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J&J's Innovative Medicines Unit Shows Resilience Amid Stelara LOE
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Key Takeaways
J&J's Innovative Medicine sales rose 5.3% operationally, topping $15B for the second straight quarter
Darzalex, Tremfya and Erleada drove growth, offsetting Stelara's 41.3% decline from biosimilar pressure.
J&J expects 2026 growth from Darzalex, Tremfya, Spravato and new launches like Carvykti and Tecvayli.
Johnson & Johnson (JNJ - Free Report) has one of the most diverse revenue streams in the industry within its pharmaceuticals division, called Innovative Medicine. The company has several multi-million-dollar drugs covering a broad range of areas such as neuroscience, cardiovascular and metabolism, immunology, oncology, pulmonary hypertension (PH) and infectious diseases.
In its Innovative Medicine business, J&J recorded 5.3% operational sales growth in the third quarter and a second consecutive quarter of sales of more than $15 billion. On an organic basis, sales rose 3.7% despite the loss of exclusivity (“LOE”) of the multi-billion-dollar product, Stelara, and the negative impact of the Part D redesign.
Higher sales of key products such as Darzalex, Tremfya and Erleada due to strong market growth and share gains drove the segment’s growth. Xarelto and Simponi/Simponi Aria sales also rose in the quarter. New drugs like Carvykti, Tecvayli, Talvey, Rybrevant and Spravato contributed significantly to growth. The sales growth was partially dampened by lower sales of Imbruvica and generic/biosimilar competition to drugs like Stelara and Zytiga.
Stelara LOE negatively impacted the Innovative Medicines segment’s growth by 1070 basis points. Excluding Stelara, J&J’s Innovative Medicines segment sales rose around 16%.
While sales of blockbuster multiple myeloma treatment, Darzalex, rose 21.7% year over year to $3.67 billion, Stelara sales declined 41.3% to $1.57 billion.
Several biosimilar versions of Stelara have been launched in the United States in 2025. According to patent settlements and license agreements, Amgen (AMGN - Free Report) , Teva, Samsung Bioepis/Sandoz and some other companies have already launched Stelara biosimilars this year.
Erleada generated sales of $936.0 million in the quarter, up 18.4% year over year, while Tremfya recorded sales of $1.42 billion in the quarter, up 41.3%.
On the call, J&J also discussed the preliminary outlook for the next year. In 2026, J&J expects accelerated growth in the Innovative Medicine segment as it continues to grow through the Stelara LOE. The growth is expected to be driven by its key products, such as Darzalex, Tremfya, Spravato and Erleada, as well as new drugs like Carvykti, Tecvayli and Talvey, and recently launched products, including Tremfya in inflammatory bowel disease (IBD), Rybrevant plus Lazcluze in non-small cell lung cancer and the newly approved drug, Inlexzo, in bladder cancer.
J&J has rapidly advanced its pipeline in the Innovative Medicine segment this year, which adds further depth to its three focus areas of oncology, immunology and neuroscience. J&J has attained significant clinical and regulatory milestones recently that will help drive growth through the back half of the decade. It has gained approval for Imaavy (nipocalimab) for generalized myasthenia gravis and Inlexzoh/TAR-200 for treating high-risk non-muscle invasive bladder cancer this year. Regulatory applications were recently filed for another key candidate, icotrokinra, for moderate-to-severe plaque psoriasis.
Three of J&J’s new cancer drugs, Carvykti, Tecvayli and Talvey, have also begun to contribute to top-line growth. Caplyta, added from J&J’s latest acquisition of Intra-Cellular Therapies, should also boost growth.
Overall, J&J believes 10 of its new products/pipeline candidates in the Innovative Medicine segment have the potential to deliver peak sales of $5 billion, including Talvey, Tecvayli, Imaavy, Caplyta, Inlexzo, Rybrevant plus Lazcluze and icotrokinra.
J&J Key Competitors
Immunology and oncology are J&J’s key areas. Other large drugmakers with a strong presence in the oncology market include Novartis, AstraZeneca (AZN - Free Report) , AbbVie (ABBV - Free Report) , Amgen, Merck, Bristol-Myers, Roche and Pfizer. In immunology, AbbVie, Amgen, Sanofi, AstraZeneca and Pfizer hold a strong position.
JNJ’s Price Performance, Valuation and Estimates
J&J’s shares have outperformed the industry year to date. The stock has risen 30.6% in the year-to-date period compared with a 4.8% increase of the industry.
Image Source: Zacks Investment Research
From a valuation standpoint, J&J is slightly expensive. Going by the price/earnings ratio, the company’s shares currently trade at 16.61 forward earnings, slightly higher than 15.42 for the industry. The stock is also trading above its five-year mean of 15.65.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2025 earnings has remained unchanged at $10.86 per share, while that for 2026 has risen from $11.36 to $11.47 over the past 60 days.
