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Investors were eagerly anticipating Johnson & Johnson's fourth-quarter earnings results, but while many were awaiting them to gain insight into J&J, I was eager to find out more about two of J&J's competitors: Bristol-Myers Squibb and Medivation .
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As expected, J&J's Q3 results offered up some intriguing data that could suggest that Bristol-Myers and Medivation are gaining on it in two important drug markets. Read on to learn how J&J's slowing growth in the anticoagulant and prostate cancer market may be good news for these other two companies.
Slowing sales could mean market share is shiftingWhen J&J's Xarelto won FDA approval in 2011, it became the first of an entirely new class of anticoagulants known as factor Xa inhibitors to challenge Warfarin's decades-long dominance.
Xarelto has become an overwhelming success since its launch, racking up sales of $461 million in the second quarter alone, but its sales growth is slowing and that could mean that Bristol-Myers and co-developer Pfizer's Eliquis, another factor Xa inhibitor, is quickly catching up.
In the third quarter, sales of Xarelto improved by just 11.4% versus a year ago, and while that's a solid showing, it continues a string of decelerating growth since the start of this year. In Q1, Xarelto's year-over-year growth was 38.2%, and Xarelto's year-over-year growth was 30.7% in Q2.
We won't know if Eliquis is truly winning the battle against Xarelto until Bristol-Myers reports its third-quarter earnings on October 27, but I think the odds are good that when the company updates investors it will report that Eliquis gained market share.
In the first quarter, sales of Eliquis surged to $355 million from $106 million the year before and in the second quarter, Eliquis sales jumped to $437 million from $171 million a year ago, up 155%.
If Eliquis overtakes Xarelto, then it could mean that Bristol-Myers has plenty of revenue-friendly running room because the anticoagulant market is worth $10 billion per year.
David outpaces GoliathBecause Zytiga, a prostate cancer therapy that's approved for use in both post chemotherapy and pre-chemotherapy patients, generates $2 billion per year in sales, it's one of J&J's most important drugs.
However, like Xarelto, Zytiga's growth rate has been fading and that could mean that the much smaller Medivation, which markets the competing drug, Xtandi, is gaining ground.
In the third quarter, J&J reports that Zytiga sales fell 3.5% from a year ago to $548 million and even if we back out currency exchange headwinds, Zytiga's global growth was still just 6.1% -- a performance that falls short of its 19.2% ex-currency growth in Q1 andits 8.6% ex-currency growth in Q2.
A major reason why Zytiga sales are slowing could be the approval of Xtandi last year for use in the pre-chemotherapy setting. Since winning that approval last fall, Xtandi sales are surging.
In Q1, Xtandi revenue in the U.S. and outside the U.S. grew by 80% and 161% year over year, respectively, andin Q2, Xtandi followed up that strong showing with U.S. and ex-U.S. sales growth of 108% and 121% year over year, respectively. As a result, Xtandi's sales are running at an annualized pace of $1.9 billion, which puts it right on the heels of Zytiga.
Looking forwardIt's unlikely that Bristol-Myers' Eliquis and Medivation's Xtandi will relegate J&J's Xarelto and Zytiga to bit-player status anytime soon, but the fact that these drugs are growing far more quickly than J&J's drugs can't be ignored, especially given that these are important multibillion-dollar markets.
Obviously, we haven't gotten third-quarter results from Bristol-Myers or Medivation yet, so we don't know just how much of the slowdown in J&Js sales they're responsible for, but I think that they could be a major reason why sales of these drugs aren't growing more quickly. For that reason, I'm anticipating Bristol-Myers' and Medivation's upcoming EPS reports as eagerly as I did J&J's. Perhaps you should be too.
The article J&J's Earnings May Be Good News for Bristol-Myers Squibb and Medivation originally appeared on Fool.com.
Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool recommends Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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