Although consumer health wasn’t necessarily the cause of the strong performance, it has served both groups well while their pharmaceutical divisions have had to contend with rising competition. In the last year many global blockbuster drugs have lost their patent protection and this has hit drugs sales hard, explaining the drop in earnings across much of the sector.
But while there has been a dearth in new drug launches to make up that lost revenue, J&J and GSK have been able to fall back on their solid consumer health divisions and keep earnings ticking up. That’s not to say their pharmaceutical divisions aren’t performing well, both companies reported a strong rise in revenues from new drugs sales.
But both are unloved. Many investors, analysts and even customers have expressed disappointment that GSK and J&J have transferred some focus away from life-saving medicines. J&J is widely referred to as a “healthcare company”; with so many sales coming from consumer health and medical devices it appears it no longer deserves the title “pharmaceutical company”. Surely GSK, with almost half of its revenue coming from outside drugs, is heading that way, too?
