While forecasting worse than expected performance for sale for 2019, Johnson & Johnson that it anticipated more headwinds on the prices of U.S. prescription drugs this year which would ultimately weigh down on the entire pharmaceutical sector.
J&J said that it anticipates sales for entire of 2019 to be about between $80.4 billion and $81.2 billion, that is lower than the estimates of the markets of sale of about $82.69 billion, according to data IBES data from Refinitiv.
The pharma company also said that the adjusted earnings for 2019 is expected by it to be between $8.50 to $8.65 per share which has a mid range that is lower than the expectaitns of the market at $8.60 per share.
There was a 2 per cent dip in the shares of J&J while there was a dip of 1.1 per cent in the broader S&P 500 healthcare sector index.
Following a drop of 4.6 per cent in the price of its medicines in 2017, the prices again dropped by about 6 per cent to 8 per cent in 2018, said the healthcare conglomerate on a call with analysts. However earlier this month, the company had raised prices of about two dozen prescription drugs in the US which included increasing prices of some of the best selling drugs of the company.
The company’s Chief Executive Alex Gorsky said on call with analysts that J&J is “obviously engaged with the (Trump) administration and a lot of different groups right now on the issue of pharmaceutical pricing.”
There were some concerns among the company with respect to reference pricing which is a proposal that would link up the prices of drugs in the US to the average price of such drugs that are paid in a few of the other developed countries where there is direct or indirect controlling of the prices of drugs by the governments there.
“We are concerned about some unintended consequences around access and innovation as it relates to some of the proposals,” Gorsky said.
There has been intense pressure from US president Donald Trump and the Congress on the US pharma companies to bring down costs that are paid out of their pockets by consumers there.
There was however an attempt by Gorsky to shed away some of the responsibility b y saying that only about 20 percent of costs to patients is comprised for by medicines and medical devices combined. He said that the remaining 80 per cent is accounted for “from outside our industry.”
The pharmaceuticals business of J&J has, over the years, been the main driver of growth for it even though the company also has a wide range of medical device and consumer health products.
Higher costs have been offset by the strength in the pharmaceuticals business. In the fourth quarter, the company incurred litigation expense of $1.29 billion.
“We remain committed to ensuring the facts about our talc are understood and we will continue to defend the safety of our products,” Gorsky said.
(Adapted from Reuters.com)