J&J's Innovative Medicine Segment in Q4: Here's What to Watch

Core Viewpoint - Johnson & Johnson (JNJ) is set to announce its fourth-quarter and full-year 2025 results, with a focus on the performance of its Innovative Medicine segment, which includes various blockbuster therapies across multiple disease areas [1] Group 1: Sales Performance - The Innovative Medicine segment experienced a 3.4% organic sales growth in the first nine months of 2025, despite the loss of exclusivity for its multi-billion-dollar product, Stelara [2][10] - The segment recorded over $15 billion in sales for two consecutive quarters, indicating resilience despite the challenges posed by Stelara's loss of exclusivity [2] - JNJ anticipates growth in Q4 driven by increased sales of key products like Darzalex, Tremfya, and Erleada, alongside the rapid adoption of new drugs such as Carvykti and Tecvayli [3][10] Group 2: Competitive Landscape - The launch of several biosimilar versions of Stelara in 2025 has negatively impacted the Innovative Medicines segment's growth, contributing to a decline of 1070 basis points in Q3 [5] - Rising competition in the U.S. market, particularly from new oral therapies, is expected to adversely affect sales of Imbruvica [6] - The redesign of Medicare Part D under the Inflation Reduction Act is also impacting sales of several drugs, including Stelara and Imbruvica [6] Group 3: Future Outlook - Initial sales figures for JNJ's newly approved drug, Imaavy, are anticipated, as it was approved for treating generalized myasthenia gravis in the U.S. and EU [7] - The Innovative Medicines unit is projected to have a compound annual growth rate (CAGR) of around 5% over the next three years [7] Group 4: Competitive Positioning - JNJ's key areas of focus include immunology and oncology, with significant competition from other large drugmakers such as Novartis, AstraZeneca, and AbbVie in oncology, and AbbVie and Amgen in immunology [8] Group 5: Valuation and Performance - JNJ's shares have outperformed the industry over the past year, with a 45.9% increase compared to an 18.4% rise for the industry [11] - The company's shares are currently trading at a price/earnings ratio of 18.03, slightly above the industry average of 17.54 and its five-year mean of 15.65 [12]