Citing a $6.9 billion charge linked to its recently proposed $8.9 billion settlement of tens of thousands of cancer claims related to the use of talcum in its baby powder and other products, Johnson & Johnson on Tuesday reported a $68 million net loss for the first quarter 2023.
Saying that “well over 60,000 [claimants] have expressed a desire to vote for this [settlement],” J&J assistant general counsel Andrew White told analysts during an earnings call that the company hopes for a vote to take place in a couple of months.
But, said Joseph Wolk, executive vice president and chief financial officer, “We’ve got a small number of plaintiffs’ attorneys who don’t even want to give their claimants the right to vote. We’re simply asking that they get the right to vote.”
Emphasizing that J&J was neither acknowledging “wrongdoing” nor changing “its longstanding position that its talcum powder products are safe,” Wolk cited “decades of independent research conducted by reputable government agencies, patient advocacy groups, and academic institutions that support the safety of cosmetic talc. “
“It is unfortunate that we’ve got to put dollars towards, quite frankly, baseless scientific claims,” he declared.
On a more positive note, J&J reported first quarter 2023 sales of $24.7 billion worldwide and $12.5 billion in the U.S., up 5.6% and 9.7% respectively year-over-year, and raised its 2023 guidance some 1% versus what had been projected in January. J&J is now estimating 2023 global sales at $97.8 billion to $98.9 billion, an increase ranging from 5.5% to 6.5%,.
Unlike fourth quarter 2022, when the soon-to-be-jettisoned consumer products group was the only one of J&J’s three business units to show growth, pharmaceutical sales also rose in the first quarter 2023.
Up 2.4% worldwide and 5.9% in the U.S. YoY, pharma sales were driven by such brands as Darzalex for multiple myeloma cancer, up 25.7%; Erleada for prostate cancer, up 40.3%; antibody Tremfya, up 11%, with U.S. share gains of .9 points in psoriasis and 2.1 points for psoriatic arthritis; and anti-inflammatory Stelara, up 9.6%, with U.S. share gains of 2.2 points in Crohn’s disease and 4.8 points in ulcerative colitis.
Stelara will lose U.S. exclusivity by the early fourth quarter of this year, Wolk said, adding that “we’ve got 30 products or platforms that generate over a billion dollars in annual revenue, so we’re not dependent on one product the way others may be.”
As for J&J’s rapidly vanishing COVID vaccine, with “contractual commitments” complete, “we do not expect material sales beyond the first quarter,” Wolk said.
While no longer on the frontlines against COVID, though, J&J was quite busy fighting cough, cold and flu during the first quarter.
More specifically, it was the company’s departing consumer business that fought those battles.
In addition to the “exceptionally strong” cough/cold/flu season, J&J’s vice president, investor relations Jessica Moore said it was price increases that led to the consumer business rising 7.4% worldwide and 11.4% in the U.S. during the quarter.
“We remain on track to complete the separation of this business in 2023, assuming accommodating market conditions” Wolk stated. As previously announced, the spinoff will result in a new company called Kenvue.
In addition to cough/cold/flu fighters, major contributors to consumer product growth in the quarter included Tylenol and Motrin pain relievers, Imodium diarrhea treatment, Neutrogena and Aveeno skincare products (with strong echannel and club channel performance, Moore said) and Johnson’s-brand baby care products.
The latter, of course, are front and center in the talcum powder lawsuits, but Wolk noted that liabilities (the payments to plaintiffs are supposed to stretch out over 25 years) would be borne by J&J, not Kenvue.
Once hatched, Kenvue will be a major company, but small in comparison to what J&J executives on Tuesday were calling “the new Johnson & Johnson.”
During the first quarter, consumer products’ $3.9 billion in sales represented just 16% of J&J’s total $24.7 billion in sales, with pharmaceuticals accounting for 54% at $13.4 billion, and medtech for 30% at $7.5 billion.
Medtech sales decreased 0.6% worldwide but were up 16.6% in the U.S. Strong performers included electrophysiology products in the Interventional Solutions segment, contact lenses in the Vision segment, wound closure products in the General Surgery segment, and knees (up 12% in the U.S.) in Orthopedics.
Company representatives were particularly excited about Abiomed, a specialist in heart pumps, which it acquired in December. Comparing its performance as part of J&J to its performance a year earlier as a standalone company, J&J said Abiomed’s sales were up 22%.