Johnson & Johnson provides further details regarding distribution rights for REMICADE, SIMPONI

Johnson & Johnson (NYSE: JNJ) provided additional information today on its amended agreement with Merck regarding distribution rights for REMICADE® (infliximab) and SIMPONI® (golimumab) in markets outside the United States. The amended agreement announced today in a separate news release from both companies concludes a pending arbitration, which had been filed by Johnson & Johnson in May 2009.  

The company is providing the following additional details relevant to the amended agreement:

  • In 2010, Johnson & Johnson reported annual sales for REMICADE of $4.6 billion and annual sales for SIMPONI of $226 million, which included sales of these products to its distribution partner Merck of approximately $1.2 billion.  In the territories being relinquished to Johnson & Johnson as a result of the amended agreement, 2010 annual end-user sales for REMICADE and SIMPONI were approximately $900 million.  The amended agreement impact on 2010 sales on a pro forma basis would have resulted in nearly $500 million in incremental net sales being recorded by Johnson & Johnson on an annual basis for these products, which excludes sales that were previously recorded.  Johnson & Johnson will begin recording 2011 sales of product from the relinquished territories on July 1, 2011.
  • The division of contribution income on sales will be amended to a 50 percent/50 percent split between Johnson & Johnson and Merck, from July 1, 2011, through Oct. 1, 2024.  This compares to the prior split of 42 percent/58 percent in 2011 for Johnson & Johnson and Merck respectively, which would have increased to a 50 percent/50 percent split in 2014.
  • Johnson & Johnson will receive a one-time, $500 million payment from Merck during the second quarter of 2011.
  • The 2011 earnings impact is not expected to be significant.
  • The company will discuss the amended agreement during its scheduled quarterly earnings call on April 19, 2011.

SOURCE Johnson & Johnson

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