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Stelara sales plunged 54.4%, while patent losses and rising generic competition threaten future growth.
Johnson & Johnson (JNJ - Free Report) , through its Innovative Medicine division, boasts a diversified portfolio of blockbuster drugs targeting several major therapeutic areas, including neuroscience, cardiovascular and metabolic disorders, immunology, oncology, pulmonary hypertension and infectious diseases. The segment contributed approximately 66% of J&J’s total revenues in the third quarter.
The Innovative Medicine segment remains the key driver of J&J’s overall growth, delivering stronger performance than its MedTech business. This growth has been achieved despite sales headwinds stemming from biosimilar and generic competition faced by several established products, including Stelara, Remicade and Zytiga.
J&J’s Innovative Medicine Q3 Sales Rise Despite LOE Headwinds
J&J’s Innovative Medicine segment delivered robust performance in the third quarter of 2026, driven by strong demand for its key oncology, immunology and neuroscience treatments. Segment revenues increased 7.7% year over year to $16.76 billion, while operational sales grew 7.9%, significantly outperforming the MedTech segment, which recorded operational growth of 2.5%. Adjusted operational sales for Innovative Medicine rose 8.0%, excluding the effects of currency fluctuations and acquisitions and divestitures.
Higher sales of key products such as Darzalex, Tremfya and Erleada drove the segment’s growth. New drugs like Carvykti, Tecvayli, Talvey, Rybrevant/Lazcluze, Spravato and Caplyta also contributed. These gains were partly offset by lower sales of Stelara, Remicade, Simponi/Simponi Aria, Imbruvica and Opsumit/Opsynvi.
Sales of blockbuster multiple myeloma treatment, Darzalex, rose 15.4% to $4.24 billion in the quarter. Tremfya remained another key growth driver, with sales rising 68.3% to $2.40 billion. Erleada sales increased 9.4% to $1.02 billion.
Stelara’s sales declined 54.4% to $716 million. Stelara's loss of exclusivity negatively impacted Innovative Medicine's operational growth by approximately 690 basis points.
Other than the Stelara LOE impact, J&J’s other drugs, Simponi and Opsumit, lost patent protection in mid-2026. Simponi biosimilars entered the European market in the second quarter, hurting third-quarter sales, while U.S. biosimilar launches are expected later this year. Opsumit also faced generic competition in the United States from late in the second quarter, weighing on third-quarter sales.
J&J’s Innovative Medicine Growth Outlook Remains Strong
J&J expects its Innovative Medicine segment to remain a key growth driver in future quarters. J&J expects continued above-market growth for the Innovative Medicine segment. The growth is expected to be driven by its key products, such as Darzalex, Tremfya, Spravato, Carvykti, Tecvayli and Erleada, as well as increased contribution from new launches like Icotyde, Rybrevant/Lazcluze, Imaavy and Inlexzo, which can offset the ongoing impact of Stelara biosimilar competition. However, Stelara’s LOE and rising generic/biosimilar competition across several drugs is expected to hurt the Innovative Medicine segment’s growth in the fourth quarter and 2027.
Additionally, new product launches, potential label expansions and a promising late-stage pipeline should strengthen the segment’s long-term growth prospects.
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 so far this year. The stock has risen 31.6% this year compared with 25.9% appreciation 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 23.71 forward earnings, higher than 19.97 for the industry. The stock is also trading above its five-year mean of 15.66.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings has declined from $11.47 to $11.12 over the past 30 days, while that for 2027 earnings has declined from $12.52 per share to $11.55 over the same time frame.
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Image: Bigstock
JNJ's Innovative Medicine Unit Grows in Q3 Despite Patent Losses
Key Takeaways
Johnson & Johnson (JNJ - Free Report) , through its Innovative Medicine division, boasts a diversified portfolio of blockbuster drugs targeting several major therapeutic areas, including neuroscience, cardiovascular and metabolic disorders, immunology, oncology, pulmonary hypertension and infectious diseases. The segment contributed approximately 66% of J&J’s total revenues in the third quarter.
The Innovative Medicine segment remains the key driver of J&J’s overall growth, delivering stronger performance than its MedTech business. This growth has been achieved despite sales headwinds stemming from biosimilar and generic competition faced by several established products, including Stelara, Remicade and Zytiga.
J&J’s Innovative Medicine Q3 Sales Rise Despite LOE Headwinds
J&J’s Innovative Medicine segment delivered robust performance in the third quarter of 2026, driven by strong demand for its key oncology, immunology and neuroscience treatments. Segment revenues increased 7.7% year over year to $16.76 billion, while operational sales grew 7.9%, significantly outperforming the MedTech segment, which recorded operational growth of 2.5%. Adjusted operational sales for Innovative Medicine rose 8.0%, excluding the effects of currency fluctuations and acquisitions and divestitures.
Higher sales of key products such as Darzalex, Tremfya and Erleada drove the segment’s growth. New drugs like Carvykti, Tecvayli, Talvey, Rybrevant/Lazcluze, Spravato and Caplyta also contributed. These gains were partly offset by lower sales of Stelara, Remicade, Simponi/Simponi Aria, Imbruvica and Opsumit/Opsynvi.
Sales of blockbuster multiple myeloma treatment, Darzalex, rose 15.4% to $4.24 billion in the quarter. Tremfya remained another key growth driver, with sales rising 68.3% to $2.40 billion. Erleada sales increased 9.4% to $1.02 billion.
Stelara’s sales declined 54.4% to $716 million. Stelara's loss of exclusivity negatively impacted Innovative Medicine's operational growth by approximately 690 basis points.
Other than the Stelara LOE impact, J&J’s other drugs, Simponi and Opsumit, lost patent protection in mid-2026. Simponi biosimilars entered the European market in the second quarter, hurting third-quarter sales, while U.S. biosimilar launches are expected later this year. Opsumit also faced generic competition in the United States from late in the second quarter, weighing on third-quarter sales.
J&J’s Innovative Medicine Growth Outlook Remains Strong
J&J expects its Innovative Medicine segment to remain a key growth driver in future quarters. J&J expects continued above-market growth for the Innovative Medicine segment. The growth is expected to be driven by its key products, such as Darzalex, Tremfya, Spravato, Carvykti, Tecvayli and Erleada, as well as increased contribution from new launches like Icotyde, Rybrevant/Lazcluze, Imaavy and Inlexzo, which can offset the ongoing impact of Stelara biosimilar competition. However, Stelara’s LOE and rising generic/biosimilar competition across several drugs is expected to hurt the Innovative Medicine segment’s growth in the fourth quarter and 2027.
Additionally, new product launches, potential label expansions and a promising late-stage pipeline should strengthen the segment’s long-term growth prospects.
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 so far this year. The stock has risen 31.6% this year compared with 25.9% appreciation 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 23.71 forward earnings, higher than 19.97 for the industry. The stock is also trading above its five-year mean of 15.66.
The Zacks Consensus Estimate for 2026 earnings has declined from $11.47 to $11.12 over the past 30 days, while that for 2027 earnings has declined from $12.52 per share to $11.55 over the same time frame.
J&J has a Zacks Rank #4 (Sell) at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.