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UPDATE 3-J&J upbeat on drugs business, cites new medicines

Published 06/04/2009, 10:33 AM
Updated 06/04/2009, 10:48 AM
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* To seek approval for HIV, hepatitis C drugs by next year

* To seek U.S. approvals for 8 drugs between 2011-2013

* Wall St counting on pharma to restore profit growth

* Shares down 0.6 percent (Recasts, adds details on drug timelines, shares)

By Ransdell Pierson

NEW BRUNSWICK, N.J., June 4 (Reuters) - Johnson & Johnson said on Thursday it will seek approval for HIV and hepatitis C drugs by next year as it looks to its pharmaceuticals business to revive flat earnings this year.

The diversified health products maker also plans to seek U.S. approvals for eight drugs between 2011 and 2013, including treatments for diabetes, tuberculosis, attention deficit disorder, pain and obesity.

During a meeting for analysts to review pharmaceutical operations, executives said J&J had an industry-leading experimental drugs pipeline, and they outlined plans to address five therapeutic areas.

"We are very optimistic about our future," Sheri McCoy,worldwide chairman of pharmaceuticals, said at the meeting in J&J's hometown of New Brunswick, New Jersey.

With its overall prescription drug sales falling because of patent lapses, J&J has projected flat earnings this year -- in contrast to the double-digit earnings growth it has consistently achieved in past years.

J&J is relying on its array of consumer products and medical devices to keep at least on an even keel.

But Wall Street is optimistic that J&J's prescription drugs will again be an engine of revenue and earnings growth starting next year.

EARNINGS OPTIMISM

Morgan Stanley analysts expect earnings to rise by 12 percent in 2010, 10 percent in 2011 and 12 percent in 2012, with new medicines and other products adding about $6 billion to sales by 2012.

By next year, J&J plans to seek European approval for hepatitis C drug telaprevir, a high-profile drug that it licensed from Vertex Pharmaceuticals Inc, and U.S. approval for HIV drug TMC 278.

It plans to advance its Type 2 diabetes drug, canagliflozin, into late-stage clinical trials later this year.

Analysts are optimistic about recently approved arthritis drug Simponi and expect U.S. approvals in coming months of psoriasis drug Stelara and blood clot preventer Xarelto, being developed with German drugmaker Bayer AG.

The company is expected to soon launch a new treatment for moderate to severe pain called Nucynta that has been approved by U.S. regulators.

J&J, whose first-quarter earnings fell slightly due to generic competition for its Risperdal schizophrenia drug and waning demand for its anemia medicines, is now under even greater pressure due to the expiration in March of the U.S. patent on its $2.5 billion-a-year Topamax epilepsy drug.

Credit Suisse analyst Catherine Arnold said earlier this week that investor reaction to J&J's pharmaceutical review could move its shares close to $60, or bring them back down below $55.

J&J shares fell 31 cents to $55.85 in morning trading on the New York Stock Exchange. They are down about 6.5 percent this year, a slightly worse decline than that of the American Stock Exchange Pharmaceutical index. (Reporting by Ransdell Pierson and Lewis Krauskopf; Editing by Lisa Von Ahn, Dave Zimmerman and Ted Kerr)

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