JNJ Healthcare · Large cap · Pharma · MedTech · Thesis updated July 19, 2026

JNJ is absorbing STELARA, but Abiomed matters

Q2 2026 sales grew 5.6% even with a 460 basis point headwind from STELARA.
Excluding STELARA, Johnson & Johnson grew double digits in the quarter.
TREMFYA grew 71% as its bowel disease launch gained share.
MedTech is still growing, but Abiomed sales fell 2% after doctors became more selective.
The planned Orthopaedics separation is a major value test over the next year.

01 Running thesis

A patent cliff, mostly contained

Johnson & Johnson is proving the main bull case. STELARA is falling hard after biosimilar copies entered the market, but the rest of the company is still growing. In Q2 2026, STELARA declined 55.7%, yet total sales still rose 5.6%. Excluding STELARA, the company grew double digits.

The best signs are in Innovative Medicine. Oncology drugs such as DARZALEX and CARVYKTI are growing, while TREMFYA is turning into a strong immunology launch in bowel disease. TREMFYA grew 71% in Q2 2026, and STELARA is now a smaller part of the drug segment.

The new worry is MedTech. Abiomed had been a key growth engine in cardiovascular devices, but sales fell 2% after doctors reacted to a neutral UK trial and used the product more carefully. Management says the shift is behavioral, not a sign that demand has vanished.

Finn's view is balanced. JNJ has real growth engines and a deep pipeline, but the stock still has to earn its price. The next proof points are Abiomed procedure trends, TREMFYA share, new device launches, and details on the Orthopaedics separation.

Jul 2026→Q2 2026 showed JNJ can offset a 55.7% STELARA decline with double-digit growth outside that drug. The offset was partly balanced by a new concern, Abiomed sales fell 2% after doctors became more selective.

Apr 2026▲Q1 2026 strengthened the thesis. Worldwide operational sales grew 6.4% despite a 5.4% STELARA headwind, helped by oncology and cardiovascular growth.

Feb 2026▲The 2025 Form 10-K showed strong growth in oncology and cardiovascular devices. It also kept talc litigation in focus after a large reserve reversal did not remove the underlying legal risk.

Oct 2025▲Q3 2025 showed 5.4% operational growth even with a 6.4% STELARA headwind. JNJ also announced plans to separate Orthopaedics within 18 to 24 months.

Jul 2025→Q2 2025 confirmed the basic tradeoff. STELARA pressure worsened, but oncology and cardiovascular growth were strong enough to keep overall growth positive.

Apr 2025▲Q1 2025 gave the first clear look at STELARA biosimilar pressure. JNJ still delivered 4.2% operational growth, led by oncology and cardiovascular devices.

Feb 2025→The 2024 Form 10-K confirmed U.S. STELARA biosimilar entry in 2025. It also showed DARZALEX had become JNJ's top product.

Oct 2024▲JNJ took a major step toward resolving talc litigation through a proposed bankruptcy plan and a large reserve. At the same time, the company was still preparing for the January 2025 U.S. STELARA biosimilar launch.

02 Business model

Patents, hospitals, and trust

Johnson & Johnson makes money in two main ways. Innovative Medicine sells patented prescription drugs. MedTech sells devices used by surgeons, heart doctors, eye doctors, and hospitals.

The drug business can be very profitable while a product has patent protection. The risk is that sales can fall fast when cheaper copies arrive, as STELARA shows. That is why JNJ needs new launches like TREMFYA, ICOTYDE, INLEXZO, and oncology drugs to keep replacing older products.

The device business depends on hospital budgets, doctor training, procedure volumes, and clinical data. A single study can change behavior quickly. Abiomed's Q2 2026 decline shows that MedTech is not immune to sudden shifts in doctor confidence.

JNJ's moat comes from research spending, patents, global sales reach, and long relationships with healthcare providers. Those strengths are real, but they do not remove legal risk, pricing pressure, or product cycle risk.

