NEW YORK/BENGALURU (Jan 23): Johnson & Johnson, fresh off a US$14.6 billion (RM65.38 billion) deal to buy neurological drugmaker Intra-Cellular, reported fourth-quarter (4Q) revenues and profit above Wall Street estimates on Wednesday, driven by strong sales of its cancer treatments.

J&J has been on an acquisition spree to boost its drugs and device businesses after spinning off its consumer unit in 2023. Last week, it announced the Intra-Cellular acquisition — its biggest deal in two years — to boost its portfolio of psychiatric drugs. It expects the deal to hit its annual earnings this year by 30 to 35 cents.

The New Jersey-based drugmaker expects 2025 sales of between US$90.9 billion and US$91.7 billion, and to earn between US$10.75 and US$10.95 per share, excluding the impact of the Intra-Cellular deal and a 25 cents per share hit from foreign currency.

Analysts were expecting sales of US$90.98 billion and a profit of US$10.56 per share for 2025, according to data compiled by LSEG.

J&J chief financial officer Joe Wolk said on an investor call that higher sales and earnings-per-share growth was expected in the second half of the year versus the first, as the drugmaker launches new products to counter US competition from close copies of its blockbuster psoriasis drug Stelara.

However, at least three investors said the 25-cent hit from a stronger dollar was above expectations, sending shares down about 4% to US$142.59 in morning trade.

The currency impact was a "negative surprise" in an otherwise routine quarterly report, said Jeff Jonas, portfolio manager at Gabelli Funds, which owns about 193,000 J&J shares.

Wolk said on the call that when adjusting for this impact, J&J's performance is "considerably stronger than consensus assumed as only about half of analysts incorporated the impact of foreign currency into their models."

For the full year 2024, international revenues made up about 43.4% of J&J's total sales.

J&J's 4Q sales stood at US$22.52 billion, up 5.3% from a year ago and above analysts' expectations of US$22.42 billion, according to LSEG data.

On an adjusted basis, the company earned US$2.04 per share in the quarter — which includes a 22-cent charge related to its acquisition of medical device-maker V-Wave — nearly 11% lower than the previous year but above analysts' estimates of US$2.01 per share.

Quarterly sales of J&J's cancer drugs rose 19% worldwide, driven by more than US$3 billion for multiple myeloma treatment Darzalex, which was up 20.9% from a year ago.

"Darzalex continues to be a pillar brand with respect to performance," said J&J's Wolk in an interview, noting that sales from Shockwave Medical also helped drive growth.

Last year, J&J bought heart device maker Shockwave Medical for US$13.1 billion. Shockwave generated US$258 million in sales for the quarter and US$564 million for the year, according to J&J.

J&J's innovative medicine unit brought in 4Q sales of US$14.33 billion while its medtech unit generated US$8.19 billion, up 4.4% and 6.7% respectively compared to a year ago.

Sales of J&J's Stelara fell 14.7% to US$2.35 billion in 4Q. Analysts were expecting sales of US$2.25 billion, according to LSEG data.

Close copies of Stelara launched in Europe, Canada and a few other markets last year. Several Stelara biosimilars are expected to launch in the US this year.

The drug and device maker expects sales, excluding impact of foreign currency, to grow at a compounded annual rate of 5-7% between 2025 and 2030.

"I think investors are perhaps a bit skeptical of those targets," said James Harlow, vice president of Novare Capital Management, which owns 121,000 shares of the company.

For the full year, Stelara brought in revenue of US$10.36 billion, making up more than 18% of J&J's total drug sales of US$56.96 billion for 2024 and missing estimates of US$10.59 billion.

Annual sales of the drug are expected to fall to about US$7 billion this year.

Darzalex brought in annual sales of US$11.67 billion, making it J&J's biggest-selling drug. Analysts were expecting sales of US$11.11 billion.

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