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One Big Threat to Johnson & Johnson's Future

By Motley Fool Staff – Feb 3, 2016 at 2:04PM

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The expiring patents on top-selling Remicade could put a big dent in the company's top line.

One of Johnson & Johnson's (JNJ -0.46%) best sellers is biologic anti-TNF drug Remicade. However, Remicade's patent is due to run out in 2018. When will Remicade's sales actually be up for grabs, and what could it mean to J&J investors? 

In this video segment, Motley Fool healthcare contributor Todd Campbell and healthcare analyst Kristine Harjes discuss the looming biosimilar threat to Johnson & Johnson's multi-billion dollar autoimmune disease drug and why investors shouldn't worry just yet.

A full transcript follows the video.

 

This podcast was recorded on Jan. 27, 2016.

Kristine Harjes: As a reminder, biosimilars are essentially generic versions of biologic drugs. So, they're a lot harder to make, they're not going to sell for as much of a discount, and they're pretty new, so we're still figuring out what exactly it means for some of these gigantic healthcare companies to face competition from newly introduced biosimilars. Interestingly, apparently, in Canada, where there is a biosimilar out for Remicade, they're still growing Remicade sales. So, that's a pretty promising sign.

But, of course, it's something that people are questioning in the U.S., especially as, apparently, the drug is already losing market share, which I can only assume is due to some of the other drugs in this pretty competitive space.

Todd Campbell: Yeah, the anti-TNF market is competitive. It's also one of the best-selling markets in the world. You've got Humira, which is an AbbVie drug that hauls in $14 billion a year; you've got Remicade, which hauls in $6.8 billion-ish a year for Johnson & Johnson. And you're right, this is a major focus of biosimilar makers, because the patent on REMICADE has expired in the E.U., so you're now facing off against biosimilars in those markets that are made by companies including Hospira, which is owned by Pfizer now.

And, as we go forward, investors can't ignore that 9% of Johnson & Johnson's revenue comes from Remicade. If the U.S. patent is going to expire in 2018, what's Johnson & Johnson going to do over the next two years to make sure they don't end up losing the $4 billion or $5 billion in sales that they're collecting in the U.S. off of that drug?

Harjes: Yeah, and the tone of the call didn't really seem too concerned with it. They said, "Yeah, we're going to keep defending our patent until September 2018, and even beyond that. We don't see it as a huge threat." So, that will be for sure something to keep an eye on. But, again, years out.

Kristine Harjes owns shares of Johnson & Johnson. Todd Campbell has no position in any stocks mentioned. The Motley Fool recommends 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.

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