5 Things I Learned From Johnson & Johnson’s Q4 2022 Earnings Call

Johnson & Johnson is a global healthcare giant that operates in the healthcare, pharmaceutical, and consumer goods industries. It is well known for producing many products, including medical devices, consumer goods, and prescription drugs. Over the year, Johnson & Johnson has built a strong reputation for innovation and is committed to improving the health and well-being of people around the world.

Here are five things I learned from Johnson and Johnson Q4 2022 earnings call:

  • Q4 2022 worldwide sales were $23.7 billion, a decrease of 4.4% compared to Q4 2021
  • Operational sales growth, excluding translational currency’s effect, increased by 0.9%.
  • Currency hurt the company’s reported sales growth worldwide and outside the US.
  • The company’s sales in the US increased by 2.9% but decreased by 11.5% in regions outside the US.
  • Excluding sales from the COVID-19 vaccine, the company had operational sales growth of 4.6% worldwide, 4.7% in the US, and 4.4% outside the US.
  • The company decreased net earnings for Q4 2022, with diluted earnings per share at $1.33 compared to $1.77 in Q4 2021. Additionally, the full-year sales for 2022 were $94.9 billion, an increase of 1.3% compared to the entire year of 2021

The company’s guidance for year 2023 is described as “responsibly cautious.”

Due to the global economy’s ongoing macroeconomic and geopolitical uncertainty, management has chosen to be conservative in its 2023 guidance. According to management, they are assuming that there will be a significant carryover of the inflationary impact that the company experienced in 2022 and are not assuming any relief as they move throughout the year. Additionally, Johnson & Johnson’s guidance for 2023 includes several conservative elements, such as assuming disruptions to procedures and implementing value-based pricing in China.

The company is expecting to face several key challenges in 2023.

Challenges such as inflationary pressures, dis-synergies from the spin-off of certain business units, and the loss of exclusivity for key products such as STELARA are expected to harm the company’s operating margins in 2023. However, management has taken steps to mitigate these challenges and address dis-synergies by 2024. Despite these challenges, the company is working hard to prioritise its most significant long-term investments and manage costs to ensure its future success.

The company is directing its attention to its myeloma portfolio.

In particular, Johnson and johnson directed its focus to CAR-T therapy “CARVYKTI” as the primary driver of growth for the pharmaceutical division. Management believes that this treatment has the potential to shift the paradigm from treating progression to treating for a cure. The CARTITUDE-4 study, which evaluates “CARVYKTI” in patients who have received one to three prior lines of therapy, is critical in this endeavor, and the results are expected in 2023. Furthermore, the company is developing several other drugs in this area, including TECVAYLI and Talquetamab, which they hope will also contribute to shifting the treatment paradigm from treating progression to treating for a cure.

The company this targeting $60 billion in revenue by 2025 for its pharmaceutical business

Management plans to accomplish these long-term goals by utilizing the strength of their currently marketed product portfolio and introducing new indications and niche-marketed products like DARZALEX, TREMFYA, and ERLEADA.

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