR crisis.

The ongoing Phase 3 E.mbrace trial is evaluating the efficacy of the 9-valent extraintestinal pathogenic E. coli vaccine (ExPEC9V) compared to placebo in the prevention of invasive E. coli disease (IED) caused by ExPEC9V O-serotypes.

In other notable alliances, under a public-private partnership, of which J&J is a founding member, a Phase II clinical trial is underway to evaluate novel regimens that combine registered products and new chemical entities to potentially and effectively treat drug-sensitive tuberculosis and inform the development of a “pan-TB” regimen capable of treating all forms of active pulmonary TB.

The regimens under evaluation are designed to explore shorter treatment durations compared to existing drug regimens, without the need for accompanying drug-resistance testing for individuals. The goal is to identify a candidate regimen suitable for Phase III development.

Additionally, as part of an effort to advance science and technology in the Asia Pacific region, J&J inked a collaboration with the Singapore Economic Development Board. Under the new partnership, J&J’s incubator—called JLABS—aims to help early-stage companies in Singapore advance medicines and medical technologies. JLABS will also work with local partners to foster employment and commercialization opportunities.

R&D Advances

Among key pipeline advances, J&J received FDA approvals for Akeega and Talvey and achieved positive Phase III data for 11 medicines. J&J made headway initiating Phase III development for milvexian and its targeted oral peptide, JNJ-2113, and received FDA Breakthrough Therapy Designation for TAR-200 for the treatment of bladder cancer. Additionally, Milvexian received FDA Fast Track designations in atrial fibrillation, stroke, and acute coronary syndrome.

Akeega is the first-and-only dual action tablet combining a PARP inhibitor with abiraterone acetate, given with prednisone, for the treatment of adult patients with deleterious or suspected deleterious BRCA-positive metastatic castration-resistant prostate cancer. The FDA approval is based on positive results from the Phase 3 MAGNITUDE study demonstrating a statistically significant 47 percent risk reduction for radiographic progression-free survival.

Additionally, first-in-class bispecific antibody Talvey was granted accelerated approval for the treatment of relapsed or refractory multiple myeloma who have received at least four prior lines of therapy. This approval was based on response rate and durability of response with a meaningful overall response rate of 73.6 percent and a median follow-up of nearly 6 months from first response among responders.

Meanwhile, all three prospective indications for milvexian, an investigational oral factor XIa (FXIa) inhibitor being developed with Bristol Myers Squibb, have been granted Fast Track Designation by the FDA. The designations cover all studies in the Phase 3 Librexia development program in stroke, acute coronary syndrome, and atrial fibrillation.

New data shows JNJ-2113, the first and only investigational targeted oral peptide designed to block the IL-23 receptor, maintained skin clearance in moderate-to-severe plaque psoriasis through one year. IL-23 underpins the inflammatory response in moderate-to-severe plaque psoriasis.

Headcount: 153,000
Pharma Revenues: $52,565 (+2%)
Net Income:  $17,941 (-14%)
R&D: $14,603 (-1%)

Johnson & Johnson’s pharmaceutical sales were up 2% to $52.6 billion for the year. Growth was driven by Darzalex (up 32% to $8bn), a biologic for the treatment of multiple myeloma, Stelara (up 7% to $9.7bn), a biologic for the treatment of a number of immune-mediated inflammatory diseases, Erleada (up 46% to $1.9 bn), a next-gen androgen receptor inhibitor for the treatment of prostate cancer, Tremfya (up 25% to$2.7bn), a biologic for the treatment moderate to severe plaque psoriasis, active psoriatic arthritis, and Invega Sustenna/Xeplion and Invega Trinza/Trevicta (up 3% to $4.1bn), long-acting, injectable atypical antipsychotics for the treatment of schizophrenia.

Growth for the year was partially offset by declines in sales of Remicade (down 27% to $2.3bn), a biologic for the treatment of several immune-mediated inflammatory diseases, Imbruvica (down 13% to $3.8bn), an oral therapy for treating certain B-cell malignancies, and Zytiga (down 23% to $1.8bn), an oral medication for use in combination with prednisone for the treatment of metastatic castration-resistant prostate cancer.

COVID-19 vaccine sales were up 2% to $2.2 billion for the year while related costs were $1.5 billion for the year, and include remaining commitments, including external manufacturing network exit costs, and required clinical trial expenses. In other COVID news, during the year Johnson & Johnson completed a landmark agreement between Janssen Pharmaceuticals and manufacturer Aspen SA Operations (Pty) Ltd, based in South Africa, to enable the first COVID-19 vaccine to be manufactured and made available by an African company for people living in Africa, with the goal of increasing COVID-19 vaccination rates across the continent.

Johnson & Johnson has shipped more than 200 million vaccine doses to Africa through a combination of its advance purchase agreements with the African Vaccine Acquisition Trust, South Africa and Gavi, the Vaccine Alliance, on behalf of the COVAX Facility, along with government donations. As one of J&J’s contract manufacturers since November 2020, Aspen has been a significant supplier within the Johnson & Johnson global network.

The agreement enables Aspen, using COVID-19 vaccine drug substance supplied by Johnson & Johnson, to produce Aspen-branded finished vaccine and make doses available to the public sector in Africa, including all 55 Member States of the African Union and key multilateral entities supporting Africa’s COVID-19 vaccination drive, inclusive of the African Vaccine Acquisition Trust (AVAT), and the COVAX Facility.

Deepening commitment to oncology

Janssen reported in February 2022 the FDA approved Carvykti (ciltacabtagene autoleucel), Janssen’s first cell therapy, a BCMA-directed CAR-T immunotherapy for the treatment of relapsed or refractory multiple myeloma. In the pivotal clinical study, 98 percent of patients with relapsed or refractory multiple myeloma responded to a one-time treatment with ciltacabtagene autoleucel and 78 percent of patients who responded experienced a stringent complete response.

Later in the year, in October 2022, Janssen received news that the FDA approved Tecvayli (teclistamab-cqyv), the first bispecific T-cell engager antibody for the treatment of patients with relapsed or refractory multiple myeloma. Tecvayli, an off-the-shelf, subcutaneous therapy, is an important new medicine for patients with incurable blood cancer who face limited treatment options and is Janssen’s fourth approved treatment for multiple myeloma.

Further diversifying the company’s oncology portfolio and deepening its commitment to discovering and developing therapies for this rare blood cancer, two months later, in December 2022, Janssen submitted a biologics license application (BLA) to FDA for talquetamab for the treatment of patients with the same disease.

In other oncology news, Janssen entered into a worldwide collaboration and license agreement with Cellular Biomedicine Group Inc. (CBMG) to develop, manufacture, and commercialize next-generation chimeric antigen receptor (CAR) T-cell therapies for the treatment of B-cell malignancies. These investigational CD20-directed autologous CAR-Ts have demonstrated promising overall and complete response rates in Phase 1 studies in patients with relapsed/refractory non-Hodgkin’s lymphoma (NHL) in China, with most study participants having diffuse large B-cell lymphoma (DLBCL), the most common type of aggressive lymphoma accounting for approximately one-third of B-cell lymphomas globally.

Through the collaboration, Janssen enhances its portfolio in B-cell malignancies and strengthens its more than two-decade legacy in hematology, while deepening its commitment to accelerate development, manufacturing, and commercialization capabilities to deliver best-in-class cell therapies. Under terms of the agreement, CBMG will grant Janssen a worldwide license to develop and commercialize the CAR-T assets, except in Greater China. Janssen and CBMG will negotiate an option for Janssen to commercialize the products in the China territory. Janssen will make an upfront payment of $245 million. Additional future payments will be based upon the achievement of certain development, regulatory and sales milestones, as well as tiered royalty payments on worldwide net trade sales, excluding Greater China.

State-of-the-art science and technology campus

During the year, Johnson & Johnson opened its San Francisco Bay Campus, a state-of-the-art R&D facility in the Bay Area, one of the world’s most established global hubs for innovation and entrepreneurship. The nearly 200,000 square-foot facility will house up to 400 employees, more than doubling the R&D presence of Johnson & Johnson in the Bay Area. The campus bridges key scientific and technological capabilities by co-locating Janssen R&D, Johnson & Johnson Innovation and Johnson & Johnson Technology.

The R&D focus at the new site spans Janssen’s therapeutic areas and key functions, including emerging science and technologies for gene and RNA therapies, novel treatments and approaches for retinal and infectious diseases, and advanced data science, including artificial intelligence and machine learning.

In other facility news, Johnson & Johnson announced the launch of the J&J Satellite Center for Global Health Discovery (Satellite Center) at the Holistic Drug Discovery and Development (H3D) Centre, University of Cape Town, in Cape Town, South Africa. This marks the latest expansion of the J&J Centers for Global Health Discovery (J&J Centers), a global network of research collaborations between the company and leading research institutions to accelerate translational and discovery research to address some of the world’s most pressing global health challenges. The Satellite Center at H3D will work to drive new solutions to address the present and rising threat of antimicrobial resistance (AMR) with a specific focus on multidrug-resistant Gram-negative bacteria (MDR-GNB).

Headcount: 141,700
Pharma Revenues: $52,080 (+14%)
Net Income: $20,878 (+42%)
R&D: $14,714 (+21%)

TOP SELLING DRUGS 

Johnson & Johnson (J&J) is organized into three business segments: Consumer Health, Pharmaceutical and Medical Devices. The pharmaceutical segment is focused on six therapeutic areas: immunology, infectious diseases, neuroscience, oncology, pulmonary hypertension, and cardiovascular and metabolic diseases. Sales across these therapeutic areas were $52 billion in 2021, a 14.3% growth over the previous year.

During the year, J&J received FDA approval for two new products: Rybrevant (amivantamab-vmjw), the first targeted treatment for patients with non-small cell lung cancer with EGFR exon 20 insertion mutations, and Ponvory (ponesimod) to treat adults with relapsing forms of multiple sclerosis.

In addition to these newly launched products, J&J received approvals for additional indications, new formulations and combination therapies, and continued to advance key pipeline programs such as its BCMA-directed CAR-T cell therapy program and entry into gene therapy with a focus on retinal diseases.

Segment performance

Immunology product sales were $16.8 billion in 2021, an increase of 11.3%, driven by strong uptake of Stelara in Crohn’s disease and ulcerative colitis and strength in Tremfya in psoriasis. Growth was impacted somewhat by lower sales of Remicade due to biosimilar competition. Stelara, which brought in $5.9 billion, will also face biosimilar competition when it loses exclusivity in September 2023 in certain indications.

Infectious disease product sales jumped 64% to $5.9 billion in 2021, driven largely by J&J’s COVID-19 vaccine. This was partially offset by lower sales of Prezista and Prezcobix/Rezolsta due to increased competition and loss of exclusivity of Prezista in certain countries outside the U.S.

Neuroscience products recorded sales of $7 billion, an increase of 7.1%. Paliperidone long-acting injectables growth was driven by sales of the schizophrenia drugs Invega Sustenna/Xeplion and Invega Trinza /Trevicta as well as the launch of Invega Hafyera.

Oncology products grew 17.6%, bringing in $14.5 billion in 2021. Contributors to the growth were strong sales of Darzalex, driven by continued strong market growth, share gains in all regions and solid uptake of the subcutaneous formulation launched in 2020. Erleada and Imbruvica both had strong years despite competitive pressures from novel oral agents and COVID-19 related market dynamics including delays in new patient starts.

