Investors fear drug will lower J&J's sales

Johnson & Johnson shares dropped Tuesday, despite a 27 percent increase in the health care bellwether's third-quarter profit.

The maker of Band-Aids, medical devices and prescription drugs beat Wall Street's expectations, maintained its 2016 revenue forecast, raised the lower end of its profit forecast and said it's on track for the approval and release of 10 new medicines between 2015 and 2020.

But on a conference call after the results were released, analysts peppered Johnson & Johnson executives with questions about how it will prevent Pfizer Inc.'s Inflectra from siphoning off sales of Johnson & Johnson's biologic immune disorder drug Remicade. Johnson & Johnson's longtime top seller has earned the company tens of billions of dollars since its 1998 launch.

On the eve of Johnson & Johnson's results announcement, Pfizer said Monday it will introduce a near-copy of the injected biologic drug, called a biosimilar, in late November in the U.S.

Many analysts didn't expect that competition until 2018 because Pfizer and Johnson & Johnson are still fighting in the courts over whether the U.S. patent protecting Remicade's monopoly is still valid, said Edward Jones analyst Ashtyn Evans. If Pfizer loses that litigation, it could have to pay J&J three times the U.S. profits it makes on Inflectra, she noted.

Investors are "beginning to price in the competition" to Remicade, driving down J&J's price, Evans said.

Shares of J&J fell $3.08, or 2.6 percent, to $115.41, as the broader markets rose.

Remicade, for treating rheumatoid arthritis, psoriasis, Crohn's disease and colitis, is one of J&J's most profitable drugs, with sales of $5.34 billion in the first three quarters.

Inflectra will be priced 15 percent less than Remicade's roughly $2,600 monthly list price and is sure to cut into Remicade sales, as biosimilars have already done in Europe and Canada.

The world's biggest maker of health care products on Tuesday reported net income of $4.27 billion, or $1.53 per share, up from $3.36 billion, or $1.20 per share, in 2015's third quarter. Restrained spending and soaring prescription drug sales more than offset a dip in consumer product sales.

Adjusted earnings, which exclude one-time items, amounted to $1.68 per share, 3 cents better than analysts expected.

The New Brunswick, N.J.-based company posted revenue of $17.82 billion in the quarter, up from $17.1 billion a year ago and above the $17.72 billion analysts expected.

Business on 10/19/2016

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