Morgan Stanley analysts David Lewis and Scott Wang reviewed Johnson & Johnson (NYSE: JNJ) after the US patent office rejected its 2018 patent of Remicade. Morgan Stanley currently rates Johnson & Johnson as Equal Weight.

Johnson & Johnson is expected to appeal to the Patent Approval Board in the coming months however if unsuccessful there is potential for an earlier than anticipated U.S. biosimilar Remicade competition among smaller biotech companies who are developing their own version of the drug. Celltrion Inc. and Epirus Biopharmaceuticals are currently far along with the FDA and hope to get continue the approval process of their drug.

Regarding the risks for Johnson & Johnson, the analysts wrote, "The risk for J&J is twofold: biosimilar approval creates potential for share losses; and will likely lead to significant pricing pressure, as evidenced by market commentary post the recent expiry of Remicade patents in Western Europe."

Johnson & Johnson has traded at $98.52.

Epirus Biopharmaceuticals has traded at $6.79.

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