Pulmonary hypertension product sales of $3.5 billion increased 9.6% driven by positive performance of Opsumit and Uptravi. Cardiovascular/metabolism/other products sales fell 8.6% to $4.5 billion due to lower sales of Invokana/Invokamet and biosimlar competition for Procrit/Eprex.

J&J’s consumer health segment includes a broad range of products including over-the-counter (OTC) pharmaceuticals. In November 2021, J&J announced its intention to separate the consumer business, aiming to create a new, publicly traded company. The company intends to finalize the organizational design for its consumer group by the end of 2022 and plans to reveal a new name and headquarters location around the middle of 2023. The consumer health unit brought in $14.6 billion in 2021.

R&D alliances

J&J entered several R&D alliances during the year. With TenNor Therapeutics (Suzhou) Ltd., a biopharmaceutical company dedicated to products for the treatment of diseases associated with bacterial infections and dysbioses, a research collaboration was established to leverage a multitargeting drug conjugation platform developed by TenNor to discover new therapies to treat nontuberculous mycobacteria (NTM) diseases.

German independent research institute BioMed X entered several research projects with Janssen Research & Development. One aims to discover novel transport mechanisms in the human intestinal tract which could be utilized for oral delivery of diverse therapeutic modalities. Biologics such as monoclonal antibodies have transformed the treatment of immune-related diseases, but need to be delivered by injection, which may have higher barriers to use compared to oral delivery.

Another collaboration between the two firms set up two new research groups. One of the research groups is called PTA (Protective Tissue Factors in Autoimmune Diseases) and is led by Mojca Frank Bertoncelj, MD, PhD, who joined BioMed X from the University Hospital Zurich in Switzerland. Her research group will develop new approaches to combat chronic inflammatory diseases. The aim is to identify protective factors in the tissue microenvironment of patients with auto-inflammatory diseases.

The second research group, TMI (Translocation of Complex Macromolecules Across the Intestinal Epithelial Barrier), is led by Kyungbo Kim, PhD, and will look to discover novel transport mechanisms in the human intestinal tract that could be used for oral delivery of various macromolar therapeutic modalities. Dr. Kim is joining BioMed X from the University of Kentucky in Lexington.

Together with Remix Therapeutics, an RNA-focused company launched over a year ago developing its REMaster drug discovery platform, J&J entered a small molecule discovery and development collaboration. The partnership leverages Remix’s REMaster platform for the discovery and development of small molecule therapies that modulate RNA processing. While the collaboration details have not been disclosed, J&J will have exclusive rights to three specific targets with applications in immunology and oncology. The companies did not disclose targets or indications for the small molecules being developed.

Midatech Pharma PLC, a drug delivery technology company focused on improving the bio-delivery and biodistribution of medicines, extended its existing R&D collaboration with J&J originally formed in July 2020. In June 2021, using its Q-Sphera technology, the company successfully encapsulated a proprietary Janssen experimental large molecule medicine and importantly preserved its functional integrity. Midatech believes no other organization has been able to successfully deliver any such experimental medicine over extended periods using methods capable of commercial scaling.

Following the initial program (MTX213), the collaboration has been extended to include another large molecule to the research performed by Midatech for Janssen. The work will concentrate on maximizing drug loading and optimizing in vitro duration of release for this undisclosed Janssen experimental molecule using the Midatech’s Q-Sphera technology.

Novadiscovery, a health tech company using in silico clinical trials to predict drug efficacy and optimize clinical trial development, expanded its collaboration with J&J, initially entered in 2020. NOVA is now applying its collaborative clinical trial simulation platform, JINKO, to expand the existing lung cancer model to support Janssen market access and global medical affairs strategies. The companies are now working together to use the JINKO platform to add layers of biological complexity to the initial disease model and then run in silico trial simulations.

Most recently, J&J entered a discovery collaboration with Evotec SE. Evotec’s TargetAlloMod platforms will be evaluated to discover first-in-class novel mode of action therapeutic candidates. Evotec and Janssen will jointly conduct screens on the identified targets and collaborate with hit identification and lead optimization leveraging Evotec’s drug discovery and development platform.

Headcount: 134,500
Pharma Revenues: $45,572 (+8%)
Net Income: $14,714 (-3%)
R&D: $12,159 (+7%)

TOP SELLING DRUGS

Johnson & Johnson (J&J) managed to grow its pharma sales 8% to $45.6 billion in 2020, despite the negative impact of COVID-19 on demand and lower sales of Remicade due to biosimilar competition.

Immunology product sales account for the largest share of J&J’s portfolio and were strong in 2020. Revenues in the segment grew 8% to $15 billion driven by the strong uptake of Stelara (+21%) in Crohn’s disease and Ulcerative Colitis.

Oncology product growth was strong too, recording a 16% climb to $12.4 billion during the year. Positive segment performance was backed by strong sales of Darzalex (+40%) in all lines of therapy and the launch of a subcutaneous formulation in the U.S. and E.U., and Imbruvica, which grew 21% due to global market penetration.

Neuroscience product sales were $6.5 billion, an increase of 4% compared to the prior year, while Infectious Disease sales grew 5% to $3.6 billion due to positive performances by Symtuza and Juluca. Pulmonary Hypertension products grew to $3.1 billion, an increase of 20% driven by the uptake of the hypertension drug Opsumit (+24%). Lastly, Cardiovascular/Metabolism/Other product sales dropped 6% to $4.9 billion because of competition.

Pipeline progress
J&J continued to make positive pipeline progress during 2020. Some recent approvals include: Darzalex Faspro, the first FDA-approved treatment for patients with newly diagnosed light chain (AL) amyloidosis; Cabenuva, which received U.S. FDA approval and European Commission authorization for the first complete long-acting injectable HIV treatment; and Tremfya, which gained European Commission approval as a first-in-class treatment for Active Psoriatic Arthritis (PsA).

Notable regulatory submissions to U.S. FDA and European authorities include amivantamab for treatment of patients with metastatic non-small cell lung cancer; BCMA CAR-T Therapy and Darzalex separately for the treatment of relapsed and/or refractory multiple myeloma; Paliperidone Palmitate 6-Month for treatment of schizophrenia in adults; and Xarelto for a new indication to expand use in patients with peripheral artery disease.

In other pipeline news, Janssen received positive CHMP opinion for Spravato nasal spray for the rapid reduction of depressive symptoms in a psychiatric emergency for patients with major depressive disorder. During the year, Janssen also acquired rights to a novel gene therapy, pioneering treatment solutions for late-stage age-related macular degeneration.

Covid-19 vaccine update
During this past year’s race to get Covid-19 vaccines to people around the world, J&J made headlines, but not in a positive way. Initially, J&J’s vaccine was going to be a game changer because it requires just one dose, compared to the two-dose mRNA counterparts from Pfizer and Moderna.

However, as this issue went to press, J&J was told by FDA that it would have to throw away 60 million doses of its Janssen Covid-19  Vaccine, which received Emergency Use Authorization from the federal regulator in February 2021. This recent action is on top of another 15 million doses that had to be discarded earlier this year. Both actions are related to contamination issues with Johnson and Johnson’s vaccine and AstraZeneca’s vaccine. They were being made at a shared contract manufacturer, Emergent BioSolutions, and somehow there was contamination between the two vaccines.

While J&J hasn’t become the player in the Covid-19 vaccine market initially thought because of these manufacturing issues, the company continues its roll-out efforts. Doses that have made their way to U.S. were made at the company’s Netherlands plant, while Emergent’s facility in Baltimore remains shuttered pending further regulatory investigation. The firm also continues to broaden distribution efforts to other countries around the world.

Acquisitions
J&J’s acquisitions in 2020 included Momenta Pharmaceuticals, a company that discovers and develops novel therapies for immune-mediated diseases, and all rights to the investigational compound bermekimab, which has multiple dermatological indications, along with certain employees from XBiotech.

In August 2020, J&J paid approximately $6.5 billion to acquire Momenta. The acquisition was driven by the significant opportunity seen in Momenta’s lead candidate nipocalimab (M281), a clinically validated, potentially best-in-class anti-FcRn antibody. Nipocalimab gives Janssen the opportunity to reach significantly more patients by pursuing indications across many autoimmune diseases with substantial unmet medical need in maternal-fetal disorders, neuro-inflammatory disorders, rheumatology, dermatology and autoimmune hematology. Nipocalimab recently received a rare pediatric disease designation from the U.S. FDA.

In addition, Janssen said it plans to retain Momenta’s presence in Cambridge, MA, increasing J&J’s existing innovation footprint and capabilities in the greater Boston area.

With XBiotech, Janssen entered a deal to acquire all rights to the investigational compound bermekimab for $750 million. Bermekimab is an anti-IL-1alpha monoclonal antibody (mAb) in Phase 2 development at the time of the deal for the treatment of atopic dermatitis and hidradenitis suppurativa. According to the company, it is the only antibody targeting IL-1a currently in clinical development and has the potential for superior efficacy and safety compared to the current standard of care.

Janssen assumed responsibility for bermekimab’s clinical program, working closely with XBiotech as it completes the ongoing Phase 2 studies in atopic dermatitis and hidradenitis suppurativa. Should Janssen pursue bermekimab indications outside of dermatology, XBiotech may be eligible to receive additional payments upon the receipt of certain commercialization authorizations.

At the very end of 2019, J&J struck a deal to acquire TARIS Biomedical, a biotech specializing in novel drug delivery technology for the treatment of bladder diseases, including cancer. The company’s lead clinical-stage product, TAR-200, uses the proprietary TARIS System, which features a silicone-based drug delivery device that allows for the continuous release of medication into the bladder. TARIS maintains a research presence in Lexington, MA and is part of Janssen R&D’s Oncology Therapeutic Area. TARIS technology arose from research conducted at MIT’s Koch Institute for Integrative Cancer Research.

R&D alliances
In January 2021, J&J entered a couple R&D alliances of note. With the German independent research institute, BioMed X, a new research project with Janssen Research & Development LLC was formed to discover novel transport mechanisms in the human intestinal tract which could be utilized for oral delivery of diverse therapeutic modalities.

Biologics such as monoclonal antibodies have transformed the treatment of immune-related diseases, but need to be delivered by injection, which may have higher barriers to use compared to oral delivery. The collaboration was facilitated by Johnson & Johnson Innovation.

In another research tie-up formed at the beginning of this year, Janssen entered a pact with TenNor Therapeutics to leverage a multitargeting drug conjugation platform developed by TenNor to discover new therapies to treat nontuberculous mycobacteria (NTM) diseases. The agreement was also facilitated by Johnson & Johnson Innovation.

The collaboration builds on the scientific know-how and background intellectual property of TenNor associated with its multitargeting drug conjugation technology. The companies will collaborate to bring complementary expertise together to discover new treatment modalities for NTM diseases.

Headcount: 132,200
Pharma Revenues: $42,198 (+4%)
Net Income: $15,119 (-1%)
R&D: $11,355 (+5%)

TOP SELLING DRUGS

Johnson & Johnson’s pharmaceutical segment sales in 2019 were $42.2 billion, an increase of 3.6% from 2018. U.S. sales were up 2.5% to $23.9 billion, while international sales grew 5% to $18.3 billion.

Star portfolio performers for the year were Stelara, a biologic for the treatment of a number of immune-mediated inflammatory diseases, Darzalex, for the treatment of multiple myeloma, Imbruvica, an oral, once-daily therapy approved for use in treating certain B-cell malignancies, a type of blood or lymph node cancer, Tremfya, a biologic for the treatment of adults living with moderate to severe plaque psoriasis, and Erleada, a next-generation androgen receptor inhibitor for the treatment of patients with prostate cancer.

