AEGiS-WSJ: J&J Trumpets Its R&D Efforts Cancer, HIV Treatments Are Among 17 Medicines In Late Development Stages

Important note: Information in this article was accurate in 2005. The state of the art may have changed since the publication date.

J&J Trumpets Its R&D Efforts Cancer, HIV Treatments Are Among 17 Medicines In Late Development Stages

Wall Street Journal - May 27, 2005
Scott Hensley, scott.hensley@wsj.com

In the first detailed review of its pharmaceutical pipeline in four years, Johnson & Johnson told analysts it is replenishing its portfolio of new drugs through improved research productivity, a slew of acquisitions and aggressive licensing.

The maker of health-care products said it has 17 new medicines in advanced stages of clinical testing or awaiting approval by regulators. The experimental drugs treat illnesses that include HIV/AIDS and various cancers. During the last full review of the company's research prospects in 2001, there were just two drugs at the same stage.

"At a time when many companies in the industry are struggling with research-and-development productivity, we seem to be hitting our stride," Christine Poon, vice chairman of Johnson & Johnson, said at the meeting, attended by about 300 analysts and investors in New York.

Some analysts remained skeptical. "I've heard this all before, and I'm still waiting" for results, said Michael Krensavage, an analyst with Raymond James & Associates in New York. Johnson & Johnson hasn't won approval of a truly new drug it discovered in-house since the 2001 review, he said.

The competitive climate for some of the New Brunswick, N.J., company's most important medicines has added a sense of urgency. A generic competitor to pain patch Duragesic, with $2.08 billion in 2004 sales, entered the market early this year, followed recently by a U.S. generic version of Ultracet, a pain pill. Several of Johnson & Johnson's biggest-selling drugs, including Procrit/Eprex for anemia and Risperdal for schizophrenia, face slower growth amid heavy competition from rival brands.

The stakes for improvement are high. While many consumers associate Johnson & Johnson mainly with products like Band-Aids and baby powder, pharmaceuticals account for the largest share of the company's sales and profit. Pharmaceuticals contributed $22.13 billion, or 47%, of company sales, and $7.61 billion, or 59%, of operating profit last year.

Johnson & Johnson has struggled to find new medicines. In an acknowledgment of its difficulties, the company reorganized its R&D operations about five years ago and implemented a program to boost productivity. The company says those moves are finally paying off.

Besides improving output at its own laboratories, Johnson & Johnson has made many acquisitions to fill the productivity gap. Since 2001, Johnson & Johnson has bought six small drug companies and has a pending deal valued at about $245 million for Peninsula Pharmaceuticals Inc., a specialist in antibiotics.

Johnson & Johnson also has bought rights to more than 20 experimental drugs and entered into nearly 120 research collaborations.

Among the most important drugs in the works are dapoxetine, a pill for premature ejaculation; paliperidone, an antipsychotic related to Risperdal; and Yondelis, for soft-tissue sarcoma. The company also aims to become a major seller of antiviral drugs to treat HIV/AIDS.

Separately, the company said the Food and Drug Administration rejected an application for the use of Risperdal to treat psychosis related to Alzheimer's disease.

Shares of Johnson & Johnson fell five cents to $67.42 in 4 p.m. composite trading on the New York Stock Exchange.

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