Johnson & Johnson took a $276 million hit from its COVID-19 vaccine program in its second quarter, offset by rising sales outside the US.
J&J‚Äôs so-called ‚ÄėJanssen‚Äô vaccine became the third to be approved under the FDA‚Äôs Emergency Use Authorization (EUA)¬†in February 2021. However, in the US at least, the single-shot jab played third fiddle to Pfizer and Moderna‚Äô mRNA vaccines leading to a drop off in demand and reports of changes in its manufacturing strategy.
This drop off in demand was reflected in J&J Q2 financial results, with the vaccine ‚Äď which is based on Janssen‚Äôs AdVac viral vector and PER.C6 cell line technology ‚Äď clocking in sales of $45 million in the US, down 40% on Q1 and 11% on the same period 2021.
However, internationally sales continue to rise with the vaccine pulling in $449 million in the quarter, up from $382 million in Q1 and $113 million last year.
But while sales remain significant, J&J was hit by costs of $276 million in the quarter related to the vaccine.
‚ÄúCOVID-19 vaccine related costs include remaining commitments and obligations, including external manufacturing network exit costs and required clinical trial expenses, associated with the company’s modification of its COVID-19 vaccine research program and manufacturing capacity to levels that meet all customer contractual requirements,‚ÄĚ the firm wrote in its financial statement.
Joe Wolk, chief financial officer, elaborated in his firm‚Äôs conference call: ‚ÄúRecognizing the global progress on vaccine development and distribution against COVID-19 and the amount of existing global supply, we are modifying our COVID-19 vaccine research programs and manufacturing capacity to levels that meet all customer contractual commitments. This will result in incremental costs for the year, which will be reflected as a special item.‚ÄĚ
J&J suspended sales guidance for the vaccine last quarter citing ‚Äúglobal supply surplus and demand uncertainty,‚ÄĚ but the product was still noted by management as a significant contributor to the $13.3 billion in pharma sales for the quarter.