J&J’s reported growth for 2019 was partially offset by biosimilar and generic competition, primarily declines in Remicade, a biologic approved for the treatment of a number of immune-mediated inflammatory diseases, U.S. Zytiga, an oral, once-daily medication for use in combination with prednisone for the treatment of metastatic, castration-resistant prostate cancer and international Velcade, a proteasome inhibitor for the treatment of multiple myeloma.

Advancing the pipeline
J&J’s pharmaceutical investments in research and development continue to fuel growth. During the year it gained approval and launched two new transformational medicines: Spravato for treatment-resistant depression and Balversa for metastatic urothelial cancer.

J&J also submitted numerous filings and received approvals for new line extensions for key brands, including Stelara, Darzalex, Imbruvica, Tremfya and Erleada, many with peak sales potential that is greater than $500 million, the company said.

J&J continued to expand its portfolio with the strategic licensing and acquisition of new assets and platforms, including cusatuzumab from Argenx, an investigational antibody for the treatment of acute myeloid leukemia and high risk myelodysplastic syndromes.

In a collaboration deal, Janssen teamed up with MeiraGTx Holdings, a clinical-stage gene therapy company, to develop, manufacture and commercialize its clinical stage inherited retinal disease portfolio, including leading product candidates for achromatopsia (ACHM) caused by mutations in either CNGB3 or CNGA3, and X-linked retinitis pigmentosa (XLRP). Further, the companies have formed a research collaboration to explore new targets for other inherited retinal diseases and further develop adeno-associated virus (AAV) manufacturing technology.

MeiraGTx will grant Janssen an exclusive worldwide license to certain clinical assets in MeiraGTx’s inherited retinal disease portfolio. The companies have also formed a research collaboration to develop a pipeline of products addressing novel gene targets, giving Janssen the exclusive option to license new treatments for other inherited retinal diseases.

During the year, the Janssen Pharmaceutical Companies of J&J acquired the investigational compound bermekimab, which has multiple dermatological indications, along with certain employees, from XBiotech Inc., for $750 million. Should Janssen pursue bermekimab indications outside of dermatology, XBiotech may be eligible to receive additional payments upon the receipt of certain commercialization authorizations. Janssen Research & Development, LLC will develop bermekimab. The agreement was executed through Janssen Biotech, Inc.

Bermekimab is an anti-IL-1alpha monoclonal antibody (mAb) in Phase 2 development for the treatment of atopic dermatitis and hidradenitis suppurativa. It is the only antibody targeting IL-1a currently in clinical development and has the potential for superior efficacy and safety compared to the current standard of care.

J&J also acquired TARIS Biomedical, a privately-owned biotechnology company specializing in the development of a novel drug delivery technology for the treatment of bladder diseases including cancer. The company’s lead clinical-stage product, TAR-200, uses the proprietary TARIS System, which features a silicone-based drug delivery device that allows for the continuous release of medication into the bladder. Financial terms of the transaction were not disclosed.

Driving data science
During the year, Janssen Research & Development formed a collaboration with the University of California, Berkeley and the University of California, San Francisco (UCSF), with the goal of inspiring data-driven approaches to improve health and develop the next generation of leaders in healthcare data sciences. This program is the first of its kind in the San Francisco Bay Area, which serves as a hub of both tech and biotech industries and is home to two of the world’s top universities. The agreement was facilitated by Johnson & Johnson Innovation.

The parties will collaborate to create and establish a data science health innovation fellowship program, run by UCSF and UC Berkeley, working with product and platform teams within Janssen. The program will recruit serial cohorts of up to five outstanding data scientists from industry or academia to conduct innovative research in areas of unmet patient need. Fellows will have access to computer science, engineering, and statistics expertise and technology innovation at UC Berkeley and clinical expertise and data at UCSF, which they will use with other health and biological datasets to conduct research projects over two years with mentorship from Janssen, UCSF and UC Berkeley.

Fellows will carry out their research at the Berkeley Institute for Data Science (BIDS) at UC Berkeley and the Bakar Computational Health Sciences Institute (BCHSI) at UCSF. Projects could include artificial intelligence-driven apps to inform patients about next steps in their treatment, or to give them early warning signs of disease, or new methods to manage and recruit participants for clinical trials. Such projects could ultimately lead to new companies that bridge the gap between growing healthcare datasets and meaningful insights.

Accelerating COVID-19 vax candidate
As this issue was going to press, J&J announced the acceleration of its COVID-19 vaccine candidate as it continues to build its manufacturing capacity and partnerships to meet global need. Through Janssen it has sped up the initiation of the Phase 1/2a first-in-human clinical trial of its investigational SARS-CoV-2 vaccine, Ad26.COV2-S, recombinant. Initially scheduled to begin in September, the trial is now expected to commence in the second half of July.

The randomized, double-blind, placebo-controlled Phase 1/2a study will evaluate the safety, response to vaccination, and immune response of the investigational SARS-CoV-2 vaccine, Ad26.COV2-S, recombinant in 1045 healthy adults aged 18 to 55 years, as well as adults aged 65 years and older. The study will take place in the U.S. and Belgium.

The company is in discussions with the National Institutes of Allergy and Infectious Diseases with the objective to start the Phase 3 SARS-CoV-2 vaccine, Ad26.COV2-S, recombinant, clinical trial ahead of its original schedule, pending outcome of Phase 1 studies and approval of regulators.

Simultaneously, J&J is continuing efforts to build global partnerships and invest in vaccine production technology and manufacturing capabilities. J&J plans on supplying more than one billion doses globally through the course of 2021, provided the vaccine is safe and effective.

Headcount: 135,100
Revenues: $81,581 (+7%)
Pharma Revenues: $40,734 (+12%)
Net Income: $15,297 (N/M)
R&D: $10,775 (+2%)

TOP SELLING DRUGS  

Johnson & Johnson’s (J&J) pharmaceutical segment sales in 2018 were $40.7 billion, an increase of 12% from 2017. U.S. sales accounted for $23.3 billion while international sales were $17.4 billion, an increase of 8.4% and 18% respectively. The pharma segment is focused on six therapeutic areas: immunology, infectious diseases and vaccines, neuroscience, oncology, cardiovascular and metabolism and pulmonary hypertension, a new therapeutic area, which was established with the $30 billion acquisition of Actelion in June 2017.

During the year, FDA approved J&J’s cardiovascular drug Invokana (canagliflozin). The drug is meant to reduce the risk of major adverse cardiovascular events, including heart attack, stroke or death due to a cardiovascular cause in adults with type 2 diabetes who have established cardiovascular disease. It is the first and only oral diabetes treatment approved with this indication. FDA also signed off on a Janssen Phase 1b/2 trial to evaluate a chimeric antigen receptor T cell (CAR-T) therapy in patients with relapsed or refractory multiple myeloma.

In terms of acquisitions, while 2018 didn’t witness anything on the level of the Actelion deal a year earlier, J&J did buy BeneVir Biopharm for as much as $1 billion. BeneVir uses its T-Stealth Oncolytic Virus Platform to engineer oncolytic viruses tailored to infect and destroy cancer cells. Janssen intends to advance preclinical candidates as standalone therapies and in combination with other immunotherapies for the treatment of solid tumor cancers. BeneVir will maintain a research presence in Rockville, MD and become part of the Janssen Oncology Therapeutic Area.

Research and development partnerships
During the year J&J entered a number of partnerships to advance its research and development activities. Biopharma Ireland Limited joined a global co-development and commercialization agreement with Janssen Biotech, one of the Janssen Pharmaceutical Companies of J&J, for TD-1473 and related back-up compounds for inflammatory intestinal diseases, including ulcerative colitis and Crohn’s disease. The deal could be worth up to $1 billion and will see the two companies jointly develop and commercialize TD-1473 in inflammatory intestinal diseases, with the two companies sharing profits in the U.S. and expenses related to a potential Phase 3 program.

Arrowhead Pharmaceuticals entered into a license and collaboration agreement with Janssen to develop and commercialize ARO-HBV. In addition, Arrowhead entered into a research collaboration and option agreement with Janssen to potentially collaborate for up to three additional RNA interference (RNAi) therapeutics against new targets to be selected by Janssen. The transactions have a combined potential value of over $3.7 billion for Arrowhead.

argenx, a clinical stage biotech, entered a $1.6 billion global collaboration and license agreement for cusatuzumab (ARGX-110), an anti-CD70 SIMPLE AntibodyÔ, with Cilag GmbH, an affiliate of Janssen. Cusatuzumab is currently in development in a Phase 1/2 combination study with Vidaza for newly diagnosed, elderly patients with acute myeloid leukemia (AML) and high-risk myelodysplastic syndrome (MDS) who are unfit for chemotherapy.

MeiraGTx entered into a research collaboration and evaluation agreement with Janssen to use their proprietary riboswitch technology to engineer regulatable gene therapy constructs encoding proprietary gene sequences from Janssen. Evaluation of the performance of these constructs will determine the utility of this approach in future product development. MeiraGTx’s gene regulation platform is a potentially transformative technology that incorporates an on/off switch for gene expression into the gene therapy vector which can then be activated using a small molecule. In this way, gene therapies can be switched on and off according to the patients’ need and the dosing requirements of the therapy. Temporal control overlaying spatial regulation of gene expression has the potential to increase the utility and flexibility of gene therapy.

Together with Theravance Biopharma, J&J will develop TD-1473, a first-in-class oral, gastrointestinal (GI) restricted pan-Janus kinase (JAK) inhibitor for the treatment of inflammatory bowel disease (IBD), including Crohn’s disease and ulcerative colitis (UC).

New Asia Pacific HQ
Expanding its global footprint, and reflecting positive growth overseas, in May 2018 J&J opened its new Asia Pacific headquarters in Singapore. The new 15,800 square meter facility will bring together more than 1,000 employees from Johnson & Johnson’s pharmaceuticals, medical devices and consumer businesses in one single location to spearhead new ideas and frameworks for healthcare of the future. The headquarters will feature a Design Lab, Leadership Lab, and Human Performance Institute. Johnson & Johnson’s Asia Design Lab will be the first design lab outside of the U.S.

The new Singapore HQ has also been selected as the location for Johnson & Johnson’s first global development center known as the Leadership Lab. The Leadership Lab aims to conduct over 200 leadership development classes and train 4,000 Asian leaders annually. As a think-tank, the Leadership Lab will create links with universities, research groups, governments, healthcare organizations and other partners to co-create new healthcare models and solutions to prototype capabilities required to author the next chapter of healthcare innovation in Asia.

The regional headquarters will also include Asia Pacific’s first Human Performance Institute (HPI), offering proprietary leadership development initiatives to participants outside of Johnson & Johnson, with the goal to train 150,000 people in Singapore by 2020.

Headcount: 134,000
Revenues: $76,450 (+6%)
Pharma Revenues: $36,256 (+7%)
Net Income: $1,300 (-92%)
R&D: $10,554 (+16%)

TOP SELLING DRUGS 

Johnson & Johnson’s pharmaceutical segment sales in 2017 were $36.3 billion, an increase of 7% from 2016. U.S. sales accounted for $21.5 billion while international sales were $14.8 billion, an increase of 6.7% and 10.8% respectively.

The pharma segment is focused on six therapeutic areas: immunology, infectious diseases and vaccines, neuroscience, oncology, cardiovascular and metabolism and pulmonary hypertension, a new therapeutic area established with the acquisition of Actelion in June 2017.

