Pharmaceutical giant Johnson & Johnson (NYSE: JNJ) appears to have made the right move in 2023 when the company chose to shift its attention to its pharmaceutical, medical technology, and medical device divisions.
The $572 billion market cap company reported growth of 9.9% in revenue during the first quarter as sales reached $24.06 billion, beating Wall Street estimates of $23.61 billion.
The largest amount of growth came from J&J’s innovative medicine division, which includes drugs to treat oncology, which rose by 11% in sales while its medical technology unit increased by 7.7% and was driven by its electrophysiology products, Abiomed, and Shockwave in cardiovascular, plus trauma in orthopedics.
The pharmaceutical company said the higher revenue was due to selling more cancer treatments, including its drugs Darzalex, Carvykti, and Tecvayli to treat multiple myeloma, while Tremfya, an anti-inflammatory drug, and Spravato, a nasal spray which is approved for people with treatment-resistant depression, also contributed to the growth.
Sales for Stelara, an immunology drug, dropped by 60% during the quarter since the medication’s patent expired in late 2023, even though the production of biosimilars did not occur until 2025.
Unlike its rivals, Johnson & Johnson does not face any patent expirations for its drug pipeline until 2031 for Tremfya. Shares rose 55% in the past year for the biopharma behemoth that has shifted its focus to being a pharmaceutical and med tech provider. Johnson & Johnson also approved a 3.1% dividend increase, which is the 64th consecutive year the company has grown the payment.
The company spun off its consumer health division that sold over-the-counter medications such as Tylenol, Zyrtec, and Motrin, and products such as Band-Aid Brand Adhesive Bandages, Neutrogena, and Listerine into Kenvue (NYSE: KVUE) in August 2023.
CFO expects double-digit growth in oncology
Johnson & Johnson estimates that its growth trajectory will continue, reaching double-digit growth of $50 billion in sales from its cancer drugs by 2030, which is an “ambitious but achievable” goal, said TD Cowen analysts in a research note.
The biopharma is confident it can continue to increase its revenue, which includes a 7% increase in 2026, CFO Joe Wolk told Barron’s.
“The fact that the performance came from key brands that are already on the market suggests this is de-risked,” he said. “We’ve added new products to our portfolio, and it gives us a clear line of sight to double-digit growth by the end of the decade. When you think this is going to be a hundred-billion-dollar business by the end of the year, that’s saying something.”
In March, the Federal Drug Administration approved Icotyde as the first targeted oral peptide to treat people who have plaque psoriasis. The drug’s treatment capabilities are wider since Icotyde is a pill that many patients, including those who dislike needles, can easily take daily.
“It has equivalent efficacy and as clean a safety profile as biologics,” said Wolk, according to Barron’s. “We think that opens up a new market opportunity, and some of the investment you saw in the quarter is going towards the success of that.”
Johnson & Johnson reported its research and development expenses increased 9.4% in the latest quarter, but also generated $1.5 billion in free cash flow. The company estimates 2026 revenue of $100.3 billion to $101.3 billion in 2026, increasing its guidance slightly from $100 billion to $101 billion. The company expects adjusted earnings of $11.45 to $11.65 a share, compared to a previous estimate of $11.43 to $11.63 a share.
Last November, the FDA signed off on the use of Caplyta, an antipsychotic drug that the company added when it bought Intra-Cellular Therapies, as an adjunctive therapy with antidepressants.
Johnson & Johnson is positioned well to continue to perform as a major pharmaceutical company, as it manufactures a wide variety of medications from oncology to immunology and has a robust research pipeline to develop future drugs.
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