What's going on?
Dry your eyes, Johnson & Johnson: the pharmaceutical giant announced better-than-expected quarterly earnings on Wednesday.
What does this mean?
Both Johnson & Johnson’s (J&J’s) revenue and profit beat investors’ expectations, rising 27% and 73% respectively from the same time last year. More than half that revenue growth came from a strong rebound in the company’s medical devices unit, which took a thumping last year as the pandemic forced hospitals to postpone surgeries.
J&J’s pharmaceutical segment – the biggest of its businesses – should be getting a boost too: the pharma giant said it was expecting $2.5 billion in sales from its single-shot vaccine in 2021. That’d be a remarkably strong finish to the year given that the vaccine only generated $164 million last quarter, but the company’s gone all in on the estimate: it upped its growth outlook for both its total revenue and profit this year.
Why should I care?
For markets: Repeat after us: cancer bad.
Curing coronavirus is both ethically responsible and commercially shrewd, sure, but J&J would do well to remember that giving people cancer isn’t: the company recently had to recall its sunscreens after they were found to be contaminated with a carcinogen. And the last thing J&J needs is another fine, with the company already expected to reach an agreement to pay $5 billion to different US states over its role in the opioid crisis.
The bigger picture: Delta’s your captain now.
J&J’s anticipated $2.5 billion in sales is a drop in the ocean compared to how much Pfizer and Moderna’s shots – which are in much wider use – are expected to make. And even that revenue stream could be derailed if US production troubles keep hobbling the vaccine’s rollout, or if the highly contagious delta variant – now dominant in many countries around the world – ends up reducing the shot’s effectiveness, as plenty of experts are worried it’ll do.