September 30, 2023

Analysis-Stelara patent deal puts J&J back on track for $57 billion revenue forecast by 2025

By Patrick Wingrove

(Reuters) – Johnson & Johnson’s legal settlement with Amgen Inc to delay a biosimilar version of its blockbuster psoriasis treatment Stelara until January 2025 could see the drug make a bigger contribution to J&J’s sales in 2024 and 2025 than Wall Street predicts.

Introduced in 2009, Stelara has been J&J’s top selling drug as of 2019, with sales of $9.7 billion by 2022. The patents expire this year, opening the door for a lower cost biosimilar to hit the market and the raises expectations that the company would have to lower Stelara’s $13,000 per month price.

Availability of biosimilars should drive down the price of older biotech drugs, if not as much as generics do for traditional pills. But legal agreements whereby rival drugmakers delay market entry to escape protracted patent litigation have stalled their launches, keeping prices high.

Analysts currently expect J&J to average $54.5 billion in pharmaceutical sales by 2025, according to data from Refinitiv, and that Stelara’s sales will drop from $9.9 billion this year to $7.5 billion in 2024 after a important US patent expires in September. Two analysts estimate $5.4 billion for Stelara by 2025.

J&J forecasts $57 billion in pharma sales by 2025 after lowering its previous $60 billion forecast in April, citing currency dynamics that hurt its pharma business in 2022.

Analysts told Reuters that the Stelara deal with Amgen could put the New Brunswick, New Jersey-based company on track to achieve that revised sales forecast, despite early skepticism.

“I don’t think (deal) will take them all the way to $57 billion, but now there may be a path for them to get to that number where before there seemed to be none because they were several billion dollars away,” says Guggenheim analyst Vamil Divan.

He said the drug, which also treats Crohn’s disease and other autoimmune diseases, could generate sales of nearly $10 billion by 2024, dropping to $7.5 billion to $8.5 billion the following year. . That would add about $4.6 billion to average pharmaceutical sales estimates, as long as no biosimilars hit the market before 2025.

Amgen said last month that the confidential settlement it signed with J&J will allow it to sell its Stelara biosimilar by January 1, 2025.

The company’s use of the phrase “appearance” has cast some doubt on Stelara’s longstanding exclusivity. According to Credit Suisse analyst Trung Huynh, J&J can also file a lawsuit to prevent that.

“If no Stelara biosimilars come in in 2024, I think growth should stay around 4% in 2023 and 2024,” Huynh said.

Alvotech and Teva Pharmaceutical’s AVT04 could be Stelara’s next biosimilar to receive US approval in the second half of 2023, Divan said in an analyst note, as long as they address manufacturing concerns raised by the Food and Drug Administration at the plant from Alvotech in Reykjavik.

Neither Teva nor Alvotech responded to requests for comment.

A spokesperson for J&J said the company would continue to defend its intellectual property following the settlement with Stelara and that the agreement will not affect its 2023 financial outlook.

J&J is making “good progress” toward its 2025 outlook, the spokesperson said, building on recent comments at an investor conference that it was increasingly confident it could meet its target.

(Reporting by Patrick Wingrove; editing by Caroline Humer and Bill Berkrot)

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