Johnson & Johnson

What they do

The company operates through two segments: Innovative Medicine (prescription drugs in oncology, immunology, neuroscience, and other therapeutic areas) and MedTech (medical devices and equipment). It distributes products to retailers, wholesalers, hospitals, and healthcare professionals globally, with approximately 138,200 employees.

Revenue drivers

• Oncology (Innovative Medicine) — Generated $25.4 billion in 2025 (22.1% growth), led by DARZALEX ($14.4B), ERLEADA ($3.6B), and CARVYKTI ($1.9B).
• Immunology (Innovative Medicine) — Generated $15.7 billion in 2025 (-11.8% decline), driven by TREMFYA ($5.2B, +40.5%) and STELARA ($6.1B, -41.3% due to biosimilar competition).
• Neuroscience (Innovative Medicine) — Generated $7.8 billion in 2025 (+10.1% growth), with SPRAVATO ($1.7B, +57.4%) and CAPLYTA ($0.7B, acquired in 2025) contributing.
• Pulmonary Hypertension (Innovative Medicine) — Generated $4.4 billion in 2025 (+3.6% growth), from OPSUMIT/OPSYNVI ($2.3B) and UPTRAVI ($1.9B).

Recent performance

In Q2 2026, reported sales were $25.3 billion (+6.6% reported, +5.6% operational), with Innovative Medicine up 6.8% operational and MedTech up 3.6% operational. Diluted EPS was $2.27 (GAAP) and $2.90 (adjusted). For fiscal 2025, revenue was $94.2 billion (+6.0%), net income $26.8 billion, and operating cash flow $24.5 billion. The company raised its 2026 guidance, targeting reported sales of $101.1 billion and adjusted EPS of $11.68.

Strategy

Johnson & Johnson focuses on advancing innovation through pipeline momentum and regulatory approvals, such as TREMFYA for psoriatic arthritis, CAPLYTA for schizophrenia relapse, and new platforms like Dual Energy THERMOCOOL SMARTTOUCH SF. The company pursues acquisitions (e.g., CAPLYTA, Shockwave) to drive growth, while managing patent expirations and biosimilar competition (e.g., STELARA decline). Management emphasizes transformative treatments and aims to exceed $100 billion in annual revenue for the first time in 2026.

Risks

• Biosimilar and generic competition — STELARA sales declined 41.3% in 2025 due to biosimilar entry, and similar pressures could impact other key products.
• Patent expirations and IP challenges — Patent losses and aggressive challenges from competitors could lead to rapid loss of market exclusivity for major drugs like DARZALEX and ERLEADA.
• Product liability and litigation — The company faces significant product liability claims and government investigations, which could result in reputational harm, declining sales, and adverse settlements.
• Regulatory and compliance scrutiny — Increased government and regulatory oversight in the healthcare industry could lead to civil/criminal penalties and debarment from government business.

Outlook

Management raised 2026 guidance, projecting reported sales of approximately $101.1 billion (+7.3% at midpoint) and adjusted EPS of $11.68 (+8.2% at midpoint). The company expects continued operational growth driven by new product launches and pipeline progress, while managing the impact of STELARA biosimilar competition. CEO Joaquin Duato stated J&J is on track to surpass $100 billion in annual revenue for the first time in its 140-year history.