03 Product portfolio

The products that now matter

Growth engine

DARZALEX

DARZALEX is JNJ's largest product and treats multiple myeloma, a blood cancer. It accounted for about 15.0% of total 2025 revenue.

Cash cow

STELARA

STELARA was once a major immunology profit pool, but biosimilar competition is cutting into sales. It declined 55.7% in Q2 2026.

Growth engine

TREMFYA

TREMFYA is now the main immunology growth story. It grew 71% in Q2 2026 as the bowel disease launch gained momentum.

Growth engine

CARVYKTI and ERLEADA

These oncology products support the drug segment's growth. CARVYKTI grew 47.7% in Q2 2026.

Growth engine

Abiomed, Shockwave, and electrophysiology

These cardiovascular devices are meant to power MedTech growth. Abiomed is under pressure after a neutral trial, while Shockwave grew 14.7% in Q2 2026.

Option

OTTAVA and MONARCH for Urology

These robotic and surgical platforms are future growth options. FDA approval and launch quality are key watch items over the next 12 months.

Steady

Orthopaedics

Orthopaedics sells implants and related surgical products. JNJ plans to separate this business, which could change the company's growth mix.

04 Business segments

Two businesses, one bigger drug engine

Innovative Medicine65%modest

MedTech35%modest

Segment mix uses Q2 2026 sales: Innovative Medicine generated $16.4 billion and MedTech generated $8.9 billion. DARZALEX concentration and STELARA erosion are important caveats inside the drug segment.

05 Risk factors

What could break the thesis

STELARA falls faster than replacements grow

High impact · High odds

STELARA biosimilars are already hurting sales. The key question is not whether STELARA declines, but whether oncology and new immunology drugs can keep offsetting it. Q2 2026 was a good test, but one quarter is not enough.

We watchQuarterly STELARA decline rate and total company growth excluding STELARA.

Abiomed weakness becomes structural

High impact · Medium odds

Abiomed sales fell 2% in Q2 2026 after doctors reacted to a neutral UK trial. Management called the effect behavioral, but doctor behavior can stick. If growth does not recover before the PROTECT IV readout in 2027, a key MedTech growth pillar may be stalled.

We watchAbiomed procedure volumes, U.S. utilization, and management comments on high-risk PCI use.

Talc lawsuits cost more than expected

High impact · Medium odds

JNJ still faces tens of thousands of talc claims. The company believes in its legal defenses, but the final cost and timing are not settled. Legal reserves can move reported earnings without ending the risk.

We watchCourt rulings, settlement talks, reserve changes, and case counts.

Drug pricing pressure cuts returns

Medium impact · Medium odds

JNJ sells into healthcare systems that want lower drug costs. U.S. policy such as the IRA and global price rules can limit how much the company earns on mature drugs. This matters most when a few large products carry a big share of profit.

We watchIRA negotiation lists, net price trends, and management's comments on pricing.

Orthopaedics separation disappoints

Medium impact · Medium odds

JNJ plans to separate Orthopaedics after announcing the plan in October 2025. The move could sharpen the remaining company's growth profile, but it also brings execution risk. Investors still need details on debt, margins, and the growth profile of the separated company.

We watchSeparation filings, timing updates, debt allocation, and standalone margin targets.

06 Quick answers

In one breath

What does Johnson & Johnson do now?

After separating consumer health, JNJ is mainly a drug and medical device company. Its two segments are Innovative Medicine and MedTech.

Why is STELARA such a big issue for JNJ?

STELARA faces biosimilar competition, which means cheaper versions can take share. It declined 55.7% in Q2 2026, so JNJ must replace that lost sales base with newer drugs.

Why does Abiomed matter?

Abiomed is part of JNJ's cardiovascular device growth plan. Its 2% sales decline in Q2 2026 raised a new question about whether doctor caution is temporary or lasting.

Is Johnson & Johnson cheap?

Finn's valuation score is below the middle of the range, so the price is not an obvious bargain. The company has quality assets, but investors still need proof that growth can keep compounding through STELARA losses and MedTech bumps.