Johnson & Johnson is a global healthcare company engaged in the research development manufacture and sale of a broad range of products related to human health and well being. The firm operates through subsidiaries that conduct business in virtually every country worldwide. Its core activities include discovering new therapies producing medical devices and delivering products to hospitals clinicians and patients. Johnson & Johnson was incorporated in the State of New Jersey…
Johnson & Johnson is a global healthcare company engaged in the research development manufacture and sale of a broad range of products related to human health and well being. The firm operates through subsidiaries that conduct business in virtually every country worldwide. Its core activities include discovering new therapies producing medical devices and delivering products to hospitals clinicians and patients. Johnson & Johnson was incorporated in the State of New Jersey in 1887 and today employs approximately 138 200 people. The company's mission is to improve health outcomes through innovation and responsible business practices.
Revenue is generated primarily from the sale of pharmaceutical products and medical technology devices. The Innovative Medicine segment sells prescription medicines directly to retailers wholesalers distributors hospitals and healthcare professionals. The MedTech segment sells products such as cardiovascular devices orthopaedic implants surgical instruments and vision care items to wholesalers hospitals retailers and eye care professionals. Key contributors to total sales include DARZALEX STELARA TREMFYA XARELTO and the ACUVUE contact lens line. Additional revenue comes from licensing agreements royalties and collaborative development arrangements with external partners.
The company operates through the following segments: Innovative Medicine and MedTech.
• The Innovative Medicine segment focuses on therapeutic areas including oncology immunology neuroscience pulmonary hypertension infectious diseases and cardiovascular and metabolism. Key products in this segment include CARVYKTI (ciltabtagene autoleucel) a CAR T cell therapy for relapsed refractory multiple myeloma DARZALEX (daratumumab) a treatment for multiple myeloma DARZALEX FASPRO (daratumumab and hyaluronidase fihj) a treatment for multiple myeloma and light chain AL amyloidosis ERLEADA (apalutamide) a next generation androgen receptor inhibitor for the treatment of patients with prostate cancer IMBRUVICA (ibrutinib) a treatment for certain B cell malignancies or blood cancers and chronic graft versus host disease RYBREVANT (amivantamab) a fully human bispecific antibody for adults with EGFR mutated non small cell lung cancer and LAZCLUZE (lazertinib) an oral brain penetrant EGFR tyrosine kinase inhibitor for non small cell lung cancer RYBREVANT FASPRO (amivantamab and hyaluronidase lpuj) a subcutaneous therapy for patients with non small cell lung cancer TALVEY (talquetamab tgvs) a bispecific antibody for adults with relapsed or refractory multiple myeloma who have received at least four prior lines of therapy TECVAYLI (teclistamab cqyv) a bispecific antibody for adults with relapsed or refractory multiple myeloma who have received at least four prior lines of therapy ZYTIGA (abiraterone acetate) a treatment for patients with prostate cancer REMICADE (infliximab) a treatment for a number of immune mediated inflammatory diseases SIMPONI (golimumab) a subcutaneous treatment for adults with moderate to severe rheumatoid arthritis active psoriatic arthritis active ankylosing spondylitis and moderately active to severely active ulcerative colitis SIMPONI ARIA (golimumab) an intravenous treatment for adults with moderate to severe rheumatoid arthritis active psoriatic arthritis and active ankylosing spondylitis and active polyarticular juvenile idiopathic arthritis in people two years of age and older STELARA (ustekinumab) a treatment for adults and children with moderate to severe plaque psoriasis for adults with active psoriatic arthritis for adults with moderately to severely active Crohn's disease and treatment of moderately to severely active ulcerative colitis TREMFYA (guselkumab) a treatment for patients with moderate to severe plaque psoriasis active psoriatic arthritis moderate to severe Crohn’s disease and moderate to severe ulcerative colitis CAPLYTA (lumateperone) used in adults along with an antidepressant to treat major depressive disorder depressive episodes associated with bipolar I or bipolar II disorder or to treat schizophrenia CONCERTA (methylphenidate HCl) extended release tablets CII a treatment for attention deficit hyperactivity disorder INVEGA SUSTENNA/XEPLION (paliperidone palmitate) for the treatment of schizophrenia and schizoaffective disorder in adults INVEGA TRINZA/TREVICTA (paliperidone palmitate) for the treatment of schizophrenia in patients after they have been adequately treated with INVEGA SUSTENNA for at least four months SPRAVATO (Esketamine) a