Life is Good at JNJ (if you're not an atypical antipsychotic): A reaction to Johnson & Johnson Earnings Call

JNJ had a nice quarter, in spite of losing Risperdal to genericsville and Invega sitting firmly on its flat launch curve. In truth, the big generic hit will start this quarter as the generics start shipping. Last quarter for Risperdal was a decline simply because the wholesellers quit building inventory. Invega is another story. Well, it just sucks. According to Dominic Caruso, Vice-President, Finance and Chief Financial Officer, "Invega is continuing to improve quarter after quarter but I would say consistent with our prior comments it’s not where we had expected it to be. It’s not the launch we had hoped for as we had commented before but we do see steady improvement with Invega. We believe it’s a viable alternative for patients and when used physicians comment very favorably about the effect with patients." It's not hard to improve quarter after quarter when a) the market is expanding and b) you're starting with such a small base.

First Generic Atypical Antipsychotic (Risperdal becomes risperidone)

Yesterday Teva announced they received FDA approval to produce a generic version of Risperdal. We all knew this was coming. Teva was ready with product to ship and JNJ was ready with their own in-house generic version in hopes of cannibalizing some Teva sales at the expense of their former cash cow.

What does this mean for the common man?

Well if you're schizophrenic, bipolar, autistic, or an off-label user, it means that the price you pay just got a whole lot cheaper AND after Teva's 180 days of exclusivity as the sole competitor allowed to sell risperidone, the price will drop even lower as more competition enters the market.

If you're a sale rep. for Invega (the bastard child of Risperdal), your sales goals just got a wee bit more difficult now didn't they because who wants to buy Risperdal-lite when you can get the original for pennies on the dollar. Wonder what that already stellar *saracasm* Invega uptake curve is gonna look like now.

And what if you're Abilify, Geodon, Seroquel or Zyprexa? Well, you hope and pray that your marketing and sales folks have done a good job differentiating their product from the competition because the price differential between you and the generic just went exponential.

And what of the insurers you may ask. Can you say fail first? I'm sure it's already begun.

Ooh, exciting times in the Atypical Antipsychotic Market!

Just How Bad is it for Invega / Teva's Generic Risperidone

For the past couple of earnings calls, JNJ has been hiding the Invega debacle within their Risperdal numbers by reporting the total sales of Risperdal and Invega together. Yesterday they switched strategy and instead hid Invega in the Other category. That's rich. Here's the relevant details from the conference call. Watch as they duck and weave the analyst's request to get to the Invega numbers...

Glenn Reicin - Morgan Stanley
That’s very helpful. Okay, and then also just two other quick questions -- INVEGA, is that included in the RISPERDAL number or is that separate now?
Dominic J. Caruso
That’s separate now in Other.
Glenn Reicin - Morgan Stanley
Okay, and you are not going to tell us what that number is?
Louise Mehrotra
No, not right now.
Glenn Reicin - Morgan Stanley
Okay, so all the other numbers you’ve given us in the past are going to be restated for that change?
Louise Mehrotra
The numbers that you have in the schedule have your comparables for prior year.
Glenn Reicin - Morgan Stanley
In prior quarters did INVEGA, was that included under the anti-psychotic number?
Louise Mehrotra
Yes, it was. And the numbers --
Glenn Reicin - Morgan Stanley
Okay, so we’re going to get restated schedules for all of the quarters going back or no?
Louise Mehrotra
What we have given you here is 2007 restated to take INVEGA out. We certainly could give you -- break out the RISPERDAL Oral and we could put that up.

Hahahahaha Ridiculous. Full transcript available here.

The good news for JNJ is that it looks like Teva will get the 6 month exclusivity on generic risperidone. Good news because JNJ can keep the generic price higher with only one other player in the market. The price for the generic will thus likely bottom out at the beginning of 2009 given current expectations for multiple entrants.

JNJ Invigorating Invega?

Not really. Despite an overall positive call and decent antipsychotic numbers, the news on Invega is little changed from what I suggested earlier. In today's conference call Dominic Caruso, JNJ's CFO stated "With respect to Invega, we still continue to see in Invega as a promising product for the treatment of schizophrenia. I would tell you that we continue to see restrictions in the use of Invega based on formulary status, so whether it is prior authorization, et cetera, we continue to see that. It is a very difficult environment for new products in a new reimbursement arena. Those pressures are difficult to overcome without additional data on the product, especially additional data comparing it other products." In other words, uptake of Invega is still a trickle and whoever was handling payor negotiations has probably been replaced by now.

Oh, and he also touted the study I said they'd tout in the call..."Now you may know that we have just recently, this past weekend, had a session on the head to head trial of Invega and Seroquel so it is recent data. That trial showed that Invega performed very nicely against the Seroquel placebo in terms efficacy and is very well-tolerated and in fact, the dropout rate for Invega patients is far lower than either Seroquel or even placebo." Um, maybe so, because everyone already knows patients (esp. severe acute schiz. pts.) drop out when the product they're taking doesn't work and Seroquel isn't much better than a placebo in short-term study of acute schizophrenia so yes, Invega had a lower dropout rate. Perhaps Dominic would also like to comment on the incidence of acute AE's in the study...I guess not.

This is probably the best quote though: "We have taken a realistic view of Invega in both our guidance for this year and in the cost improvement programs that were previously announced." We here at JNJ accept that our product has failed to launch successfully, but we'll just cut some jobs and take what we can get until Risperdal goes generic. Hey, at least we got the product approved by the FDA *thumbs nose at Wyeth's bifeprunox failure*.

Enough on Invega, there's 5 other products out there to discuss...

Invega

Let's talk about Invega. Invega is the "newest" atypical antipsychotic on the market. It was launched at the beginning of 2007 by Janssen. Janssen also carries Risperdal and wouldn't you know it, Risperdal is going to lose patent protection in the middle of 2008. How convenient that a new product would arrive to fill the sales reps bag and the physicians' sample closets just as the old product becomes generic. Perhaps a little too convenient. You see Invega is really not that different from Risperdal. In fact, it's actually a metabolite of Risperdal so the chemical structure is virtually identical. One would think Janssen would be spending the next year trying to convert as many patients as possible over to Invega since Risperdal revenue will dry up midway through next year when multiple generic versions of risperidone hit the market. However, it appears that rather than have a conversion strategy, they instead are trying to pass Invega off as a truly new and unique product. This would be the correct strategy if they could actually convince doctors of its veracity. But, given the uptake to date, they're not really winning the docs over. It's so bad that when Johnson and Johnson report earnings, they combine Risperdal and Invega revenues together to avoid showcasing Invega's launch numbers. At least that's what they've done for the first 2 quarters. Quarter 3 numbers come out on 10/16 and although prescriptions have probably risen, it's unlikely that there's anything Janssen can do to change the path of the product's uptake at this time. (I thought this picture floating out on the web was pretty funny - that's the last cake that marketing team is getting for a long time.)

About the ads

So you can't help but notice there are ads on this site. These are Google ads. I have no control over the content. Due to the nature of my blog it's likely that ads from major pharmaceutical companies will show up here. For example, the ad showing on my blog at the time of this post is for psychiatry24x7.com. Although this ad touts information about antipsychotic drugs, it's really a site paid for by Janssen-Cilag which is likely the European subsidiary of Janssen in the US which promotes Risperdal. You have to dig to figure this out. By the way, Janssen is one of the Johnson and Johnson companies. Anyway, my point is that you should take the offerings with a grain of salt and look to see who is sponsoring the site before you fully trust its content. Be especially suspicious if they don't even spell the product name correctly in the ad - geez.