At $30 billion, J&J’s purchase of the Swiss biotech was by far the biggest pure biotech/pharma transaction of the year. Based in Allschwil, Actelion has a franchise of differentiated, innovative products for pulmonary arterial hypertension (PAH), as well as specialty in-market medicines and late-stage products. J&J said it will retain Actelion’s presence in Switzerland and leverage its complementary capabilities to shape medical paradigms.

As part of the deal, Actelion spun out its drug discovery operations and early-stage clinical development assets into a newly created Swiss biopharma company, R&D NewCo. J&J also received an option on ACT-132577, a product being developed for resistant hypertension currently in Phase II development.

Segment performance

Taking a closer look at results across the pharma segment, immunology products achieved sales of $12.2 billion in 2017, representing an increase of 2.3%. Growth was driven by strong uptake of Stelara, the launch of Tremfya and sales growth of Simponi/Simponi Aria outside the U.S. Lower sales of Remicade were due  to biosimilar competition.

Infectious disease products sales were $3.2 billion, a decline of 1.7% from 2016. Lower sales of Olysio, vaccines and Prezista were partially offset by sales growth of Edurant, Prezcobix/Rexolsta and the launch of Symtuza.

Neuroscience products sales were $6 billion, a decrease of 1.6%. Lower sales of Risperdal Consta and Concerta as well as the impact of divestitures were partially offset by strong sales of Invega Sustenna/Xeplion/Trinza/Trevicta long-acting injectables.

Oncology products achieved by far the strongest sales growth in 2017 at $7.3 billion, representing an increase of 25%. Contributors to the growth of oncology products were strong sales of Darzalex and Imbruvica driven by market share and market growth and sales of Zytiga.

Cardiovascular and metabolism products sales dropped 1.7% to $6.3 billion due to lower sales of Invokana/Invokamet in the U.S. primarily due to an increase in price discounts and market share decline driven by competition. This was partially offset by sales growth of Xarelto with increased market growth and market share, as well as sales of non-PAH products from the Actelion acquisition.

Drug approvals

The U.S. FDA approved several new drugs and indications during the year. The drug agency approved Imbruvica for patients with marginal zone lymphoma who require systemic therapy and have received at least one prior anti-CD20-based therapy. It is the first therapy specifically indicated for this rare blood cancer and represents the fifth indication for Imbruvica in the U.S.

The immunotherapy Darzalex was approved in combination with pomalidomide and dexamethasone for the treatment of patients with multiple myeloma who have received at least two prior therapies including lenalidomide (an immunomodulatory agent) and a proteasome inhibitor (PI). Clinical trial results showed an overall response rate of 59.2 percent with Darzalex in combination with pomalidomide and dexamethasone in these patients.

FDA also approved Tremfya for the treatment of adults with moderate to severe plaque psoriasis who are candidates for systemic therapy or phototherapy. Tremfya is the first and only approved biologic therapy that selectively blocks only IL-23, a cytokine that plays a key role in plaque psoriasis. In clinical studies, patients receiving Tremfya experienced significant improvement in skin clearance and greater improvement in symptoms of plaque psoriasis including itch, pain, stinging, burning and skin tightness when compared with placebo.

Imbruvica got the green light for the treatment of adult patients with chronic graft-versus-host-disease (cGVHD) after failure of one or more lines of systemic therapy. Imbruvica is the first and only FDA-approved medication for adult patients with cGVHD, a potential consequence of an allogeneic stem cell or bone marrow transplant, which can be life-threatening and debilitating.

During the year Actelion was approved for a new 32 mg tablet for oral suspension for Tracleer. It is indicated for pediatric patients aged three years and older with idiopathic or congenital pulmonary arterial hypertension (PAH), to improve pulmonary vascular resistance, which is expected to result in an improvement in exercise ability. With this approval, Tracleer becomes the first FDA-approved medicine for pediatric PAH patients in the U.S. PAH is a chronic, life-threatening disorder characterized by abnormally high blood pressure in the arteries between the heart and lungs.

Also, an expanded indication for Stelara was approved in 2017 for the treatment of adolescents 12 years or older with moderate to severe plaque psoriasis who are candidates for phototherapy or systemic therapy. The approval marks a significant milestone for this age group as approximately one-third of individuals who develop plaque psoriasis do so before 20 years of age, and there are limited treatment options for adolescents.

Rounding out the approvals in 2017, FDA ok’d the 10 mg once-daily dose of Xarelto for reducing the continued risk for recurrent venous thromboembolism after completing at least six months of initial anticoagulation therapy and approved Juluca, the first complete single-pill, two-drug regimen for the treatment of HIV-1 infection in certain adults with the disease who are

virologically suppressed.

Pipeline research partnerships

J&J continued to push its pipeline forward in 2017 through several research partnerships. With Synthetic Genomics, Janssen Vaccines & Prevention B.V. entered a research and licensing option agreement to apply replicon RNA technology for the design and development of novel RNA-based medicines for infectious diseases. Synthetic Genomics replicon RNA technology enables a tunable, multigenic approach to elicit desired antigen expression and immune response for a variety of applications. The company believes that this technology will enable the development of RNA-based therapies and vaccines that enhance and fine tune immune response against infectious diseases and cancer.

Janssen Biotech formed a clinical research pact with Bristol-Myers Squibb (BMS) to evaluate the combination of BMS’ Immuno-Oncology (I-O) agent Opdivo and Janssen’s CD38-directed cytolytic antibody Darzalex in Phase Ib/II trials in multiple myeloma and solid tumors including non-small cell lung cancer, pancreatic cancer, colorectal cancer (CRC), triple negative breast cancer and head and neck cancer.

X-Chem announced during the year that it also expanded its collaboration with Janssen Biotech to discover new drug leads for the treatment of inflammatory disease. The multi-target expansion builds on their existing discovery and license partnership entered into in December 2014. This agreement will apply X-Chem’s DEX platform to identify novel modulators for challenging disease targets, following the licensing of multiple series of X-Chem-discovered small molecules by Janssen in 2016.

Janssen Biotech also entered into a worldwide exclusive license and collaboration agreement with Protagonist Therapeutics to develop, manufacture and commercialize PTG-200, a first-in-class, oral interleukin-23 receptor (IL-23R) antagonist drug candidate in development for the treatment of Crohn’s disease and ulcerative colitis (UC). PTG-200 is currently in Investigational New Drug (IND) enabling studies and the initiation of a Phase I trial is planned in 2017.

BioMed X entered a collaboration agreement with Janssen R&D to foster early-stage preclinical biomedical research and development projects. Under the agreement, the BioMed X Innovation Center in Heidelberg, Germany will accommodate as many as five Janssen research projects. The first research project will focus on rapid identification of auto-antigens in autoimmune diseases. Epidemiological data provide evidence of a steady increase in autoimmune diseases worldwide over the last decades. New platform technologies or concepts may lead to identification of antigens recognized by T cells involved in autoimmune responses.

Additionally, Janssen Pharmaceuticals entered into a worldwide exclusive license and collaboration agreement with Bavarian Nordic to leverage their MVA-BN technology with Janssen’s own AdVac and DNA-based vaccine technologies in the development and commercialization of potential new vaccine regimens against hepatitis B virus (HBV) and the human immunodeficiency virus (HIV-1). This agreement stems from successful and ongoing collaborations between the companies to develop vaccines to address Ebola and Human Papillomavirus (HPV).

Lastly, on the cancer research front, Janssen Biotech entered into a worldwide collaboration and license agreement with Legend Biotech USA and Legend Biotech Ireland Ltd., subsidiaries of Genscript Biotech Corporation, to develop, manufacture and commercialize a CAR T-cell drug candidate, LCAR-B38M, which specifically targets the B-cell maturation antigen. LCAR-B38M is currently accepted for review by the China Food and Drug Administration (CFDA) and in the planning phase of clinical studies in the U.S. for multiple myeloma. LCAR-B38M is the first CAR-T therapy accepted for review by the CFDA. Janssen made an upfront payment of $350 million as part of the deal.

Headcount:127,000
Revenues: $71,890(+3%)
Pharma Revenues: $33,464 (+7%)
Net Income: $16,540 (+7%)
R&D: $9,095 (+1%)

TOP SELLING DRUGS

Headquartered in New Brunswick, NJ, Johnson & Johnson (J&J) operates in more than 60 countries while its pharmaceutical and healthcare products are supplied to over 200 countries. The Pharmaceutical segment contributes nearly 47% of J&J’s total revenues. The segment reported 2016 revenues of $33.5 billion—a 7% increase over 2015—and comprises several franchises: Immunology, Infectious Disease, Neuroscience, Oncology, and Cardiovascular and Metabolics. The major blockbuster drugs under the Immunology franchise are Remicade, Stelara, and Simponi/Simponi Aria. The franchise revenues reported growth of 7% to $12 billion in 2016.

Cancer collaborations

J&J’s Oncology franchise grew 24% to $6 billion during 2016, driven by increased sales of Imbruvica and a strong uptake of Darzalex. During the year Janssen Biotech, one of the Janssen Pharmaceutical Companies of Johnson & Johnson, entered several cancer collaborations. First it teamed up with Tesaro for exclusive rights to the investigational compound niraparib in prostate cancer. Niraparib is an orally administered, once daily, potent, and highly selective poly polymerase (PARP) inhibitor, currently in late-stage development for patients with metastatic breast cancer and ovarian cancer. Janssen will develop and commercialize niraparib for patients with prostate cancer worldwide, except in Japan. Tesaro received an upfront payment of $35 million, and is eligible to receive additional milestone payments of up to $415 million.

With Bristol-Myers Squibb (BMS), Janssen entered a clinical research collaboration to evaluate BMS’ immuno-oncology drug Opdivo (nivolumab) and Janssen’s Live Attenuated Double–Deleted (LADD) Listerial monocytogenes cancer immunotherapy, expressing mesothelin and EGFRvIII (JNJ-64041757), in patients with non-small cell lung cancer (NSCLC). Opdivo is a human antibody designed to alleviate immune suppression. JNJ-64041757 is designed to induce an immune response against NSCLC tumors.

Later in the year, Janssen entered into a master clinical trial collaboration and supply agreement with Onyx Pharmaceuticals, a subsidiary of Amgen, to evaluate the efficacy and safety of CD38-directed immunotherapy daratumumab (DARZALEX) in combination with a proteasome inhibitor (PI) carfilzomib (KYPROLIS) and dexamethasone. The agreement covers all potential opportunities for combining daratumumab and carfilzomib to treat cancer. Janssen licensed daratumumab from Genmab and is responsible for all global development, marketing and manufacturing. Carfilzomib is developed and commercialized by Amgen.

Industrial bioscience company Amyris entered into a research agreement with Janssen facilitated by Johnson & Johnson Innovation. The collaboration will use Amyris’s µPharm platform technology to develop a customized library of natural and natural-like compounds to test against Janssen’s therapeutic target. Amyris’s µPharm platform technology enables an integrated discovery and production process for therapeutic compounds. It provides access to scarce natural compounds and also creates new diversity based on natural compound scaffolds.

Janssen Biotech also licensed Ionis Pharmaceuticals’ IONIS-JBI1-2.5Rx, an oral antisense drug for the treatment of a GI autoimmune disease, for $10 million. Janssen assumes all global development, regulatory and commercialization responsibilities after Ionis completes the IND-enabling studies. Ionis is eligible to receive as much as $800 million in development, regulatory and sales milestones and license fees for three programs, as well as royalties on sales from any product that is successfully commercialized.

