J&J Expects Innovative Medicines Growth Despite Stelara LOE: Here's Why

Johnson & Johnson’s JNJ multibillion-dollar immunology drug, Stelara, lost patent exclusivity in the United States this year. It is approved for treating moderate-to-severe plaque psoriasis, active psoriatic arthritis, moderately to severely active Crohn’s disease (“CD”) and ulcerative colitis (“UC”). Stelara was a key top-line driver for J&J, accounting for around 18% of J&J’s Innovative Medicine unit’s sales in 2024, before it lost patent exclusivity in 2025.

Several biosimilar versions of Stelara have been launched in the United States in 2025. According to patent settlements and license agreements, Amgen AMGN, Teva Pharmaceutical Industries/Alvotech, Samsung Bioepis/Sandoz and some other companies have already launched Stelara biosimilars this year.

The launch of generics is significantly eroding Stelara’s sales and hurting J&J’s sales and profits in 2025. Stelara sales declined 42.7% in the second quarter of 2025. Stelara LOE negatively impacted the Innovative Medicine segment’s growth by 1170 basis points in the second quarter.

Stelara biosimilar competition is expected to accelerate throughout 2025 as the number of biosimilar entrants increases. Stelara sales are expected to come down from almost $11 billion in 2023 to around $2.7 billion in 2027, per our estimates.

When a key drug loses patent, a drugmaker experiences a patent cliff due to a significant drop in sales of that drug, which significantly pulls down the company’s top line. However, despite the loss of exclusivity (“LOE”) of Stelara, J&J expects growth in the Innovative Medicine segment in 2025.

The growth is expected to be driven by its key products, such as Darzalex, Tremfya, Spravato and Erleada, as well as new drugs like Carvykti, Tecvayli and Talvey and new indications, including Tremfya in inflammatory bowel disease (IBD) and Rybrevant in non-small cell lung cancer. Despite Stelara LOE, J&J expects to generate more than $57 billion in sales in the Innovative Medicines segment in 2025, which is almost in line with 2024 levels.

Sales of Darzalex, Tremfya, Spravato and Erleada all rose in a double-digit range in the first half of 2025, driven by share gains and market growth with the positive momentum expected to continue in the second half. Temfya was approved for two IBD conditions, UC and CD, in the past year. J&J expects Tremfya to be a $10 billion product with approvals in IBD conditions. J&J’s three new cancer drugs, Carvykti, Tecvayli and Talvey, have also begun to contribute to top-line growth. Combined, they generated $1.3 billion in sales in the first half of 2025.

In conclusion, J&J expects operational sales growth in the Innovative Medicine segment to be higher in the second half than the first half, despite Stelara LOE as well as other headwinds like the Medicare Part D redesign impact.

J&J's Key Competitors

Immunology and oncology are J&J’s key areas. Other large drugmakers with a strong presence in the oncology market include Novartis, AstraZeneca AZN, AbbVie ABBV, Merck, Bristol-Myers, Roche and Pfizer. In immunology, AbbVie, Amgen, Sanofi, AstraZeneca and Pfizer hold a strong position.

JNJ’s Price Performance, Valuation and Estimates

J&J’s shares have outperformed the industry year to date. The stock has risen 22.6% in the year-to-date period compared with a breakeven performance for the industry.

From a valuation standpoint, J&J is slightly expensive. Going by the price/earnings ratio, the company’s shares currently trade at 15.78 forward earnings, slightly higher than 14.78 for the industry. The stock is trading above its five-year mean of 15.65.

The Zacks Consensus Estimate for 2025 earnings has risen from $10.83 per share to $10.86 over the past 60 days, while that for 2026 has risen from $11.33 to $11.37 over the same timeframe.

J&J has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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