How much will Johnson & Johnson’s series of product recalls ultimately cost the company?

We got a partial answer today, when the company released second-quarter earnings. J&J said the recalls by its McNeil Consumer Healthcare unit — most notably those of kids’ pain and allergy medicines — cut $200 million from the quarter’s sales and will pare an estimated $600 million from sales for all of 2010.

CFO Dominic Caruso, on a conference call with analysts, declined to estimate what the financial effects of the recalls would be in 2011.

But what about the ding to J&J’s reputation and any resulting future financial fallout?

Other plants have also been affected by manufacturing problems; the FDA has found issues at a J&J facility in Puerto Rico, and just yesterday the company said the agency found manufacturing problems at yet another facility, in Lancaster, Pa.

A few analysts on the call asked whether all the production problems would hurt the company’s reputation and thus sales of other products not affected by the recall.

“With respect to any potential collateral damage, it is too early for us to comment on that,” Caruso said in response to one of those questions, from Wells Fargo’s Larry Biegelsen, according to a transcript from Thomson Reuters. “Obviously, our businesses have been very good over the years [at] innovating and assuring [that] consumers get the kind of products that they expect and at the quality they expect.” He added that the recalls were “precautionary” and that the chance of serious health effects was either nonexistent or “remote.”

Biegelsen also asked about “any management changes that you’re making to ensure that this doesn’t happen again.” Caruso said he wouldn’t comment on that issue.

Source: The Wall Street Journal

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A comparative Phase IV study of Merck & Co. and Schering-Plough’s Zetia (ezetimibe) and Abbott’s Niaspan (niacin) was stopped early last month, according to a notice posted on the US National Institutes of Health’s online registry of clinical trials. The posting indicated that an “independent steering committee has stopped the trial based on results of a pre-specified, blinded interim analysis,” and that the decision was not due to safety concerns. Merck’s shares fell as much as 5 percent on the news.

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Abbott is listed as one of the trial’s sponsors and collaborators, though spokespeople for the drugmaker, as well as those for the joint venture between Merck and Schering-Plough, said they did not know why the study ended and were not involved in the decision. The trial’s lead investigator, Allen Taylor, declined to disclose the reason for the termination, adding that more information may be provided at a later date.

The randomised ARBITER 6 – HALTS trial began in November 2006 with a planned enrollment of 400 patients who had atherosclerotic coronary or vascular disease, or who were at high cardiovascular risk due to certain other medical conditions. The study, which was expected to conclude later this year, was designed to compare HDL- and LDL-focused dyslipidaemia treatment strategies on carotid atherosclerosis. The primary endpoint was change in carotid intima-media thickness after 14 months, according to the NIH registry.

Commenting on the development, Wells Fargo Securities analyst Larry Biegelsen speculated that “Niaspan likely performed better than Zetia in the HALTS study,” estimating that positive data could eventually add as much as $400 million in sales for Abbott’s product. In addition, Natixis Bleichroeder’s Jon LeCroy, who said a positive or negative outcome for either drug could lead to a rise or fall in prescriptions of up to 20 percent, remarked: “We are now assuming that this trial significantly favoured Niaspan and, as a result, we are decreasing our sales estimates for both Zetia and [Merck and Schering-Plough's] Vytorin.” Analyst Barbara Ryan of Deutsche Bank stated, however, that the negative impact on Merck’s stock was “extremely premature and probably unwarranted.”

Zetia generated revenue of $2.2 billion last year, while Niaspan garnered $786 million in sales.

Source: FirstWord

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Johnson & Johnson’s Centocor unit intends to go to arbitration to seek an end to its Remicade (infliximab) partnership with Schering-Plough in light of Schering-Plough’s pending $41.1-billion merger with Merck & Co., according to a Merck filing with the US Securities and Exchange Commission on Wednesday.

Johnson & Johnson stated that “the distribution agreement may be terminated by Centocor in the event Schering-Plough is acquired or otherwise falls under the control of another party… As its public statements make clear, Merck is acquiring Schering-Plough. The acquisition constitutes a change of control and triggers Centocor’s right to terminate.” Johnson & Johnson is seeking arbitration to regain marketing rights from Schering-Plough for Remicade, as well as the recently approved drug Simponi (golimumab), in markets outside the US. Simponi is currently under review by regulators in Europe.

Commenting on the development, analyst Steve Brozak of WBB Securities indicated: “We know Johnson & Johnson wants something, and we know that Merck and Schering-Plough are going to defend…The question is what will be the ultimate agreement.” Meanwhile, a spokesperson for Merck said the drugmaker had examined the matter and was confident it would prevail.

Remicade garnered US sales of $2.8 billion for Johnson & Johnson in 2008, while Schering-Plough recorded revenue of $2.1 billion for the drug in its markets last year. Wachovia’s Larry Biegelsen forecast that Simponi could generate sales of over $600 million by 2013.[ad]

Source: FirstWord

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An FDA advisory panel agreed by a margin of 15 to 2 on Thursday that clinical data for Johnson & Johnson’s and Bayer’s anticoagulant Xarelto (rivaroxaban) shows a “favourable risk-benefit profile” for the drug as a preventive treatment against deep vein thrombosis and pulmonary embolism in patients undergoing hip or knee replacement surgery. The committee also discussed concerns that had been raised by FDA staff about bleeding and liver damage in some patients. However, panel chairman Robert Harrington commented that Xarelto is “still favourable” and that “there’s a bit of caution.”

Members of the panel questioned the strength of some data that was provided on blood clot prevention, as well as the comparability of the drugmaker’s studies, which ranged in duration from five weeks to under two weeks. Regarding the combining of results from four trials to support safety and efficacy claims for Xarelto, FDA statistical reviewer Qing Xu suggested that “any type of analysis with this kind of limitation can yield spurious results.”

In addition, while several of the advisors indicated they were concerned about the potential for liver damage, a majority thought Xarelto would not be harmful for patients undergoing knee or hip surgery where the product would be used for 14 to 35 days. Panel member Peter Gross remarked: “I think we have enough safety and efficacy data to approve [Xarelto] for short-term use, with the caveat that practitioners should not prescribe it for alternate uses, particularly long-term uses.”

Johnson & Johnson’s head of cardiovascular treatments, Peter DiBattiste, told panellists that the anticoagulant was “well-tolerated with modest increases in bleeding” in studies that compared Xarelto to sanofi-aventis’ Lovenox (enoxaparin). Other company representatives asserted that the treatment probably did not cause liver-related deaths observed in certain studies. The drugmaker’s officials also told the advisory committee that data from the company’s studies showed that Xarelto was more effective than Lovenox, which is a benefit that outweighs potential risks. Johnson & Johnson noted as well that more long-term studies of Xarelto are in progress.

Commenting on the revenue potential of Xarelto for Johnson & Johnson, analyst Larry Biegelsen of Wachovia Capital Markets forecast initial sales of $300 million per year, if approval is granted. If the drug is authorised for other uses, including the prevention of stroke, Biegelsen estimated potential sales of $1.6 billion in 2013. The FDA is expected to deliver a verdict on the drug by May 28.

Source: FirstWord

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