Analyst Sees FY15 'Trough' For Johnson & Johnson Pharma Growth

Johnson & Johnson JNJ is entering a "trough year" for its all-important pharmaceuticals segment, an analyst said Thursday. The New Brunswick, N.J. company's shares took a tumble earlier this week when it posted a 6 percent drop in fourth-quarter sales. Morgan Stanley's David R. Lewis said although a slowdown in sales for the company's Olysios hepatitis C treatment is widely expected, investors may not fully appreciate its impact. Lewis figures newly launched competition for Olysios will slow growth in the company's pharmaceuticals segment to 2.3 percent in 2015 from 16.5 percent last year. Moreover the company faces risks from generics to its Zytica prostate cancer drug and to its Xarelto blood thinner. Pharmaceuticals growth has been correlated to 70 percent of the health-care giant's stock performance since 2007, according to Lewis, who said several promising products in its pipeline "may have more of a 2016-2017 time frame." Lewis speculated that the company could make a major acquisition in the medical device segment in 2015, noting that its net cash of $14 billion is similar to just before it acquired Pfizer Consumer Health in 2006 and Synthes in 2012. Major acquisitions in the pharmaceuticals or consumer segments are less likely in 2015, given the company's past strategies, according to Lewis, who maintained an Equal Weight rating and $110 target.