J&J expects inflation and China COVID to hit through 2023

J&J expects inflation and China COVID to hit through 2023
J&J expects inflation and China COVID to hit through 2023

Jan 24 (Reuters) – Johnson & Johnson (JNJ.N) said on Tuesday it sees the impact of high inflation continuing through 2023 and expects the main outbreak of COVID-19 in China hurt sales of its medical devices unit in the first half of the year.

Inflation has hurt demand for consumer healthcare products and driven up costs for the healthcare conglomerate.

J&J’s forecasts and commentary on China’s COVID business disruption point to issues that could hurt the broader medtech industry in the first half of the year, said Truist Securities analyst Richard Newitter, in a note.

“Expect other MedTech companies to announce this when they also release their 2023 outlook,” he said.

J&J forecasts 2023 sales of $96.9 billion to $97.9 billion, putting the midpoint of the range below Wall Street estimates, while fourth-quarter earnings beat expectations in due to cost management and high demand for some prescription drugs despite lower than expected medical costs. device sales.

“Given all the macroeconomic uncertainty, the geopolitical uncertainty, we thought it was the right approach at this point to offer guidance within the ranges we did,” Chief Financial Officer Joseph Wolk said during of a conference call.

Shares of J&J were down more than 1% in midday trading.

Sales of some key treatments, such as Crohn’s disease drug Stelara, missed analysts’ estimates. But sales of COVID-19 vaccines exceeded lowered expectations and demand for cancer drug Darzalex helped push fourth-quarter profits.

The company reported $689 million in quarterly COVID-19 vaccine sales outside the United States.

“If there was one small disappointment in the quarter, it was that sales of COVID-19 vaccines were stronger than expected and masked some of the underperformance we saw in some more important,” said Edward Jones analyst John Boylan.

J&J said it expects Stelara sales in the United States to be flat or decline in 2023 due to competition from cheaper biosimilars in some regions.

It forecast adjusted earnings for 2023 of $10.45 to $10.65 per share, above analyst estimates of $10.35.

Pharmaceuticals sales of $13.16 billion for the fourth quarter beat estimates of $13.14 billion, helped by $2.08 billion in Darzalex sales. Analysts expected $2.02 billion for the drug.

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J&J also recorded $821 million in COVID-19 vaccine costs, which were related to changes in its research program and manufacturing capacity.

Excluding items, J&J earned $2.35 per share for the quarter, beating analyst estimates by 12 cents, according to IBES data from Refinitiv.

Reporting by Manas Mishra and Bhanvi Satija in Bengaluru; Editing by Anil D’Silva and Bill Berkrot

Our standards: The Thomson Reuters Trust Principles.

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