DoD tests AI models that make it easy to switch from vendors like Palantir
Introduction & Market Context
Johnson & Johnson (NYSE:JNJ) delivered solid first-quarter 2025 results on April 15, with operational sales growth of 4.2% despite facing significant headwinds from Stelara biosimilar competition. The healthcare giant reported total sales of $21.9 billion, exceeding analyst expectations of $21.57 billion, while adjusted earnings per share of $2.77 beat forecasts of $2.58.
Despite the earnings beat, J&J’s stock saw a slight decline of 0.39% in pre-market trading, closing at $154.36. The stock remains within its 52-week range of $140.68 to $169.99, suggesting investors may be taking a cautious approach despite the company’s strong performance.
As shown in the following financial highlights slide, J&J achieved 2.4% reported sales growth, with adjusted EPS increasing by 2.2%:
Quarterly Performance Highlights
J&J’s performance demonstrated the resilience of its diversified business model, with growth across both its Innovative Medicine and MedTech segments. The company’s ability to grow despite losing exclusivity for Stelara, a multi-billion-dollar product, underscores the strength of its portfolio.
Innovative Medicine sales reached $13.9 billion, representing operational growth of 4.2% despite an approximate 810 basis point headwind from Stelara. This segment was driven by strong performance in oncology products, particularly DARZALEX, which grew over 20%, and CARVYKTI, which saw growth exceeding 100%.
The following slide illustrates the key drivers of Innovative Medicine’s performance:
MedTech sales totaled $8.0 billion, with operational growth of 4.1%. This segment’s performance was primarily driven by the company’s recently acquired cardiovascular businesses, Abiomed (NASDAQ:ABMD) and Shockwave, as well as strong results in Surgical Vision and Wound Closure.
As shown in the following breakdown of MedTech performance by category:
Regionally, U.S. sales grew by 5.9% to $12.3 billion, while international sales increased by 2.1% to $9.6 billion. The company noted that orthopedics underperformed with a 3.1% decline, primarily due to one-time events including revenue recognition timing changes, fewer selling days, and disruption from the previously announced orthopedics transformation.
Pipeline & Strategic Initiatives
J&J highlighted several significant pipeline advancements during the quarter, positioning 2025 as a "catalyst year" that will set the stage for accelerated growth through the second half of the decade.
In oncology, the company presented impressive overall survival data for RYBREVANT plus LAZCLUZE in first-line EGFR-mutated non-small cell lung cancer, showing more than one year of extended survival compared to the current standard of care:
In immunology, Tremfya received FDA approval for Crohn’s disease, adding to its recent approval in ulcerative colitis. The company reported that Tremfya is the fastest-growing product in the ulcerative colitis market, with IL-23 inhibitors being the fastest-growing class. Tremfya has already achieved nearly 50% share of IL-23 new patient starts in ulcerative colitis.
The following slide shows the strong clinical results for Tremfya in Crohn’s disease:
J&J also highlighted promising data for icotrokinra, its investigational oral IL-23 pathway inhibitor for plaque psoriasis. The phase 3 data demonstrated that nearly half of adult patients and three-quarters of adolescents with moderate to severe plaque psoriasis achieved completely clear skin by week 24:
On the strategic front, J&J announced the completion of its acquisition of Intra-Cellular Therapies (NASDAQ:ITCI) in April, extending its portfolio in central nervous system disorders. The addition of CAPLYTA expands J&J’s lineup of therapies with at least $5 billion potential in peak year sales.
The company also announced a commitment to invest more than $55 billion in the U.S. over the next four years in manufacturing, R&D, and technology, representing a 25% increase compared to the previous four years. This investment includes four planned new manufacturing facilities.
Forward-Looking Statements
J&J increased its operational sales guidance for 2025 by $700 million to reflect the addition of CAPLYTA following the completion of the Intra-Cellular acquisition. The company now expects operational sales growth for the full year to be in the range of 3.3% to 4.3%, with a midpoint of $92 billion or 3.8%.
Despite $0.25 dilution from the Intra-Cellular acquisition and the impact of tariffs, J&J maintained its adjusted reported earnings per share guidance of 6.2% at the midpoint, for a range of $10.50 to $10.70.
The company’s capital allocation strategy continues to prioritize organic growth, with $3.2 billion invested in R&D during Q1, while also returning value to shareholders through dividends and strategic acquisitions:
Competitive Industry Position
Looking beyond 2025, J&J expressed strong confidence in the long-term growth potential of several key assets. Management indicated that their internal projections for certain products significantly exceed current analyst estimates.
For instance, the company projects sales for RYBREVANT plus LAZCLUZE to be at least two times higher than current street estimates by 2027/2028, and Tremfya sales to be at least 25% higher:
CEO Joaquin Duato emphasized the company’s comprehensive approach to healthcare, stating, "We are not just a pharmaceutical company or a med tech company. We are a healthcare company, innovating across the full spectrum of disease."
Duato also addressed concerns about potential tariffs, noting that with the company’s $55 billion investment plan, "all our advanced medicines that are used in the U.S. will be manufactured in the U.S." He emphasized that tax policy, rather than tariffs, is a more effective tool for building manufacturing capacity in the United States.
The company’s diversified portfolio, robust pipeline, and strategic investments position J&J to navigate the challenges of 2025, including Stelara biosimilar competition and potential economic headwinds, while setting the stage for accelerated growth in the coming years.
Full presentation:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.