Janssen Pharmaceutica NV divested five anesthesia and pain management injectable products to Piramal Enterprises’ wholly owned Critical Care subsidiary in the UK for $155 million. The products include five injectable versions of Janssen’s Sublimaze (fentanyl citrate), Sufenta (sufentanil citrate), Rapifen (alfentanil hydrochloride), Dipidolor (piritramide), and Hypnomidate (etomidate), which are currently marketed in more than 50 countries. Piramal acquired the brand names and related IP, including how to make both the API and the finished dosage forms of the products. The acquisition does not include the transfer of any manufacturing facilities or employees.

Janssen will continue to supply finished dosage forms for up to three years and API for up to five years, and will continue to sell the products on behalf of Piramal until the marketing authorizations or relevant business relations are transferred to Piramal.

Headcount: 127,000
Revenues: $70,074 (-6%)
Pharma Revenues: $31,430 (-3%)
Net Income: $16,323 (+18%)
R&D: $9,046 (+7%)

TOP SELLING DRUGS  

Johnson & Johnson (J&J) has a portfolio focused on five core therapeutic areas—immunology, infectious diseases and vaccines, neuroscience, cardiovascular and metabolism, and oncology. Combined segment sales in 2015 were $31.4 billion, a decrease of 2.7% from 2014. J&J said the pharma segment was negatively impacted by the introduction of competitive products to the company’s Hepatitis C products, Olysio/Sovriad (simeprevir) and Incivo (telaprevir).

Immunology products achieved sales of $10.4 billion in 2015, representing an increase of 2.1% compared to the prior year driven by the increased sales of Sterlara (ustekinumab) and Simponi/Simponi Aria (golimumab). Growth was partially offset by lower Remicade (infliximab) sales due to the weakening of the euro and biosimilar competition in Europe.

Infectious disease products sales were $3.7 billion, a decline of 34.7% from 2014. Competitive products to the company’s Hepatitis C products, Olysio/Sovriad and Incivo had a significant negative impact on U.S. sales and will continue to have a negative impact on future sales, according to the company.

Neuroscience products sales were $6.3 billion, a decrease of 3.5% from 2014. J&J reports the U.S. sales growth of Concerta/methylphenidate was primarily due to a therapeutic equivalence reclassification of generic competitors by the FDA in November 2014. In addition, strong sales were reported upon the launch of Invega Trinza. However, neuroscience products sales were negatively impacted by the U.S. divestiture of Nucynta (tapentadol) and lower sales of Risperdal Consta (risperidone).

Oncology products achieved sales growth of $4.7 billion in 2015, representing an increase of 5.3% as compared to the prior year. Contributors to the growth were strong sales of Imbruvica (ibrutinib) due to the approval of new indications, additional country launches and strong patient uptake. Additionally, sales of Zytiga (abiraterone acetate) grew in the U.S. and in Asia and Latin America, but were lower in Europe due to competition.

Cardiovascular, metabolism and other products achieved sales of $6.4 billion in 2015, representing an increase of 15% as compared to the prior year due to strong sales of Xarelto (rivaroxaban) and Invokana/Invokamet (canagliflozin).

While overall sales were down, the innovation engine at J&J steams ahead. During the year, the pharma giant unveiled plans to file for regulatory approval of more than 10 new products between 2015 and 2019, each with the potential to exceed $1 billion in revenue, as well as more than 40 line extensions of existing and new medicines. Janssen Pharmaceuticals, one of the Janssen Pharmaceutical Companies of Johnson & Johnson, has launched 14 new products since 2009, seven of which already exceed or are on track to achieve sales in excess of $1 billion.

Late-stage products expected to drive growth in the next several years, following regulatory approvals, include daratumumab for multiple myeloma; sirukumab for rheumatoid arthritis; guselkumab for psoriasis; JNJ-927 (ARN-509) for pre-metastatic prostate cancer; imetelstat for myelofibrosis; JNJ-493 (FGFRi kinase inhibitor) for urothelial cancer; esketamine for treatment-resistant depression; AL-8176 for respiratory syncytial virus (RSV); fulranumab for osteoarthritic pain; JNJ-872 (VX-787) for influenza A; JNJ-922 (Orexin-2 antagonist) for primary insomnia; and AL-335 for hepatitis C.

In addition, daratumumab and esketamine have both received Breakthrough Therapy Designations from the U.S. FDA. Janssen also announced plans to submit a Biologic Licensing Application to the FDA and a Marketing Authorization Application to the EMA this year for daratumumab in double refractory multiple myeloma.

Acquisitions and partnerships

In March 2015, Janssen acquired XO1 Limited, a privately held asset-centric virtual biopharmaceutical company founded to develop the anti-thrombin antibody ichorcumab. Ichorcumab is a recombinant human antibody developed to mimic the activity of a human antibody, which appears to produce an anti-coagulated state without predisposition to bleeding.

Ichorcumab complements the Janssen cardiovascular portfolio. With its strong position in the fields of anticoagulation and biologics, J&J is well positioned to explore the potential of this next generation anticoagulant. The opportunity was identified and facilitated through Johnson & Johnson Innovation, London.

Ichorcumab was initially developed by Cambridge University Hospitals and Cambridge University with support from Cambridge Enterprise, the University’s commercialization arm. The technology was licensed by Cambridge Enterprise to XO1 Limited in order to take its development towards the clinic. XO1 Limited was established by Index Ventures as an asset centric company, a model advanced by Index, via a fund launched in 2012 in which Johnson & Johnson Innovation— JJDC, Inc. is an investor.

In another acquisition deal later in the year, J&J strengthened its pipeline to combat Hepatitis B virus when it acquired Novira Therapeutics, a privately held, clinical-stage biopharmaceutical company. The acquisition included Novira’s portfolio of novel antivirals, including its lead candidate, NVR 3-778, a small molecule, direct acting antiviral, for oral administration in patients with HBV that inhibits the HBV core or capsid protein. HBV core is a novel and promising drug target since it is involved in multiple activities required for viral replication and persistence.

During the year J&J also completed the divestiture of its Cordis business to Cardinal Health for an approximate value of $2 billion. The Cordis business is a global leader in the development and manufacture of interventional vascular technology and generated net revenues of approximately $780 million in 2014. At the time of the deal J&J reinforced its commitment to cardiovascular disease, focusing on its leading cardiovascular medicine, Xarelto.

During the year Janssen entered into a collaboration and license agreement with Bavarian Nordic to leverage their MVA-BN technology, jointly with Janssen’s own AdVac technology, in the development and commercialization of a heterologous prime-boost vaccine for the treatment of Human Papillomavirus (HPV) chronic infections, which can lead to cancer. Janssen will conduct all clinical development and, subject to regulatory approval, will be responsible for registration, distribution and commercialization of the potential combination vaccine worldwide.

Janssen also obtained worldwide rights, excluding China and Korea, to develop and commercialize oxyntomodulin-based therapies including HM12525A, a biologic that is completed Phase I and entered Phase II, from Hanmi Pharmaceutical. HM12525A is an oxyntomodulin-based therapy (GLP-1/glucagon receptor dual agonist) that has shown evidence of improving multiple metabolic parameters that lead to improved blood glucose, body weight, and insulin sensitivity. J&J said this asset has the potential, as a once weekly therapy, to be a best-in-class oxyntomodulin-based therapy.

Headcount: 127,000
Revenues: $74,331 (+4%)
Pharma Revenues: $32,313 (+15%)
Net Income: $16,323 (+18%)
R&D: $6,213 (+6%)

TOP SELLING DRUGS 

pulmonary embolism$1,52276%Procritanemia$1,238-9%Risperdal Constaschizophrenia$1,190-10%Simponirheumatoid arthritis$1,18727%

Worldwide pharmaceutical sales of $32.3 billion for the full-year 2014 represented an increase of nearly 15% versus the prior year for J&J. Domestic sales increased 25%, while international sales grew 5%.

J&J’s rather strong sales results were driven by new products and the strength of core product performance. New products launched during the year include Olysio/Sovriad (simeprevir), for combination treatment of chronic hepatitis C in adult patients; Xarelto (rivaroxaban), an oral anticoagulant; Zytiga (abiraterone acetate), an oral, once-daily medication for use in combination with prednisone for the treatment of metastatic, castration-resistant prostate cancer; Invokana (canagliflozin), for the treatment of adults with type 2 diabetes; and Imbruvica (ibrutinib), an oral, once-daily therapy approved for use in treating certain B-cell malignancies, or blood cancers.

During the year J&J acquired Alios BioPharma, Inc., a clinical stage biopharma company focused on therapies for viral diseases, for approximately $1.75 billion. Alios’ lead candidate AL-8176 is an orally administered antiviral therapy currently in Phase II development for the treatment of infants with respiratory syncytial virus (RSV).

In January, J&J divested the U.S. license rights to Nucynta (tapentadol), Nucynta ER extended-release tablets, and Nucynta oral solution for approximately $1.05 billion to Depomed.

Collaboration is key

Janssen, the pharmaceutical companies of J&J, entered several strategic collaborations during the year, as well as announcing the formation of Janssen Global Public Health (Janssen GPH), a new group that will be responsible for clinical and product development and creating and implementing new strategies for its portfolio of pharmaceuticals, diagnostics, and services for diseases impacting resource-limited countries and emerging markets.

Halozyme Therapeutics entered into a worldwide collaboration and license agreement with Janssen Biotech to develop and commercialize products combining Janssen compounds with Halozyme’s Enhanze technology. Enhanze is based on a recombinant human hyaluronidase enzyme (rHuPH20) that temporarily modifies hyaluronan to aid in the dispersion and absorption of other injected drugs.

Transposagen Biopharmaceuticals entered into a research and worldwide license agreement with Janssen to develop allogeneic Chimeric Antigen Receptor T-cells (CAR-T). CAR-T therapies have shown promise in early trials for the treatment of blood cancers and have the potential for use as off-the-shelf cancer treatments without the need of matching donor with recipient.

Aduro BioTech entered into its second agreement with Janssen granting an exclusive, worldwide license to certain product candidates for the treatment of lung cancer and certain other cancers, based on its LADD immunotherapy platform.

Bristol-Myers Squibb, Pharmacyclics and Janssen R&D all entered a clinical trial collaboration to evaluate the safety, tolerability and preliminary efficacy of BMS’ investigational PD-1 immune checkpoint inhibitor OPDIVO (nivolumab) in combination with Imbruvica (ibrutinib), an oral Bruton’s tyrosine kinase (BTK) inhibitor co-developed and co-marketed by Pharmacyclics and Janssen.

Janssen Pharmaceuticals also formed a collaboration with Vertex Pharmaceuticals on worldwide development, manufacturing and commercialization of VX-787, an investigational medicine now in Phase II development for the treatment of influenza A.

Janssen R&D Ireland entered a collaboration with ViiV Healthcare to develop and commercialize a new single tablet regimen containing Janssen’s Non-Nucleoside Reverse Transcriptase Inhibitor rilpivirine (Edurant) and ViiV’s Integrase Inhibitor dolutegravir (TIVICAY), as the sole active ingredients for the maintenance treatment of HIV. The companies will also investigate development of the drug combination for pediatric use.

Novozymes Biopharma entered a collaboration with Janssen R&D under which Janssen will evaluate Novozymes’s engineered albumin-based Veltis technology for potential drug candidates.

J&J has swapped places with GSK this year as a result of some highly lucrative drug launches. The company is openly touting its drug pipeline announcing intentions to have 10 new drug launches by 2019 and expecting each of them to net $1 billion, while adding 40 line extensions. Making it big in vaccines, neuroscience, immunology, infectious diseases and CV/metabolism, and oncology is J&J’s aim.