nasal spray used along with an oral antidepressant to treat adults with treatment resistant depression and depressive symptoms in adults with major depressive disorder with suicidal thoughts or actions EDURANT (rilpivirine) PREZISTA (darunavir) PREZCOBIX/REZOLSTA (darunavir cobicistat) antiretroviral medicines for the treatment of human immunodeficiency virus in combination with other antiretroviral products SYMTUZA (darunavir cobicistat emtricitabine tenofovir alafenamide) a once daily single tablet regimen for the treatment of HIV OPSUMIT (macitentan) OPSYNVI (macitentan tadalafil) as monotherapy or in combination indicated for the long term treatment of pulmonary arterial hypertension UPTRAVI (selexipag) the only approved oral and intravenous selective IP receptor agonist targeting a prostacyclin pathway in PAH XARELTO (rivaroxaban) an oral anticoagulant for the prevention of deep vein thrombosis which may lead to pulmonary embolism in patients undergoing hip or knee replacement surgery to reduce the risk of stroke and systemic embolism in patients with non valvular atrial fibrillation and for the treatment and reduction of risk of recurrence of DVT and PE to reduce the risk of major cardiovascular events in patients with coronary artery disease and peripheral artery disease for the treatment and secondary prevention of thromboembolism in pediatric patients and for thromboprophylaxis in pediatric patients following the Fontan procedure. Many of these medicines were developed in collaboration with strategic partners or are licensed from other companies and maintain active lifecycle development programs.
• The MedTech segment develops and manufactures a broad portfolio of products used in cardiovascular orthopaedics surgery and vision supporting physicians hospitals eye care professionals and healthcare systems across a wide range of acute and elective procedures. These products are designed to address disease states where procedural intervention plays a central role in treatment and patient outcomes. The Cardiovascular portfolio includes electrophysiology products used to diagnose and treat heart rhythm disorders mechanical circulatory support technologies (Abiomed) used in patients with cardiogenic shock or those undergoing a high risk percutaneous coronary intervention circulatory restoration products (Shockwave) for the treatment of calcified coronary artery disease and peripheral artery disease and neurovascular care that treats stroke and other conditions. These offerings are primarily delivered through minimally invasive catheter based approaches and are used by interventional cardiologists electrophysiologists and neurointerventional specialists. The Orthopaedics portfolio includes products and enabling technologies that support joint reconstruction trauma spine sports related injuries and others. The Surgery portfolio includes a range of surgical products and enabling technologies for use across open laparoscopic and robotic surgical procedures. This portfolio includes instrumentation energy devices stapling systems wound closure biosurgery products and digital and robotic technologies designed to support procedural consistency and efficiency across multiple surgical specialties. The Surgery portfolio also includes solutions that focus on breast aesthetics and reconstruction (Mentor). These products are used in hospitals and surgical centers worldwide and are supported by ongoing development of surgical techniques and clinical evidence. The Vision portfolio includes contact lenses marketed under the ACUVUE brand TECNIS premium intraocular lenses for cataract surgery and other products used in cataract and refractive procedures. Vision products are used by eye care professionals and ophthalmic surgeons and span both corrective and surgical vision care. These MedTech products are distributed to wholesalers hospitals and retailers and are used predominantly in the professional fields by physicians nurses hospitals eye care professionals and clinics. In October 2025 the Company announced its intention to separate its Orthopaedics business. The Company intends to explore multiple paths to effect the planned separation with a targeted completion within 18 to 24 months after the initial announcement.
Johnson & Johnson holds a leading position in the global healthcare sector due to its diversified portfolio and strong brand recognition. In the pharmaceutical arena it competes with companies such as Pfizer Merck Roche and Novartis. In the medical technology space it faces competition from Medtronic Abbott Boston Scientific and Stryker. The company's competitive advantages include its extensive research and development pipeline its broad distribution network and its ability to leverage synergies between its two business segments. Its scale allows it to negotiate favorable terms with suppliers and to invest in large scale clinical trials. These factors help Johnson & Johnson maintain stable market share and generate consistent cash flow.
