Johnson & Johnson (JNJ) Takes a Breather

Johnson & Johnson (NYSE:JNJ) recently launched Invokana, its diabetes medication that’s in a new class of drugs called SGLT-2 inhibitors. Invokana is a good drug, but I suspect that its uptake will be slow, simply because the other diabetes drugs work fairly well. Doctors are comfortable prescribing Merck & Co., Inc. (NYSE:MRK)‘s Januvia, the top-selling oral diabetes medication, because they have experience with it and know that few patients will have side effects. Until doctors gain experience with the drug, the market for Invokana will likely come from its use once other oral drugs have stopped working.

Later this year, we should see an FDA approval for hepatitis C treatment simeprevir. The drug appears to have a slight — probably inconsequential — lead on Gilead Sciences, Inc. (NASDAQ:GILD)’s sofosbuvir. Both drugs have a future as a part of cocktail with other oral drugs, but probably won’t generate large sales on their own since they have to be taken with injected pegylated interferon drugs. Most patients will continue to wait for the all-oral cocktails in development.

Gilead’s pathway is pretty clear with home-grown compounds to pair up with sofosbuvir, but Johnson & Johnson is testing simeprevir with multiple partners. In the long run, more shots on goal could mean more sales by potentially developing a better combination, but the downside is that Johnson & Johnson (NYSE:JNJ) has to share revenue and that development may be slower, as partnerships rarely move as quickly as internal development.

Final Foolish thoughts
For long-term investors, there’s rarely a bad time to buy Johnson & Johnson stock. Arguably some times are better than others, but with a hefty dividend, Johnson & Johnson (NYSE:JNJ) stock still looks reasonable even after the large run we’ve seen.

The article Johnson & Johnson Stock Takes a Breather originally appeared on Fool.com.

Fool contributor Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends Gilead Sciences, Johnson & Johnson, and Vertex Pharmaceuticals. The Motley Fool owns shares of Johnson & Johnson.

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