Latest news with #JosephWolk
Yahoo
17-04-2025
- Business
- Yahoo
J&J projects $400m tariff hit but raises sales outlook
Johnson & Johnson Innovative Medicine (J&J) addressed the potential impact of pharmaceutical tariffs during its Q1 2025 earnings call, as the US government intensifies its scrutiny of foreign drug supply chains. The company's chief financial officer Joseph Wolk said the company expects a $400m cost tied to newly proposed and existing tariffs, with the largest burden stemming from China's retaliatory duties on US-origin goods. With the possibility of pharma-specific tariffs looming and the Department of Commerce announcing the launch of a Section 232 investigation into pharmaceutical imports on 14 April, investors were watching closely for commentary from J&J on US trade policy. The investigation gives President Donald Trump 90 days to determine whether tariffs should be imposed on national security grounds. CEO Joaquin Duato said the company is analysing the Section 232 process, noting it had been anticipated and would be treated as a normal regulatory development. 'It's important that companies in healthcare partner with the administration to look to mitigate some of the vulnerabilities that exist today in our healthcare supply chain,' Duato said. 'We plan to do it in this process to make sure that we have enough manufacturing capacity here in the US to be able to address multiple scenarios. We want to be deferential to the administration and their process,' he added. Many large pharma companies like MSD and Novartis have announced plans to increase manufacturing activity in the US against the backdrop of these tariff announcements, and J&J announced its own $55m US investment in March 2025. 'Since President Trump's 2017 tax reform, the investment in manufacturing – both in medtech and in pharmaceuticals – has significantly increased. When you think about our recent announcement of investing $55bn over the next four years at the completion of this investment plan, essentially all our advanced medicines that are used in the US will be manufactured in the US,' said Duato. J&J indicated that most of the projected $400m tariff impact will affect its Medtech division. The total includes duties from China, as well as import tariffs from Mexico and Canada not excluded under the United States–Mexico–Canada Agreement (USMCA). Wolk noted that mitigation strategies are limited due to existing price controls and contractual agreements, particularly in the pharmaceutical segment. Tariff-related costs will primarily be recorded as inventory before impacting future profit and loss statements. Despite the headwinds, J&J posted Q1 results above analyst expectations. Revenue for the quarter rose by 2.4% to $21.9bn, with operational growth of 4.2% and adjusted operational growth of 3.3%. Oncology products, including multiple myeloma drug Darzalex (daratumumab), remained key contributors. The company raised its 2025 sales forecast by $700m to $92bn at the midpoint, reflecting the addition of Caplyta (lumateperone) following its $14.6bn acquisition of Intra-Cellular Therapies. However, J&J lowered its adjusted operational EPS growth projection to 6.2%, down from 8.7%, citing dilution from the acquisition. Adjusted reported EPS growth remains unchanged at 6.2%, consistent with guidance first issued in January 2025. J&J also reported regulatory approvals for two key therapies in 1Q: the US Food and Drug Administration (FDA) cleared Tremfya (guselkumab) for Crohn's disease, and the European Commission (EC) approved Rybrevant (amivantamab-vmjw) for specific lung cancer indications. Medtech operational sales rose 4.1%, with growth driven by cardiovascular and general surgery segments. Orthopaedics showed weakness, particularly in spine and sports medicine. Legal challenges remain ongoing. In April 2025, a Texas court blocked J&J's attempt to resolve talc-related liabilities via a bankruptcy filing by its subsidiary Red River Talc. J&J previously expressed its intention to defend itself against the claims, which it insists are 'meritless' and 'premised on junk science'. J&J intends to recover up to $7bn from legal reserves. "J&J projects $400m tariff hit but raises sales outlook" was originally created and published by Pharmaceutical Technology, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Sign in to access your portfolio
Yahoo
16-04-2025
- Business
- Yahoo
Johnson & Johnson (JNJ) Q1 2025 Earnings Call Highlights: Strong Sales Growth Amid STELARA ...