The company sells its products to a broad range of customers including hospitals health systems retail pharmacies wholesalers distributors and independent clinicians. In the Innovative Medicine segment medicines are supplied directly to retailers wholesalers distributors hospitals and healthcare professionals for prescription use. In the MedTech segment devices are sold to wholesalers hospitals retailers and are used by physicians nurses eye care professionals and clinics. Vision products are specifically marketed to eye care professionals and ophthalmic surgeons. Overall the customer base is diversified across acute care settings outpatient clinics and retail channels.
Sector:HealthcareSector rationaleThe company's entire revenue model is based on the research, development, and sale of pharmaceutical products (Innovative Medicine segment) and medical devices (MedTech segment). Its customers are hospitals, clinicians, and pharmacies, and its products include prescription medicines like DARZALEX and medical technology such as cardiovascular devices and orthopaedic implants, all of which fall squarely within the Healthcare sector.Industries:+1 morePharmaceuticalsHealthcarePrimaryThe company's Innovative Medicine segment generates significant revenue from branded prescription pharmaceuticals such as STELARA, TREMFYA, and XARELTO. These products are sold to retailers, wholesalers, and hospitals for the treatment of oncology, immunology, and cardiovascular diseases.Medical DevicesHealthcareSecondaryThe MedTech segment designs and manufactures therapeutic and surgical medical devices, including cardiovascular devices, orthopaedic implants, and robotic surgical technologies. These products are sold to hospitals and clinicians for use in acute and elective procedures.Gene and Cell TherapyHealthcareSecondaryThe company develops and commercializes cell therapies, specifically CARVYKTI, which is a CAR T cell therapy used for the treatment of relapsed refractory multiple myeloma.Classified using BQ-MICSCIK: 0000200406
Investment Thesis
▲ Bull case
Johnson & Johnson's Innovative Medicine segment is demonstrating exceptional growth in multiple high-potential therapeutic areas, with Tremfya showing remarkable momentum in inflammatory bowel disease (IBD) following its fully subcutaneous approval for both ulcerative colitis and Crohn's disease, delivering 65.4% Q4 2025 operational sales growth worldwide and accelerating to over $5 billion in full-year sales, positioning it to exceed $10 billion in peak sales as IBD was 75% of Stelara's sales, indicating significant upside from capturing market share from the declining legacy drug. The oral psoriasis drug Icotyde (icotrokinra) received FDA approval for moderate-to-severe plaque psoriasis and achieved high rates of complete skin clearance in adolescents through Week 52 in the ICONIC-LEAD study, with nearly 60% achieving clear skin, and J&J sees peak annual sales exceeding $5 billion once approved for other autoimmune conditions like psoriatic arthritis, ulcerative colitis, and Crohn's disease, representing a transformational oral alternative to injectable IL-23 inhibitors that could capture substantial market share from Tremfya and competitors like Skyrizi due to its convenience and favorable safety profile. In oncology, Tecvayli (teclistamab) demonstrated clinically meaningful and statistically significant improvements in progression-free and overall survival in the MajesTEC-9 study, reducing the risk of disease progression or death by 71% and death by 40% in heavily pre-treated multiple myeloma patients refractory to anti-CD38 and lenalidomide, with all key secondary endpoints showing significant improvement including nearly two-thirds achieving complete response or better, supporting its potential as an early-line therapy and reinforcing J&J's leadership in bispecifics, while Darzalex Faspro-based quadruplet regimen approval for newly diagnosed transplant-ineligible multiple myeloma patients expands the foundational franchise's addressable population. The MedTech segment is benefiting from structural shifts toward higher-growth markets, with cardiovascular delivering 15.2% operational sales growth in 2025 driven by Abiomed and Shockwave, and the company's strategy to focus on cardiovascular, surgery, and vision is working, as evidenced by approximately half of the $34 billion MedTech business now participating in higher growth markets growing north of 5%, up from 20% in 2018, and expected to reach north of 70% following the orthopedics separation, which will catapult growth by reallocating capital to innovation-rich areas. Johnson & Johnson's financial strength provides resilience and flexibility for sustained investment, with $20 billion in cash and marketable securities, $19.7 billion of free cash flow generated in 2025, and guidance to elevate free cash flow to approximately $21 billion in 2026, enabling continued R&D and M&A investment, including the planned $1 billion investment in next-generation cell therapy manufacturing in Pennsylvania, while maintaining shareholder returns through a 3.1% dividend increase to $1.34 per share, marking 64 consecutive years of increases, all supporting the line of sight to double-digit revenue growth by the end of the decade despite the current $100 billion revenue base.