Indeed the pipeline does look strong with daratumumab for multiple myeloma, sirukumab for rheumatoid arthritis and guselkumab for psoriasis followed by a ruck of currently unnamed drugs in oncology, it may well be close to its goal.

Wisely, J&J is also harnessing external partners in drug development. Janssen announced in May that it is partnering with Achillion Pharmaceutical to develop a new hepatitis C treatment, and earlier in the year the company announced an agreement with Kura Oncology to further develop tipifaranib, on top of acquiring UK virtual biopharma company XO1.

 —Adele Graham-King

Headcount: 128,100
Pharma Reveneus: $28,125 (1%)
Total Revenues: $71,31 (26%)
Net Income: $13,831 (32%)
R&D Budget: $8,183 (14%)

TOP SELLING DRUGS

After years marked by manufacturing problems, product recalls and a consent decree at the company’s Fort Washington, PA facility, J&J is moving ahead with quality programs and additions to its pipeline. The company has restored supplies of over-the-counter drugs that had been affected by quality problems and recalls. Over the past four years, it has introduced 11 new products, including the prostate cancer drug, Zytiga.

According to CEO Alex Gorsky, J&J is the fastest growing Top 10 pharma company in the U.S., Europe and Japan, and has continued to invest about 11% of sales each year to support R&D.

J&J is currently focusing on global markets, wth over 275 companies in 60 countries. Currently, 55% of the company’s business coms from outside the U.S, and 22% of market growth from the BRIC nations (Brazil, Russia, India and China).

The company plans to introduce simeprevir for hepatitis C,  its “breakthrough” drugs ibrutinib and daratumumab for the treatment of hematologic malignancies, as well as sirukumab and guselkumab for immune mediated diseases. The company also has plans for esketamine, an antidepressant based on its version of ketamine. The company is moving quickly in Japan and China, where Janssen plans to file nine NME’s and six brand line extensions by 2017.

Last year, FDA rejected, for the third time, its supplemental New Drug Application (sNDA) for rivaroxaban, citing the need for more clinical data proving safety and efficacy.

However the company has scored a number of approvals, for instance, for Siltuximag (CNTO 328), a treatment for multicentric Castleman’s disease, a rare blood disease similar to lymphoma.

FDA also approved Imbruvica, developed by Pharmacyclics and J&J as a treatment for mantle cell lymphoma.

J&J subsidiary Janssen Pharmaceuticals has submitted its new once daily antiretroviral drug, Prestiza, for FDA approval as an HIV treatment.

Prestiza reportedly contains darunavir, a protease inhibitor developed by Janssen’s research and development team in Ireland, and cobicistat, a boosting agent developed by Gilead Sciences.

Darunavir is already sold as an HIV treatment, but use of Gilead’s boosting agent would allow the two products to be combined, resulting in a single pill daily therapy.

The company plans to extend its range of hepatitis C therapies, and recently acquired a drug candidate GSK2336805, from GSK, who had developed it with Vertex Pharmaceuticals. Janssen plans to test it in combination with simeprevir, a drug that it developed with Medivir, that is awaiting regulatory approval to be used in combination with the standard therapy of interferon and ribavirin.
Janssen hopes that the Glaxo drug can take the place of interferon in that cocktail. Its hepatitis C drug Olysio did well in clinical trials, and has been approved by FDA.

J&J has also taken steps to make its clinical trial data more transparent.  Janssen R&D LLC now has a clinical trial data sharing arrangement with Yale University School of Medicine’s open door access project, to share clinical trials data to enhance public health. Working with an independent third party is expected to improve scientific understanding of diseases  and treatment opportunities. The company has also created innovationcenters in London, Shanghai, Boston, San Francisco and San Diego to form what CEO Gorsky calls an “international network of scientific entrereneurs.”

Battling Cancer
J&J moved more aggressively to extend its range of prostate cancer treatments by acquiring Aragon Pharmaceuticals, which has developed ARN-509, now in Phase II development for castration-resistant prostate cancer. The drug would complement J&J’s existing treatment, Zytiga (abiraterone acetate), which has been approved in the U.S. and Europe.

In the hot field of immunooncology, J&J Innovation and Janssen Biotech are collaborating with The Dana Farber Research institues. The company made some acquistions last year, notably buying Synthes.  However, it has also been focusing its efforts and divesting of businesses that don’t seem to fit. J&J recently sold its Ortho Clinical Diagnostics to The Carlyle Group.

Headcount: 127,600
Pharma Revenues: $25,351 (4%)
Total Revenues: $67,224 (3%)
Net Income: $10,51 (49%)
R&D Budget: $5,36 (24%)

Top Selling Drugs

Account for 70% of total pharma sales, up from 65%in 2011

Finally! One of our Top 20 companies actually grew its pharma revenues in 2012! Johnson & Johnson’s engine was firing on all cylinders last year, with major increases by newer products offsetting relatively mild declines. Remicade remains tops at the company, with four times the revenue of J&J’s second-biggest seller, Velcade. That’s one of the highest ratios in our ranks (although Humira and Seretide/Advair laugh at Remicade), but J&J doesn’t appear hyper-dependent on its top seller, as it posted six other blockbusters in 2012, has two more primed to cross the billion-dollar mark in 2013, and is advancing a pipeline with potential mega-drugs in oncology and hepatitis C.

Sure, the company’s consumer healthcare reputation remains a work-in-progress (at best), and the device business is facing around 10,000 lawsuits due to faulty artificial hips, but we’re here to discuss the pharma unit (which is still negotiating a multi-billion-dollar settlement for improper marketing of Risperdal), so let’s not focus on the negatives! J&J had a good year, by 2012 big pharma standards! Zytiga, its new oral treatment for prostate cancer, absolutely blew up in its first full year, more than offsetting the final collapse of Levaquin revenues. It’s growing fast enough that it may just compensate for the decline of Aciphex sales, too.

At the same time, J&J’s portfolio of autoimmune biologics — Remicade, Stelara and Simponi — combined to post sales of $7.8 billion (+17%) in 2012, and showed a similar growth rate in 1Q13.

For the longest time, most of the talk about J&J’s new drugs centered around Xarelto, its anti-clotting drug intended to treat acute coronary syndrome (ACS). Although the drug reached the market in mid-2011 to treat deep vein thrombosis (DVT) in certain surgery patients, J&J hasn’t been able to convince the FDA to approve it for ACS, where it was expected to fight for a multi-billion-dollar prize against Pradaxa and Eliquis. In November 2012, the agency cleared it to treat blood clots in patients with DVT or pulmonary embolism, but sent J&J its second complete response letter in March 2013 regarding the ACS label.

There’s no word on when that’ll be resolved, but J&J didn’t take its eye off the R&D ball all this time. In addition to the massive success of Zytiga, the company has also seen a breakout from Invega Sustenna, the long-lasting version of its schizophrenia treatment, while getting approvals for several drugs with lower sales potential like Sirturo, a treatment for multidrug-resistant tuberculosis.

In March 2013, J&J received FDA approval for Invokana, a first-in-class diabetes treatment intended to lower blood glucose. Even with a pretty extensive set of postmarketing studies, getting Invokana onto the U.S. market is quite an achievement for J&J. Forxiga, a competitor SGLT2 inhibitor from AstraZeneca and Bristol-Myers Squibb, was turned down by the FDA because of liver cancer risks, but did receive approval in the EU late in 2012. A few days before Invokana’s approval, Lilly and Boehringer Ingelheim submitted an NDA for their own SGLT2 inhibitor, but J&J will have a significant head start on them.

There is a question of how well J&J will do in this market, given that they have to build up a diabetes sales force, but that’s a much better question than, “Will we ever get our diabetes drug approved?”

The company is also hoping to get further into huge market for hepatitis C treatments with simeprivir, a drug co-developed with Medivir, which received priority review status from the FDA in May 2013. J&J also co-markets Vertex’s HCV treatment, Incivo/Incivek, but that drug demonstrates how hyper-accelerated the field is. When Incivek hit the market in mid-2011, it broke records in patient uptake, posting $782 million in sales in half a year. By 2012, growth began to slow as new treatments were approved, and Incivek reached $1.3 billion in total revenues. For 2013, it’s on a pace to dip back below $1.0 billion. J&J reported Incivo revenues of $162 million in 1Q13, an increase of 23%. We can’t recall ever seeing a drug have that steep a take-off then fall back to earth without receiving a recall or black box warning. So it’s great news that J&J submitted simeprivir for approval in March 2013, but it’s tough to guess how big a bite it can take out of the HCV market.

At an analyst meeting in May 2013, J&J outlined its plans to file for approval a slew of new products in the next four years, including simeprivir, a pair of cancer treatments that have received Breakthrough designation from the FDA, two more autoimmune biologics, several vaccines, and a three-month version of Invega Sustenna.

On a longer timeline, J&J is conducting Phase II trials on an inhalable formulation of party-drug/horse-tranquilizer ketamine. Early research has shown ridiculously good results in treating depression and suicidal ideation in people with major depressive disorder, as in, they get better overnight, rather than the months it can take for a conventional antidepressant to begin working. So apparently, my pharmanaut pals back at college really were on to something.

On the device end of the business, J&J hasn’t shied away from major acquisitions to secure its market position, most recently the $21.3 billion buyout of Synthes in 2011. The company has been focused more on product development and partnerships on the pharma side of things. Still, a company as large J&J needs to find major new markets just to keep afloat. It may have found several. That should help keep chief executive officer and (as of 2013) chairman Alex Gorsky secure while he tries to solve the rest of J&J’s raft of problems.

(Note: we made it through an entire J&J writeup without mentioning any of its product recalls, even though they extended into the pharma side with a June 2013 recall of 32 million packages of oral contraceptives!)

Lowe Down
Now that the long-running problems with product recalls, unapproved promotions, and so on have (generally) died down, the underlying strength of J&J’s drug business is easier to appreciate. These guys are a behemoth, with a well-spread-out portfolio of products and a lot going on in the clinic, not that they feel to urge to update people very often about much of it. I suspect that there are whole programs that have been born and died in the place without ever being mentioned, the sorts of things that smaller companies would have press-released all over the landscape.

But J&J isn’t shy about going out to get things to sell, if need be. There are surely quite a few VPs in there somewhere whose entire jobs consist of keeping track of all the deals that have been made or are in the works. Between the pharma/biologic side of the company and the medical devices and consumer care units, this company is so well-rounded that it looks like some sort of business school case rather than something from the real world. There’s bound to be some luck involved in that, but it takes a lot of skill to manage that, too.

—Derek Lowe

Acquisition News
Target: Aragon Pharmaceuticals
Price: $650 million upfront, and $350 in milestones, plus royalties
Announced: June 2013
What they said: “[This acquisition] further enhances our leadership in prostate cancer drug development.”

—Peter F. Lebowitz, M.D., Ph.D., Global Therapeutic Area Head, Oncology for Janssen R&D

Target: Corimmun
Price: not disclosed
Announced: June 2012
What they said: “COR-1 is an early stage development compound with a novel mechanism for treating heart failure that has the potential to improve heart function by suppressing antibodies that can exacerbate this condition.”