Worldwide Sales: $21.9 billion, increased 4.2% despite a 470 basis point headwind from STELARA. Net Earnings: $11 billion, with diluted earnings per share of $4.54. Adjusted Net Earnings: $6.7 billion, with adjusted diluted earnings per share of $2.77, up 1.9% and 2.2% respectively. Innovative Medicine Sales: $13.9 billion, increased 4.2% despite an 810 basis point headwind from STELARA. MedTech Sales: $8 billion, increased 4.1%. Free Cash Flow: Approximately $3.4 billion. Dividend Increase: 4.8%, marking the 63rd consecutive year of increases. Operational Sales Growth Guidance: Increased by $700 million, now expected to be 3.3% to 4.3% for the full year. Adjusted Operational Sales Growth: 2% to 3% compared to 2024. Interest Income and Expense: Net income of $128 million, down from $209 million in Q1 2024. Effective Tax Rate: 19.3%, up from 12.4% in the same period last year. Warning! GuruFocus has detected 4 Warning Signs with BOM:540133. Release Date: April 15, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Johnson & Johnson (NYSE:JNJ) delivered strong operational sales growth of 4.2% in Q1 2025, despite headwinds from STELARA's loss of exclusivity. The company's Innovative Medicine sector achieved 4.2% operational sales growth, with 11 key brands growing double digits. MedTech sector showed 4.1% operational sales growth, driven by strong performance in cardiovascular businesses and surgical vision. Johnson & Johnson (NYSE:JNJ) announced a commitment to invest over $55 billion in the US over the next four years, enhancing manufacturing and R&D capabilities. The company increased its dividend for the 63rd consecutive year, reflecting its commitment to returning capital to shareholders. STELARA faced an approximate 810 basis points headwind due to biosimilar competition, impacting overall sales growth. Gross margins were below recent trends, affected by the loss of exclusivity for STELARA and Part D redesign. The orthopedic segment experienced a decline of 3.1%, impacted by competitive pressures and one-time events. Tariffs, particularly those related to China, are expected to have a significant impact on costs, with a $400 million impact anticipated in 2025. The company faces ongoing litigation challenges related to the Talc bankruptcy ruling, which could impact future financial performance. Q: Joe, you mentioned $400 million in tariffs in the 2025 guidance. What is that on an annualized basis, and how do you plan to mitigate it? A: Joseph Wolk, CFO, explained that the $400 million primarily involves MedTech tariffs, including those from Mexico, Canada, and China. The most significant impact comes from US-origin products shipped to China. Mitigation strategies are limited due to existing contractual agreements, but tax policy is seen as a more effective tool than tariffs for building US manufacturing capacity. Q: Can you explain the drivers behind the lower gross margins this quarter and the outlook going forward? A: Joseph Wolk, CFO, noted that the decline was due to the impact of STELARA's loss of exclusivity, Part D redesign, and unfavorable currency effects. He expects margins to improve by 100 to 150 basis points moving forward, despite the tariff impacts. Q: How do you see the erosion of STELARA being offset by other brands like TREMFYA? A: Jennifer Taubert, EVP, Worldwide Chairman, Innovative Medicine, stated that the impact of STELARA's loss was in line with expectations, and the business excluding STELARA grew over 12%. TREMFYA is gaining traction, especially with recent approvals in inflammatory bowel disease, and is expected to offset some of the erosion. Q: How recession-proof is Johnson & Johnson's business, and which areas might be most at risk? A: Joseph Wolk, CFO, mentioned that healthcare is generally more recession-proof than other industries. While elective procedures might be delayed, they are not abandoned. The company monitors job reports as an indicator of healthcare coverage and demand. Q: Can you provide more details on the orthopedic sales decline and the recovery outlook? A: Tim Schmid, EVP, Worldwide Chairman of MedTech, explained that the decline was due to one-time events like revenue recognition changes and fewer selling days. Despite competitive pressures, the company expects improved performance due to new product launches and commercial execution. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
Yahoo
16-04-2025
- Business
- Yahoo
Johnson & Johnson (JNJ) Q1 2025 Earnings Call Highlights: Strong Sales Growth Amid STELARA ...