Johnson & Johnson's Innovative Medicine segment is demonstrating exceptional growth in multiple high-potential therapeutic areas, with Tremfya showing remarkable momentum in inflammatory bowel disease (IBD) following its fully subcutaneous approval for both ulcerative colitis and Crohn's disease, delivering 65.4% Q4 2025 operational sales growth worldwide and accelerating to over $5 billion in full-year sales, positioning it to exceed $10 billion in peak sales as IBD was 75% of Stelara's sales, indicating significant upside from capturing market share from the declining legacy drug. The oral psoriasis drug Icotyde (icotrokinra) received FDA approval for moderate-to-severe plaque psoriasis and achieved high rates of complete skin clearance in adolescents through Week 52 in the ICONIC-LEAD study, with nearly 60% achieving clear skin, and J&J sees peak annual sales exceeding $5 billion once approved for other autoimmune conditions like psoriatic arthritis, ulcerative colitis, and Crohn's disease, representing a transformational oral alternative to injectable IL-23 inhibitors that could capture substantial market share from Tremfya and competitors like Skyrizi due to its convenience and favorable safety profile. In oncology, Tecvayli (teclistamab) demonstrated clinically meaningful and statistically significant improvements in progression-free and overall survival in the MajesTEC-9 study, reducing the risk of disease progression or death by 71% and death by 40% in heavily pre-treated multiple myeloma patients refractory to anti-CD38 and lenalidomide, with all key secondary endpoints showing significant improvement including nearly two-thirds achieving complete response or better, supporting its potential as an early-line therapy and reinforcing J&J's leadership in bispecifics, while Darzalex Faspro-based quadruplet regimen approval for newly diagnosed transplant-ineligible multiple myeloma patients expands the foundational franchise's addressable population. The MedTech segment is benefiting from structural shifts toward higher-growth markets, with cardiovascular delivering 15.2% operational sales growth in 2025 driven by Abiomed and Shockwave, and the company's strategy to focus on cardiovascular, surgery, and vision is working, as evidenced by approximately half of the $34 billion MedTech business now participating in higher growth markets growing north of 5%, up from 20% in 2018, and expected to reach north of 70% following the orthopedics separation, which will catapult growth by reallocating capital to innovation-rich areas. Johnson & Johnson's financial strength provides resilience and flexibility for sustained investment, with $20 billion in cash and marketable securities, $19.7 billion of free cash flow generated in 2025, and guidance to elevate free cash flow to approximately $21 billion in 2026, enabling continued R&D and M&A investment, including the planned $1 billion investment in next-generation cell therapy manufacturing in Pennsylvania, while maintaining shareholder returns through a 3.1% dividend increase to $1.34 per share, marking 64 consecutive years of increases, all supporting the line of sight to double-digit revenue growth by the end of the decade despite the current $100 billion revenue base.