—Peter M. DiBattiste, M.D., Global Therapeutic Area Head, Cardiovascular Disease and Metabolism, Janssen R&D

Outsourcing News
J&J continued to suffer supply constraints for cancer treatment Doxil in 2012, due to problems at its CMO, Ben Venue Labs. Not that money matters compared to the number of cancer patients who had to delay or forego treatment, but Doxil revenues fell from $402 million in 2011 to $83 million last year. The company reported that it had restored full access to the drug in the U.S., by employing an “alternate manufacturing approach” (that is, a second CMO finishing bulk product made by BVL). The FDA approved a generic version of Doxil in February 2013 from Sun Pharma, and has cleared subsequent lots of J&J’s bi-outsourced Doxil several times in 2013.

Headcount: 114,000
Pharma Revenues: $22,396 (-1%)
Total Revenues: $61,587 (-1%)
Net Income: $13,334 (9%)
R&D Budget: $4,432 (-3%)

Top-Selling Drugs in 2010

Account for 69% of total pharma sales, down from 73% in 2009.

PROFILE

In last year’s edition, Johnson & Johnson was our top company . . . in terms of revenue drop from the previous year. Thanks to a spate of patent expirations and the new scrutiny applied to Procrit, J&J shed $2.2 billion in revenues in 2009. The company’s pharma businesss managed to drop only $124 million in revenues in 2010, keeping it squarely locked into our #7 slot. (Which means you can ignore last year’s prediction that Lilly might manage to surpass J&J in this year’s list.)

Having fallen most of the way off of its patent cliff (Levaquin is set to expire mid-2011), J&J is positioned to climb back up with a number of up-and-coming drugs. The company is seeing strong growth from Caelyx (ovarian/breast cancer), Invega (schizophrenia), Stelara (severe plaque psoriasis) and Simponi (anti-TNF for rheumatoid arthritis), and recently received approvals for Zytiga (metastatic prostate cancer) and Edurant (HIV, to be sold in a combo-pill with treatments from Gilead Sciences). Shortly before press time, J&J received its first approval for Xarelto, a stroke drug developed with Bayer. Xarelto received a Complete Response Letter from the FDA in 2009, but was cleared to prevent venous thromboembolism in joint-replacement surgery settings. The companies are hoping to get it appproved for stroke prevention next. Some analysts predict the annual post-warfarin anticoagulant market to be around $20 billion.

Meanwhile, J&J awaits EU approval of telepravir, Vertex’s hepatitis C drug, approved in the U.S. in May 2011. Overall, the company hopes to launch 11 new products and 30 line extensions by 2015.

In addition, J&J reached a settlement with Merck over marketing rights for Remicade and Simponi, which were cast into doubt with Merck’s acquisition of Schering-Plough. Merck will pay $500 million in cash and take a smaller piece of the sales and profit pie for ex-U.S. sales. (See Merck’s profile for more on the settlement.)

Despite the growth prospects for the pharma business, J&J’s medical device segment looks like it’s going to remain the top dog at the company. That segment posted revenues of $24.6 billion in 2010, and in April 2011, J&J put up $21.3 billion to acquire Synthes, a trauma-care-focused device company based in Switzerland that posted $3.7 billion in 2010 sales. It’s the biggest acquisition in J&J’s history, in a high-margin segment of the device field. (The segment could use some help, since J&J is facing a huge lawsuit related to the recall of its dePuy hip-replacement devices.)

Back in the pharma segment, J&J recently closed its protracted acquisition of Dutch-based Crucell (see Acquisition News, below). The purchase allows J&J to move into the vaccine market. Under J&J’s SOP, Crucell will continue to operate as a subsidiary and retain its management.

You Might Recall

However, Johnson & Johnson isn’t in the public eye because of its growing drug portfolio or its medical device mega-acquisitions. It’s the company’s ongoing manufacturing problems, centered on its consumer health unit, that have hamstrung the company and damaged its reputation. Since 2009, J&J has initiated countless recalls of its consumer products, culminating in the shutdown of a major manufacturing site and a consent decree with the FDA.

J&J has also issued several recalls of pharma products. These were almost exclusively due to the presence of TBA, a pesticide used on wood pallets, leaching into packaging and creating a musty odor. In June 2011, the company recalled 16,000 bottles of Risperdal for that reason. The TBA problem has also plagued the consumer brands. A few days before press time, J&J issued a recall notice for 61,000 bottles of 2009-made Tylenol due to the TBA-fueled smell.

A more serious recall occurred in February 2011, when prefilled syringes of Invega Sustenna were recalled due to potential cracks in the glass syringe barrel. That recall covered 70,000 units in the U.S. and four lots overseas.

In March 2011, J&J’s McNeil unit entered a consent decree with the FDA covering facilities in Las Piedras, PR, Fort Washington, PA and Lancaster, PA. J&J closed the Fort Washington site in April 2010 and is still conducting remediation of the quality issues uncovered there. Under the consent decree, J&J will need a compliance certification from an independent expert, as well as FDA approval, to re-open that site. The company will continue operating the other two sites, but will have them inspected by a third party and require FDA clearance for remediation plans. The decree will last at least five years.

J&J’s consumer health sales fell by more than $1.2 billion in 2010, with U.S. sales dropping 19% to $5.5 billion. Recalls of Las Piedras and Fort Washington products accounted for $900 million of the shortfall, according to J&J. The company reported that it’s spending more than $100 million to bring Fort Washington into compliance and make it “state of the art in medicine production,” according to chief executive officer Bill Weldon.

As far as the bottom line goes, one major blockbuster from its new and upcoming drugs will offset the material losses of these consumer health problems. But in the court of public opinion, it remains to be seen whether J&J will be able to restore the brand equity of its most public-facing products: Tylenol, Motrin, Rolaids and more.

In some respects, J&J is in a better position than some of its competitors, having already weathered most of its major patent expirations. In the first quarter of 2011, the pharma unit posted growth of nearly 8%, to $6.1 billion. If it can put its manufacturing woes behind it, and avoid multi-billion-dollar fines or settlements (See Legal News, because there are some doozies), perhaps J&J can have a happy 125th anniversary in 2011.  —GYR

LEGAL NEWS

Like many of the rest of the top companies, J&J is also facing a raft of lawsuits with potential billion-dollar ramifications. In May 2011, the company recently set aside an unspecified amount to settle federal cases of improper marketing of Risperdal. A few weeks later, a court in South Carolina fined J&J $327 million in a state case. The company plans to appeal. The feds are also investigating the marketing of Risperdal’s followup, Invega.

In January 2011, the Cordis unit (on the medical device side of the company) lost a patent case for its Cypher stent, and was hit with a $482 million penalty. The company planned to appeal, and the judge responded in March by adding $111 million in prejudgment interest to the initial damages and denying J&N’s post-trial motions on non-infringement, invalidity, and inequitable conduct. Shortly before press time, J&J announced that it was getting out of the drug-eluting stent business, taking a $600 million restructuring charge and citing market dynamics.

J&J has also reserved around $1.2 billion related to its recall of DePuy artificial hips (both to conduct the recall and to settle litigation). In April 2011, the company settled an international bribery investigation (part of which tied into the Iraqi oil-for-food scandal) for $70 million.

The company’s $1.8 billion award in its 2009 lawsuit against Abbott’s drug  Humira was reversed in February 2011. J&J has filed for a rehearing. Abbott, meanwhile, is suing J&J for patent infringement over Stelara and Simponi.

ACQUISITION NEWS

Target: Crucell

Price: $2.3 billion for 82% of company not already owned

Announced: Oct. 2010

What they said: “Operational excellence in manufacturing and supply chain has made Crucell an established and reliable supplier of vaccines, in particular to emerging markets. We hope to build on those capabilities, and the expertise and talent of Crucell’s employees to continue making a difference in the lives of people worldwide.‚“

—Paul Stoffels, head of pharmaceutical research, J&J

THE LOWE DOWN

I’ll be completely honest: I gave up months ago trying to keep track of all the OTC product recalls and manufacturing problems that J&J has been through. It’s been like a particularly poorly written soap opera, where the plot twists occur partly by design and partly because the writers just couldn’t be bothered to pay attention to the continuity. But isn’t all this over-the-counter stuff supposed to be one of the company’s strengths?

Admittedly, one of their other strengths — doing deals with other companies — seems to be holding up just fine. You sometimes wonder how many people don’t have some sort of agreement with them. So the prescription side of the company doesn’t look too bad, with a lot of products coming along in a wide range of areas. And even if J&J isn’t the complete owner (or originator) of many of these, they still have a lot of stuff to sell in a lot of markets. And that’s not even counting the shampoo, the bandages, the medical devices and all the rest of it. A huge company where every part of it seems to contribute to the whole: how’d that happen, anyway?  —Derek Lowe

Previous Profile: AstraZeneca // Next Profile: Eli Lilly & Co.

Headcount: 115,500
Pharma Revenues: $22,520 (-8%)
Total Revenues: $61,897 (-3%)
Net Income: $12,266 (-5%)
R&D Budget (Pharma Only): $4,591 (-10%)

Account for 73% of total pharma sales, down from 75% in 2008.

PROFILE

Last year, I pointed out that Johnson & Johnson’s pharma revenues were pretty top-heavy; around 75% of that money came from eight products. That number’s down to 71% this year (and J&J split one of the reported products in two), but five (!) of those drugs — Topamax, Levaquin, Aciphex, Duragesic and Risperdal — got hit by generic exposure in different markets, contributing to a 1% drop in overall drug revenues. Risperdal in particular got demolished, shedding $1.3 billion in annual revenues. In addition to the generic erosion of those top sellers, Procrit dropped 15% of its revenues last year, after a 9% drop in 2007. The EPO biologic continued to decline because of new labeling and dosing rules, leaving J&J with another hole to fill.

J&J had a year to forget in 2009, and it looks like 2010 is shaping up to be even worse. The company posted the biggest revenue drop of anyone on our list, in both percentage (-8.3%) and pharma-dollar terms ($2.0 billion), helping lead the company to its first drop in sales in 76 years.

The carnage continued in 1Q10, with pharma revenues down 2.5%. Currency fluctuations wreaked havoc with J&J’s figures, causing an extra 2.2% drop in 2009, while helping 1Q10 numbers to the tune of a 3.2% boost. U.S. pharma revenues, which are unaffected by exchange rates, were down 12.1% in 2009 and down 12.7% in 1Q10. At this pace, there’s an outside chance that Lilly could pass J&J in our ranks next year, a prospect I couldn’t conceive of even a year ago.

But that’s what happens when some of your top performers get gutted by generics before new products can replace them.

For example, Risperdal, which lost $1.3 billion in revenues from 2007 to 2008, managed to shed another $1.2 billion in sales from 2008 to 2009. It dropped another 50% in 1Q10, posting $138 million in worldwide revenues. Domestically, it dropped from $118 million in 1Q09 to a mere $5 million in 1Q10.

Topamax managed to beat Risperdal in the lost revenue race, plummeting from $2.7 billion in 2008 to $1.2 billion in 2009. It fell another 75% in 1Q10 to $148 million. On top of that, Procrit’s safety and prescribing issues are modestly shrinking that drug’s sales.

With collapses like that, it would take a massive launch-year to replace them, and we don’t seem to live in an era of massive launches. J&J managed to get several approvals in the past year —Nucynta, Invega Sustenna (a new formulation of the Risperdal followup, but I’ll count it as a new product), Stelara, and Pancreaze — but they’ll take years for them to build up significant sales numbers. The company has done a great job marketing Remicade, which continues to rise by double-digits in a very competitive market.

The upside? The major generic damage is done. The company is still at risk of a Concerta ANDA getting approved, and Levaquin’s patent is up after June 2011, but the latter’s sales were “only” $1.6 billion in 2009, so the drop won’t be as daunting as Risperdal and Topamax.

