Can J&J's Innovative Medicines Unit Sustain Growth Amid Stelara LOE?
Johnson & Johnson JNJ has one of the most diverse revenue streams in the industry within the pharmaceutical division called Innovative Medicine. Under this segment, J&J markets several multi-million-dollar drugs covering a broad range of areas such as neuroscience, cardiovascular and metabolism, immunology, oncology, pulmonary hypertension and infectious diseases.
J&J's Innovative Medicine unit is showing a growth trend. The segment's sales rose 4.4% in the first quarter of 2025 on an organic basis despite the loss of exclusivity (LOE) for its multi-billion-dollar product, Stelara, and the negative impact of the Part D redesign.
A biosimilar version of J&J's multi-billion-dollar immunology drug, Stelara, was launched in certain European markets for some indications in July 2024. Several biosimilar versions of Stelara are expected to be launched in the United States in 2025, according to patent settlements and license agreements. Amgen AMGN launched the first Stelara biosimilar, Wezlana, in January 2025, while Teva launched Selarsdi in February 2025. Stelara biosimilar competition is expected to accelerate throughout 2025 as the number of biosimilar entrants increases. Stelara sales are expected to come down from almost $11 billion in 2023 to around $2.9 billion in 2027, per our estimates.
However, despite Stelara LOE, J&J expects growth in the Innovative Medicine segment in 2025 to be driven by its key products such as Darzalex, Tremfya, Spravato and Erleada as well as new cancer drugs like Carvykti, Tecvayli and Talvey, and new indications for Tremfya and Rybrevant.
J&J expects to generate more than $57 billion in sales in the Innovative Medicine segment in 2025. It expects the Innovative Medicine business to grow 5-7% from 2025 to 2030.
J&J Key Competitors
Immunology and oncology are J&J's key areas. Other large drugmakers holding a strong presence in the oncology market are Novartis, AstraZeneca, AbbVie ABBV, Merck, Bristol-Myers, Roche and Pfizer PFE. 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 10.4% in the year-to-date period compared with an increase of 4.0% for the industry.
From a valuation standpoint, J&J is reasonably priced. Going by the price/earnings ratio, the company's shares currently trade at 14.58 forward earnings, slightly lower than 15.65 for the industry. The stock is also trading below its five-year mean of 15.76. The stock is cheaper than some other drugmakers like AbbVie, Lilly and Novo Nordisk.
The Zacks Consensus Estimate for 2025 earnings has risen from $10.51 per share to $10.60 over the past 60 days, while that for 2026 has declined from $10.99 to $10.98 over the same timeframe.
J&J has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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