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.
The bigger, the better
Velcade, which is approved for multiple myeloma, was the fastest growing blockbuster for Johnson & Johnson in 2012. It also made up 57% of total oncology sales.
Source: Johnson & Johnson 2012 earnings.
While sales growth may slow in coming years the drug is still expected to be a driving force in company’s pharmaceutical business. It can certainly pay to be a leader. Decision Resources, a leading pharmaceutical and health care advisory firm, estimates that the multiple myeloma market will grow from just $4.4 billion in 2011 to $7.2 billion in 2021.
Non-obvious competition
Velcade’s only major competition is Celgene Corporation (NASDAQ:CELG)‘s Revlimid. However, once a drug is recognized as a leading therapy there is more to look forward to than simple stand-alone sales. If one drug can enhance a patient’s chances of survival, then what can combining it with another promising drug do?
That’s the question being asked by companies such as Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX), Bristol Myers Squibb Co. (NYSE:BMY), and AbbVie Inc (NYSE:ABBV) — all of which are developing combinational multiple myeloma therapies. Unfortunately for Velcade, all of the above companies are being tested with Revlimid. Johnson & Johnson’s drug is only being combined with Aeterna Zentaris’ perifosine — which failed in recent cancer trials — and Novartis’ panobinostat.
Decision Resources estimates that Revlimid could experience sales growth of $1.6 billion from combinational therapies by 2021, while Velcade could only generate an additional $70 million. The figures are just one firm’s estimates, but they suggest Velcade’s combinational therapy potential is not very high at the moment.
An exception to the rule?
Velcade was the first proteasome inhibitor approved in the United States, but being a pioneer has its drawbacks. The drug will lose total exclusivity in early 2014. Despite the looming date for generic competition, analysts widely expect the drug to hold its ground in the market, even against newer drugs like Onyx’s recently approved Kyprolis.
Even Johnson & Johnson thinks Velcade could reach $2 billion in sales in the next few years, which may be easily attainable given recent approval in Europe (link opens PDF). Even then, the drug may have a difficult time keeping pace with the company’s up-and-comer oncology treatment Zytiga, whose sales exploded 219% last year and narrowly missed the $1 billion blockbuster threshold.
The article Can Johnson & Johnson Hold Its Ground in the Multiple Myeloma Market? originally appeared on Fool.com and is written by Maxx Chatsko.
Fool contributor Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio or follow him on Twitter @BlacknGoldFool to keep up with his writing on energy, bioprocessing, and emerging technologies.The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
