Johnson

Source: Johnson & Johnson

Johnson & Johnson (NYSE:JNJ) is one of the planet's largest companies with operations that stretch from consumer goods to medical devices, but it's drug business growth has led to J&J's climbing sales.

In the past year, revenue in J&J's pharmaceutical unit is up 18%, handily outstripping results in its consumer segment, which has seen sales fall 0.6%, and its medical device business, in which revenue has slumped 5.2%. But J&J may be facing some headwinds in its drug business that could slow revenue growth next year, including an expected drop in sales for Olyisio, its hepatitis C drug, and increased competition for Zytiga, its prostate cancer drug. Given those risks, let's look more closely at J&J's fastest-growing drugs and see whether or not they may be able to overcome those stumbling blocks.

Higher hurdles
First, let's get our arms around the challenges facing Olysio and Zytiga.

J&J's Olysio won approval for use in hepatitis C patients just days prior to the FDA green lighting Gilead Sciences (NASDAQ:GILD) Sovaldi last year. While Olysio arguably under-performed Sovaldi during clinical trials, particularly in patients with the common Q80K polymorphism, Olysio has been a big success for J&J this year. That success came thanks to guidelines issued in January by the American Association for the Study of Liver Diseases, or AASLD, that recommend using a combination of Olysio and Sovaldi to treat patients unable, or unwilling, to take peg interferon -- a prior generation hepatitis C drug laden with side effects. The recommendations proved a boon for Olysio, helping it generate nearly $2 billion in sales through the first nine months of this year. However, Olysio's impressive run is about to come to an end. Last week, the FDA approved Gilead's second generation hepatitis C drug, Harvoni, and given that Harvoni posts cure rates in the high 90% range, its unlikely doctors will continue prescribing the pricier Olysio plus Sovaldi combination.

J&J's Zytiga, a treatment approved for post chemotherapy prostate cancer patients in 2011, has also been a star performer in 2014. Thanks to the FDA agreeing to expand Zytiga's label to include pre-chemotherapy prostate cancer patients in 2012, Zytiga's sales have soared. Through the first nine months of 2014, Zytiga's revenue totals $1.64 billion, up 37% from last year. However, that growth may nosedive now that the FDA has granted similar pre-chemotherapy label expansion to Medivation (NASDAQ:MDVN) and Astellas' (NASDAQOTH:ALPMY) Xtandi. Xtandi has already captured more market share than Zytiga in the post chemotherapy indication, so it's likely to significantly cut into Zytiga's dominance in pre-chemotherapy, too.

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Source: Johnson & Johnson

Overcoming obstacles
Since sales of those two drugs total more than $3.5 billion so far this year, J&J may have its work cut out for it if it hopes to post sales growth next year.

Fortunately, J&J has three other drugs that are also growing quickly and may do a lot of heavy lifting in 2015.

The first is Stelara, a drug used to treat autoimmune disease including psoriasis and psoriatic arthritis. Those are big indications that have helped propel competing drugs like AbbVie's (NYSE:ABBV) Humira to billions in sales. Globally, more than 125 million people suffer from psoriasis and treating them has allowed J&J to grow Stelara's sales by 47% in the past year to $543 million in the third quarter.

The second is Invega Sustenna, a long acting treatment for schizophrenia. Schizophrenia is a notoriously tough-to-treat disease with a poor patient adherence rate, so long acting drugs like Invega Sustenna are important to reducing psychotic events. According to J&J, 80% of patients suffer at least one relapse within five years of diagnosis and according to the World Health Organization, there are more than 20 million people globally suffering from the disease. As a result, sales of Invega Sustenna have climbed 30% this year to more than $1.1 billion through the first nine months.

Thirdly, J&J is also enjoying growing demand for its anticoagulant, Xarelto, a next generation drug that is increasingly displacing warfarin, or Coumadin, in post-operative and heart disease patients. Xarelto's sales have surged 85% so far this year to $1 billion as doctors become increasingly comfortable with Xarelto, which requires less monitoring, fewer dose adjustments, and results in fewer brain hemorrhages than warfarin.

Looking ahead
J&J's headwinds aren't insurmountable. It's one of the most prolific investors in R&D and its pipeline is chock-full of intriguing drugs targeting high profile diseases including rheumatoid arthritis, depression, and cancer. In the short term, however, its drugs like Stelara, Invega Sustenna, and Xarelto that investors should be tracking. If they can continue to post robust sales growth, J&J may find that tough comparisons next year are a bit easier to overcome.

Todd Campbell owns shares of Gilead Sciences and Medivation. The Motley Fool recommends Gilead Sciences and Johnson & Johnson. The Motley Fool owns shares of Gilead Sciences and Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.