Johnson & Johnson JNJ provided additional information today on its amended agreement with Merck MRK regarding distribution rights for REMICADE® and SIMPONI® 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.
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