Worldwide Sales: $21.9 billion, increased 4.2% despite a 470 basis point headwind from STELARA. Net Earnings: $11 billion, with diluted earnings per share of $4.54. Adjusted Net Earnings: $6.7 billion, with adjusted diluted earnings per share of $2.77, up 1.9% and 2.2% respectively. Innovative Medicine Sales: $13.9 billion, increased 4.2% despite an 810 basis point headwind from STELARA. MedTech Sales: $8 billion, increased 4.1%. Free Cash Flow: Approximately $3.4 billion. Dividend Increase: 4.8%, marking the 63rd consecutive year of increases. Operational Sales Growth Guidance: Increased by $700 million, now expected to be 3.3% to 4.3% for the full year. Adjusted Operational Sales Growth: 2% to 3% compared to 2024. Interest Income and Expense: Net income of $128 million, down from $209 million in Q1 2024. Effective Tax Rate: 19.3%, up from 12.4% in the same period last year. Warning! GuruFocus has detected 4 Warning Signs with BOM:540133. Release Date: April 15, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Johnson & Johnson (NYSE:JNJ) delivered strong operational sales growth of 4.2% in Q1 2025, despite headwinds from STELARA's loss of exclusivity. The company's Innovative Medicine sector achieved 4.2% operational sales growth, with 11 key brands growing double digits. MedTech sector showed 4.1% operational sales growth, driven by strong performance in cardiovascular businesses and surgical vision. Johnson & Johnson (NYSE:JNJ) announced a commitment to invest over $55 billion in the US over the next four years, enhancing manufacturing and R&D capabilities. The company increased its dividend for the 63rd consecutive year, reflecting its commitment to returning capital to shareholders. STELARA faced an approximate 810 basis points headwind due to biosimilar competition, impacting overall sales growth. Gross margins were below recent trends, affected by the loss of exclusivity for STELARA and Part D redesign. The orthopedic segment experienced a decline of 3.1%, impacted by competitive pressures and one-time events. Tariffs, particularly those related to China, are expected to have a significant impact on costs, with a $400 million impact anticipated in 2025. The company faces ongoing litigation challenges related to the Talc bankruptcy ruling, which could impact future financial performance. Q: Joe, you mentioned $400 million in tariffs in the 2025 guidance. What is that on an annualized basis, and how do you plan to mitigate it? A: Joseph Wolk, CFO, explained that the $400 million primarily involves MedTech tariffs, including those from Mexico, Canada, and China. The most significant impact comes from US-origin products shipped to China. Mitigation strategies are limited due to existing contractual agreements, but tax policy is seen as a more effective tool than tariffs for building US manufacturing capacity. Q: Can you explain the drivers behind the lower gross margins this quarter and the outlook going forward? A: Joseph Wolk, CFO, noted that the decline was due to the impact of STELARA's loss of exclusivity, Part D redesign, and unfavorable currency effects. He expects margins to improve by 100 to 150 basis points moving forward, despite the tariff impacts. Q: How do you see the erosion of STELARA being offset by other brands like TREMFYA? A: Jennifer Taubert, EVP, Worldwide Chairman, Innovative Medicine, stated that the impact of STELARA's loss was in line with expectations, and the business excluding STELARA grew over 12%. TREMFYA is gaining traction, especially with recent approvals in inflammatory bowel disease, and is expected to offset some of the erosion. Q: How recession-proof is Johnson & Johnson's business, and which areas might be most at risk? A: Joseph Wolk, CFO, mentioned that healthcare is generally more recession-proof than other industries. While elective procedures might be delayed, they are not abandoned. The company monitors job reports as an indicator of healthcare coverage and demand. Q: Can you provide more details on the orthopedic sales decline and the recovery outlook? A: Tim Schmid, EVP, Worldwide Chairman of MedTech, explained that the decline was due to one-time events like revenue recognition changes and fewer selling days. Despite competitive pressures, the company expects improved performance due to new product launches and commercial execution. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
