How Far Can This Blockbuster Take Johnson & Johnson (JNJ)?

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Johnson & Johnson (NYSE:JNJ) may offer well-known personal care products such as Listerine and Neutrogena, but it also boasts an impressive portfolio of market-leading therapeutic compounds. The health care leader was one of the few to show growth in both worldwide pharmaceutical sales and earnings last year, which grew to $25 billion and $3.86 per share respectively. It finds itself in an enviable position heading into 2013 as one of the best-positioned companies to tackle the patent cliff head on.

Even with the recent success, there is no time to rest on laurels in the highly competitive landscape of pharma and biotech. The industry’s most successful drugs are under constant pressure from generics, which are either already on the market or timing their entrance for the moment exclusivity is lost. Luckily, 2012 showed that several new drugs are already shaping up to be critical driving forces in the company’s future. Today, we will look at the anti-inflammatory biologic Remicade.

Johnson & Johnson (NYSE:JNJ)Immunology goes beast mode
Remicade (infliximab) is a monoclonal antibody that targets and suppresses tumor necrosis factor-alpha, or TNF-alpha, which regulates immune cells that induce fever and inflammation when fighting infection or disease. The biologic gained its first approval in 1998 and never looked back.

In fact, it was a major factor in shifting the standard of care in autoimmune disorders from the small molecule methotrexate to stand-alone therapeutic proteins or combinational therapies. It was also the first TNF inhibitor to be approved in three distinct therapies and is now approved for 16 indications. According to the company, Remicade has treated more than 1.5 million patients in the past 17 years.

As you can probably tell, Remicade is easily the leading drug for Johnson & Johnson. Not only does it generate 78% of all biologics revenue, but it also single-handedly topped the sales of the company’s total infectious disease and oncology segments in 2012.

Source: SEC filings. Dollar amounts in millions.

A recent battle over Remicade with Merck & Co., Inc. (NYSE:MRK), which generated just over $2 billion from the biologic last year, decided who had exclusive rights to key markets outside of the United States and how profits would be split elsewhere. Judging by last year’s results, it would seem that Johnson & Johnson got the better end of the deal.

Do you hear footsteps?
Other TNF-alpha inhibitors approved for various indications include Simponi (golimumab) from Johnson & Johnson and Merck; Humira (adalimumab) from AbbVie Inc (NYSE:ABBV); and Enbrel (entanercept) from Amgen, Inc. (NASDAQ:AMGN). Due to the scope of approvals granted to various therapeutic proteins, Remicade faces competition in some indications while enjoying exclusive use — such as orphan drug status for pediatric ulcerative colitis — in others.

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