In its first earnings report after spinning off its consumer health division, Johnson & Johnson increased its 2023 profit projection. The company’s fortunes are now more tightly related to sales of blockbusters like its arthritis medicine Stelara.

The company’s shares increased by around 2% in Tuesday’s premarket trade.

Investor attention is centred on J&J’s ability to meet its target of $57 billion in drug sales by 2025 as a standalone pharmaceutical and medical device firm. The first close imitation of Stelara will present new competition for the business that year, and sales could potentially slow down.

In the third quarter, Johnson & Johnson realised a $21 billion profit from the spin-off of its consumer health business.

“A sharpened focus on Innovative Medicine and MedTech appears to be creating a solid foundation for future sustained growth,” Cantor Fitzgerald analyst Louise Chen said.

Sales of Stelara, J&J’s top-selling anti-inflammatory medication, exceeded LSEG forecasts of $2.61 billion and totaled $2.86 billion in the quarter.

Stelara’s copycat competitors won’t be released until 2025 according to agreements Johnson & Johnson has made. This might enable the drug continue to be a major driver of the company’s sales.

While J&J CFO Joseph Wolk told Reuters that the company doesn’t anticipate a reduction in Stelara U.S. revenue until 2025, Wolk said that once a crucial patent expires, the drug’s sales in Europe may begin to decline in 2019. “We could see a little bit of an impact.”

Stelara accounted for more than 20% of the company’s innovative pharmaceutical unit’s quarterly sales of $13.89 billion.

“COVID vaccine sales this quarter are very minimal, whereas in the third quarter of last year they were pretty substantial,” Wolk added.

Sales of the COVID-19 vaccine for the corporation decreased from $489 million to $41 million in the quarter.

J&J’s medical device division reported sales of $7.46 billion, falling short of projections of $7.58 billion.

A decline in demand for operations like bariatric surgery as well as more competition in the United States hurt sales of the company’s equipment used in abdominal surgeries.

The third-quarter total revenues for Johnson & Johnson were $21.35 billion, exceeding analysts’ projections of $21.04 billion.

Compared to its earlier expectation of $10.00 to $10.10 per share, J&J now anticipates an adjusted profit in 2023 of between $10.07 and $10.13 per share, excluding its consumer health unit.

In August, J&J completed the largest reorganisation in its 137-year history by exchanging shares with its former consumer health company Kenvue (KVUE.N). As a result, the pharmaceutical giant now owns a smaller 9.5% holding in its former unit.

J&J reported a profit of $2.66 per share after adjustments, exceeding projections of $2.52.

(Adapted from DevDiscourse.com)