Johnson & Johnson faces significant near-term headwinds from the erosion of Stelara due to biosimilar competition and Part D redesign, which created an approximate six twenty basis point headwind on full-year 2025 sales growth despite the company reporting 5.3% operational sales growth, and while management dismissed the impact as being in the rearview mirror, the Q1 2026 results show Stelara's negative impact persisted at approximately 920 basis points on Innovative Medicine operational sales growth, indicating the drag is more severe and longer-lasting than acknowledged, potentially undermining the growth trajectory as the company transitions patients to newer therapies like Tremfya and Icotyde, which may not fully offset the revenue decline quickly enough to sustain the guided 5.7%-6.7% operational sales growth for 2026. The company's reliance on multiple myeloma as a primary growth driver presents concentration risk, as while Darzalex grew 22% full-year 2025 and Carvicti achieved 63.2% Q4 growth, the oncology portfolio's success is heavily dependent on maintaining leadership in a single disease area, and any competitive setbacks in CAR T-cell therapies or bispecifics could disproportionately impact overall growth, especially given the high expectations for Tecvayli to expand into earlier lines of therapy, which remains unproven at scale despite promising early-line data. MedTech growth is being challenged by ongoing volume-based procurement (VBP) in China, which management acknowledged as partially offsetting growth in surgery and orthopedics, with Schmid noting VBP in China continues to impact results across the portfolio, and while the company plans to accelerate newly launched products, the persistent pricing pressure in a major global market could constrain MedTech's ability to achieve the guided 4.6%-5.6% operational sales growth range, particularly as tariffs on medtech imports are expected to increase significantly in 2026 to approximately $500 million, substantially above the 2025 amount, directly impacting cost of goods sold and margin progression. The orthopedics separation, while strategically positioned to unlock value, introduces execution risk, as Wolk noted the opportunity to eliminate stranded cost will likely need to be in place for 2027, meaning the near-term benefits of the spin-off may be delayed, and the process itself could distract management or create integration challenges during the transition period, potentially slowing the anticipated reallocation of capital to higher-growth areas like surgery robotics and vision. Finally, Johnson & Johnson's guidance for 2026 adjusted pretax operating margin improvement of at least 50 basis points may be overly optimistic given the headwinds from increased medtech tariffs, the cost of the fifty-third week of operations, and the impact of the voluntary U.S. government agreement to improve access to medicines and lower costs, which Wolk stated is factored into the margin guidance but could exert more pressure than anticipated, especially if the agreement leads to sustained pricing concessions that outweigh efficiency gains from infrastructure improvements and gross margin initiatives in manufacturing.
Johnson & Johnson faces significant near-term headwinds from the erosion of Stelara due to biosimilar competition and Part D redesign, which created an approximate six twenty basis point headwind on full-year 2025 sales growth despite the company reporting 5.3% operational sales growth, and while management dismissed the impact as being in the rearview mirror, the Q1 2026 results show Stelara's negative impact persisted at approximately 920 basis points on Innovative Medicine operational sales growth, indicating the drag is more severe and longer-lasting than acknowledged, potentially undermining the growth trajectory as the company transitions patients to newer therapies like Tremfya and Icotyde, which may not fully offset the revenue decline quickly enough to sustain the guided 5.7%-6.7% operational sales growth for 2026. The company's reliance on multiple myeloma as a primary growth driver presents concentration risk, as while Darzalex grew 22% full-year 2025 and Carvicti achieved 63.2% Q4 growth, the oncology portfolio's success is heavily dependent on maintaining leadership in a single disease area, and any competitive setbacks in CAR T-cell therapies or bispecifics could disproportionately impact overall growth, especially given the high expectations for Tecvayli to expand into earlier lines of therapy, which remains unproven at scale despite promising early-line data. MedTech growth is being challenged by ongoing volume-based procurement (VBP) in China, which management acknowledged as partially offsetting growth in surgery and orthopedics, with Schmid noting VBP in China continues to impact results across the portfolio, and while the company plans to accelerate newly launched products, the persistent pricing pressure in a major global market could constrain MedTech's ability to achieve the guided 4.6%-5.6% operational sales growth range, particularly as tariffs on medtech imports are expected to increase significantly in 2026 to approximately $500 million, substantially above the 2025 amount, directly impacting cost of goods sold and margin progression. The orthopedics separation, while strategically positioned to unlock value, introduces execution risk, as Wolk noted the opportunity to eliminate stranded cost will likely need to be in place for 2027, meaning the near-term benefits of the spin-off may be delayed, and the process itself could distract management or create integration challenges during the transition period, potentially slowing the anticipated reallocation of capital to higher-growth areas like surgery robotics and vision. Finally, Johnson & Johnson's guidance for 2026 adjusted pretax operating margin improvement of at least 50 basis points may be overly optimistic given the headwinds from increased medtech tariffs, the cost of the fifty-third week of operations, and the impact of the voluntary U.S. government agreement to improve access to medicines and lower costs, which Wolk stated is factored into the margin guidance but could exert more pressure than anticipated, especially if the agreement leads to sustained pricing concessions that outweigh efficiency gains from infrastructure improvements and gross margin initiatives in manufacturing.