JNJ's Innovative Medicine unit eyes Q1 growth on key drug momentum, but biosimilar pressure and Stelara's decline may weigh on results.
Johnson & Johnson $JNJ JNJ, via its Innovative Medicine segment, markets a broad portfolio of blockbuster therapies across key areas including neuroscience, cardiovascular and metabolic diseases, immunology, oncology, pulmonary hypertension (PH) and infectious diseases. The company is scheduled to report first-quarter 2026 results on April 14, with investors likely to focus closely on the performance of this segment.
Below, we outline several key factors that may have impacted the segment’s sales during the quarter.
J&J’s Innovative Medicine unit’s sales rose 4.1% on an organic basis in 2025 despite the loss of exclusivity (“LOE”) of its multi-billion-dollar product, Stelara, and the negative impact of the Part D redesign. The segment recorded three consecutive quarters of sales of more than $15 billion despite the LOE of Stelara, a trend we expect to have continued in the first quarter of 2026.
J&J expects first-quarter growth to be fueled by increased sales of key products such as Darzalex, Tremfya and Erleada, supported by strong market expansion and market share gains. Other drugs, including Xarelto, Simponi/Simponi Aria, Uptravi and Opsumit, are also projected to maintain their growth momentum. Additionally, the rapid uptake of newer therapies like Carvykti, Tecvayli, Talvey, Rybrevant, Lazcluze, Caplyta and Spravato might have contributed to overall top-line growth.
Backed by regular pipeline success, J&J expects a more pronounced impact from new products in 2026 than in 2025.
However, generic/biosimilar competition for key drug, Stelara, and lower sales of Imbruvica, are likely to hurt top-line growth.
Several biosimilar versions of Stelara were launched in the United States in 2025. Stelara’s LOE negatively impacted the Innovative Medicines segment’s growth by 10.4% in 2025. We expect the negative impact to be steeper in the first quarter of 2026 as the number of biosimilar entrants is expected to have increased.
Imbruvica sales are likely to have declined due to rising competitive pressure in the United States as a result of new oral competition. Generic/biosimilar competition for drugs like Zytiga and Remicade is also likely to have hurt the top line.
The negative impact of the Part D redesign is expected to have weighed on sales of drugs like Stelara, Imbruvica and Erleada.
Investors will look for commercialization plans and initial sales numbers of J&J’s newly approved products, Inlexzoh/TAR-200 for treating high-risk non-muscle invasive bladder cancer and Imaavy (nipocalimab) for treating generalized myasthenia gravis. Another newly added drug, Caplyta, was approved for a new indication, major depressive disorder, in November, which is benefiting the drug’s new patient start volumes.
The positive trend of new drug approvals continued in 2026 with the FDA approving J&J and partner Protagonist Therapeutics’ PTGX Icotyde (icotrokinra), an oral targeted peptide inhibitor of the IL-23 receptor for treating moderate-to-severe plaque psoriasis in the United States earlier this month. Icotyde was co-discovered by Protagonist and J&J, with the latter holding exclusive global rights for its late-stage development and commercialization across multiple indications. However, Icotyde will not make any contribution to first-quarter 2026 sales.
Immunology and oncology are J&J’s key areas. Other large drugmakers with a strong presence in the oncology market include Novartis, AstraZeneca $AZN AZN, AbbVie ABBV, Amgen $AMGN, Merck $MRK, Bristol-Myers, Roche and Pfizer $PFE. In immunology, AbbVie, Amgen, Sanofi, AstraZeneca and Pfizer hold a strong position.
J&J’s shares have outperformed the industry over the past year. The stock has risen 46.2% in the past year compared with10.6% appreciation of the industry.
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From a valuation standpoint, J&J is slightly expensive. Going by the price/earnings ratio, the company’s shares currently trade at 20.36 forward earnings, higher than 16.99 for the industry. The stock is also trading above its five-year mean of 15.65.
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The Zacks Consensus Estimate for 2026 earnings has been stable at $11.54 per share over the past 60 days, while that for 2027 earnings has gone up from $12.33 per share to $12.44 over the same time frame.
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J&J has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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