Image: Bigstock
J&J's Innovative Medicines Unit Shows Resilience Amid Stelara LOE
Key Takeaways
Johnson & Johnson (JNJ - Free Report) has one of the most diverse revenue streams in the industry within its pharmaceuticals division, called Innovative Medicine. The company has several multi-million-dollar drugs covering a broad range of areas such as neuroscience, cardiovascular and metabolism, immunology, oncology, pulmonary hypertension (PH) and infectious diseases.
In its Innovative Medicine business, J&J recorded 5.3% operational sales growth in the third quarter and a second consecutive quarter of sales of more than $15 billion. On an organic basis, sales rose 3.7% despite the loss of exclusivity (“LOE”) of the multi-billion-dollar product, Stelara, and the negative impact of the Part D redesign.
Higher sales of key products such as Darzalex, Tremfya and Erleada due to strong market growth and share gains drove the segment’s growth. Xarelto and Simponi/Simponi Aria sales also rose in the quarter. New drugs like Carvykti, Tecvayli, Talvey, Rybrevant and Spravato contributed significantly to growth. The sales growth was partially dampened by lower sales of Imbruvica and generic/biosimilar competition to drugs like Stelara and Zytiga.
Stelara LOE negatively impacted the Innovative Medicines segment’s growth by 1070 basis points. Excluding Stelara, J&J’s Innovative Medicines segment sales rose around 16%.
While sales of blockbuster multiple myeloma treatment, Darzalex, rose 21.7% year over year to $3.67 billion, Stelara sales declined 41.3% to $1.57 billion.
Several biosimilar versions of Stelara have been launched in the United States in 2025. According to patent settlements and license agreements, Amgen (AMGN - Free Report) , Teva, Samsung Bioepis/Sandoz and some other companies have already launched Stelara biosimilars this year.
Erleada generated sales of $936.0 million in the quarter, up 18.4% year over year, while Tremfya recorded sales of $1.42 billion in the quarter, up 41.3%.
On the call, J&J also discussed the preliminary outlook for the next year. In 2026, J&J expects accelerated growth in the Innovative Medicine segment as it continues to grow through the Stelara LOE. The growth is expected to be driven by its key products, such as Darzalex, Tremfya, Spravato and Erleada, as well as new drugs like Carvykti, Tecvayli and Talvey, and recently launched products, including Tremfya in inflammatory bowel disease (IBD), Rybrevant plus Lazcluze in non-small cell lung cancer and the newly approved drug, Inlexzo, in bladder cancer.
J&J has rapidly advanced its pipeline in the Innovative Medicine segment this year, which adds further depth to its three focus areas of oncology, immunology and neuroscience. J&J has attained significant clinical and regulatory milestones recently that will help drive growth through the back half of the decade. It has gained approval for Imaavy (nipocalimab) for generalized myasthenia gravis and Inlexzoh/TAR-200 for treating high-risk non-muscle invasive bladder cancer this year. Regulatory applications were recently filed for another key candidate, icotrokinra, for moderate-to-severe plaque psoriasis.
Three of J&J’s new cancer drugs, Carvykti, Tecvayli and Talvey, have also begun to contribute to top-line growth. Caplyta, added from J&J’s latest acquisition of Intra-Cellular Therapies, should also boost growth.
Overall, J&J believes 10 of its new products/pipeline candidates in the Innovative Medicine segment have the potential to deliver peak sales of $5 billion, including Talvey, Tecvayli, Imaavy, Caplyta, Inlexzo, Rybrevant plus Lazcluze and icotrokinra.
J&J Key Competitors
Immunology and oncology are J&J’s key areas. Other large drugmakers with a strong presence in the oncology market include Novartis, AstraZeneca (AZN - Free Report) , AbbVie (ABBV - Free Report) , Amgen, Merck, Bristol-Myers, Roche and Pfizer. In immunology, AbbVie, Amgen, Sanofi, AstraZeneca and Pfizer hold a strong position.
JNJ’s Price Performance, Valuation and Estimates
J&J’s shares have outperformed the industry year to date. The stock has risen 30.6% in the year-to-date period compared with a 4.8% increase of the industry.
From a valuation standpoint, J&J is slightly expensive. Going by the price/earnings ratio, the company’s shares currently trade at 16.61 forward earnings, slightly higher than 15.42 for the industry. The stock is also trading above its five-year mean of 15.65.
The Zacks Consensus Estimate for 2025 earnings has remained unchanged at $10.86 per share, while that for 2026 has risen from $11.36 to $11.47 over the past 60 days.
J&J has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.