The company addressed its annus horribilis in November 2009 by announcing a restructuring plan. The moves, which will include 7,500 layoffs, incurred a one-time charge of $1.2 billion in 4Q09, $750 million of which was severance costs. Nearly $500 million of the costs were charged to the Pharma division, with Consumer accounting for $369 million and Devices and Diagnostics taking on $321 million in charges.

The restructuring is intended to save $1.4 to $1.7 billion annually, but J&J isn’t just trying to slash its way to survival. It’s still making big bets in pharma. In July 2009, J&J paid $1.1 billion for 18% of Elan and a controlling stake in its Alzheimer’s immunotherapy program. Later in the year, the company spent $448 million on 18% of Crucell, as part of a collaboration program on influenza vaccines and other large molecule products. The company has also made several acquisitions in the pharma segment (see Acquisition News).

Consumed by Consumer

Now, when I wrote that 2010 could be worse for J&J, I didn’t mean in terms of drug sales. There should be a bottoming-out for revenues, as its new products start to build market share. No, the bigger problem for J&J is in its Consumer business, and it has Congress very angry and FDA very, very involved.

In January 2010, J&J’s McNeil Consumer Health unit recalled several OTC products due to a weird odor emanating from its pills. This was tied to a chemical in the wood used for pallets that carry packaging materials. The FDA sent the company a warning letter over that issue, along with other “significant” manufacturing violations at the site in Puerto Rico where the products originated.

The next shoe dropped when an April 2010 inspection in Fort Wayne, PA turned up a number of deficiencies and a declaration that processes were “out of control,” leading to a recall of more than 40 products for infants and children and a suspension of the facility. A month later, the FDA announced that it will investigate McNeil’s manufacturing practices throughout its network. This was followed by typically contentious Congressional hearings, the discovery that J&J may have conducted a “secret” recall of an OTC product via a third party, and a big PR black eye for J&J.

But it could get worse. If the back-and-forth with Congress and the FDA draws out and J&J faces an even larger inspection and compliance investigation, I can envision a scenario where its NDAs, sNDAs and BLAs end up on the agency’s back-burner until its resolution. (It sure seems like Genzyme received a lot of approvals and clearances from the FDA in the weeks after its consent decree was finalized, doesn’t it?) Given that J&J received as many Complete Response Letters as NDA/BLA approvals from the FDA in the past 12 months, they need to negotiate this rough patch very carefully.

Return to Top Pharma Report homepage.

Headcount (Total): 118,700
Pharma Revenues: $24,567 (-1%)
Total Revenues: $63,747 (+4%)
Net Income: $12,949 (+22%)
R&D Budget: $5,095 (-3%)

Account for 71% of total pharma sales, down from 74% in 2007.

PROFILE

Last year, I pointed out that Johnson & Johnson’s pharma revenues were pretty top-heavy; around 75% of that money came from eight products. That number’s down to 71% this year (and J&J split one of the reported products in two), but five (!) of those drugs — Topamax, Levaquin, Aciphex, Duragesic and Risperdal — got hit by generic exposure in different markets, contributing to a 1% drop in overall drug revenues. Risperdal in particular got demolished, shedding $1.3 billion in annual revenues. In addition to the generic erosion of those top sellers, Procrit dropped 15% of its revenues last year, after a 9% drop in 2007. The EPO biologic continued to decline because of new labeling and dosing rules, leaving J&J with another hole to fill.

It got worse in 1Q09; overall pharma revs fell 10% overall, with half of that coming from currency fluctuations. Risperdal shed another 66% in year-on-year revenues, dropping from $809 million in 1Q08 to $279 million in 1Q09. Even strong sellers like Remicade fell short in that quarter, posting growth of only 3%. Only Concerta posted double-digit sales growth in 1Q09, reaching $344 million in revenues. These declines led the company to cut a reported 900 jobs (6% of U.S. pharma sales) in April 2009.

How’d the other two parts of J&J’s fabled three-column structure do? Consumer products were up 11% in 2008, but was down 9% in 1Q09, while Medical Devices and Diagnostics revenues rose 6% for the year, but fell 3% in 1Q09. So J&J’s got some work to do, and it’s not just in the pharma business.

With all those top sellers falling down the charts, where is the new revenue going to come from? While J&J’s past earnings statements tended to highlight only the biggest (billion-plus) sellers, its most recent one highlighted a couple of up-and-comers. HIV treatment Prezista posted a 65% boost to $122 million in revenues in 1Q09, while Risperdal followup Invega was up 38% to $91 million. Meanwhile, sales of Velcade, another next-wave drug for J&J, posted only 4% growth in 1Q09, after posting a 47% jump in FY08 to $787 million. J&J only records international sales of Velcade; Millennium (Takeda) handles U.S. marketing.

The company has been pinning some of its blockbuster hopes on rivaroxaban, a next-gen oral anticoagulant that could become a multi-billion-dollar product. Approved in the EU as Xarelto (where it’s marketed by Bayer Schering), the drug would be the first new treatment of this kind in the U.S. since 1954, and could put a dent in Sanofi-Aventis’ $4.0 billion Lovenox franchise. Despite favorable results against Lovenox and a strong (15-2) recommendation from an advisory committee, rivaroxaban was delayed by the FDA in May 2009, which sent a complete response letter to J&J. The company hasn’t divulged the contents of the letter, but a spokesman said that no new clinical trials were requested. The NDA was submitted in July 2008.

J&J is also awaiting the FDA’s approval of Stelara, a new biologic treatment for plaque psoriasis. Stelara is approved in the EU and Canada, but the FDA in May pushed off its approval timeline by three months. In June 2008, an advisory committee recommended the drug, but in December, the agency requested more info, including a REMS proposal. As with rivaroxaban, the new delay does not involve the need for more trials.

Stelara was developed in partnership with Medarex, using its UltiMAB technology. That same technology was employed to develop J&J’s Simponi, a once-a-month TNF-alpha inhibiting injection that received approval in April 2009 for rheumatoid arthritis, psoriatic arthritis, and ankylosing spondylitis. Schering-Plough owns the European rights to Simponi (and predecessor Remicade), from a 1998 distribution agreement, and it seems that the Merck/SP merger was structured so that the combined company could keep control of SP’s portion of the Remicade/Simponi pot. (More on that structure in Merck’s and SP’s profiles.)

J&J’s not taking that lying down, especially when it has a chance to take hold of the revenue streams for both drugs. There was speculation that J&J might step in and trump Merck’s $41.1 billion bid for SP, but it looks like J&J is taking the arrangement to court instead. In May 2009, J&J filed for arbitration, contending that the merger fulfills the change-of-control clause in the 1998 agreement. Analysts’ consensus is that Merck/SP will avoid arbitration by giving J&J a larger cut of the revenues from both drugs.

Things look bleak at the top for J&J, but there’s at least a hint of the cavalry on its way. And with $11.0 billion in cash on hand at the end of last year, J&J’s in a position to make some deals.

Return to Top Pharma Report homepage.

Headcount: 119,200
Pharma Revenues: $24,866 (+7%)
Total Revenues: $61,096 (+15%)
Net Income: $10,576 )-4%)
R&D Budget: $7,680 (+8%)

Account for 75% of total pharma sales, same as in 2006.

PROFILE

For a company that’s supposed to be well-balanced, J&J looks to me like it’s teetering. In 2006, Procrit sales dropped 4% as FDA restricted its use. The ESA drug’s sales fell another 9% in 2007 as FDA and Medicare scrutiny increased. J&J’s #2 drug in 2006 fell behind Remicade to the #3 spot in 2007 and got passed by Topamax in 1Q08.

Meanwhile, the oral version of #1-seller Risperdal will see generic competition in the U.S. in June 2008. J&J posted Risperdal’s numbers as part of the “Antipsychotics” franchise ($4.7 billion in 2007), but did break out sales of Risperdal oral at $2.2 billion in the U.S. in 2007.

Interestingly, in 1Q08, J&J did choose to split Risperdal’s numbers (-7% to $809 million) from Risperdal Consta’s (+18% to $309 million) in its list of pharma revenues. I’m guessing this is to prepare for the disastrous numbers that Risperdal oral will post later this year, but as I like to point out, I don’t have an MBA. To keep itself covered, J&J announced in June 2008 that it would market its own generic version of Risperdal through its Janssen division.

Fortunately, new antipsychotic Invega was approved in 2007. J&J hopes of to transition schizophrenia patients to it from Risperdal, but psychiatrists have been slow to make the switch.

Oh, and Topamax, which posted $2.4 billion in 2007 sales, will go generic in the U.S. in 2009 and is also likely carry suicide warning labels (as will other members of its class of drugs).

That covers three of the top four products at J&J pharma. The other one, TNF-blocker Remicade, is going gangbusters, posting $3.3 billion in 2007 sales and a 37% bump to $1.0 billion in 1Q08. (Sure, the entire class of TNF-blockers is under safety review at the FDA, but hey.)

Safe?

As I mentioned at the outset, J&J tends to be portrayed as a very balanced company. The three divisions — pharma, medical device, and consumer health — help the company weather volatility in specific parts of the healthcare market. But if you look over the “Top Selling Drugs” section on the first page of this profile, you’ll notice that J&J’s eight top sellers account for 75% of its total pharma revenues. As it turns out, that’s not very balanced. Of the companies that rank above it in this list, only AstraZeneca relies more on its blockbusters for its revenues. And no one’s going around saying they want to emulate AZ’s market position.

(Pfizer shows a higher percentage, but that’s misleading; Pfizer lists revenues for more of its drugs and I cut off Top Sellers at the $500 million mark. If you take Pfizer’s top eight products, in comparison with J&J, they only account for 58% of the company’s pharma revenues.)

J&J’s pharma business showed 6.9% revenue growth in 2007, but even that modest bump doesn’t look so good when we peek at the numbers. Of the 6.9%, currency fluctuations accounted for 2.6%; more than a third of the business’s growth resulted from a weak dollar. U.S. sales for the year, which are unaffected by exchange rates, were up only 3.4%. In 2006, exchange rates only accounted for 0.3% of 4.2% growth.

It got worse in the beginning of this year: 1Q08 pharma growth was 3.3%, but 3.9% of that came from currency rates. Which means J&J would’ve posted a loss of 0.3% for the quarter without the weak dollar. U.S. sales were up 0.9%, but international numbers were down 3.1%, and that was buttressed by an 11.0% boost from exchange rates.

Same Story

If you’ve read the Top Companies report this far, you know what the next step for J&J is: restructuring! In July 2007 (too late for last year’s edition), J&J offered up its cost-reduction strategy, which will involve consolidating operations, boosting R&D and market support, and firing around 4,400 people. The plan is intended to save $1.3 to $1.6 billion annually — starting this year! — and cost the company $745 million in 2007.

The company already reorganized its pharma business in 2006, focusing its efforts on three areas: CNS & internal medicine; biotech, immunology and oncology; and virology. Now, in contrast with Novartis’ goal of reducing management layers, J&J announced plans to add some structure to its fabled decentralized collection of companies. In November 2007, the company added an Office of Strategy and Growth (OSG), a Surgical Care Group, and a Comprehensive Care Group as part of this initiative.

The OSG, according to a company statement, “will explore business opportunities in markets where we currently do not compete but in which we see new opportunities. It will also explore opportunities in markets that do not yet exist but where we see the potential for transformational products and technologies.” The OSG will also look for new businesses that will stand outside the existing consumer health, pharma and device/diagnostic divisions. Good luck with that.

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