Johnson & Johnson JNJ faces several challenges, including revenue pressure from upcoming patent expirations, unresolved legal issues related to its talc powder, pricing pressure and macroeconomic uncertainties. Below, we examine these key headwinds and assess whether the healthcare giant is well-positioned to overcome them and sustain its long-term growth trajectory.
Stelara LOE Hurting J&J’s Sales
The biggest long-term challenge for J&J is the loss of exclusivity for some of its key drugs.
J&J lost U.S. patent exclusivity of Stelara in 2025. 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 were launched in the United States in 2025 as the drug lost patent exclusivity.
According to patent settlements and license agreements, Amgen AMGN, Teva Pharmaceutical Industries TEVA, Samsung Bioepis/Sandoz and some other companies launched Stelara biosimilars in 2025. Stelara’s LOE negatively impacted the Innovative Medicines segment’s growth by 10.4% in 2025. In the first quarter of 2026, J&J saw a faster erosion in sales of Stelara than expected, with the decline expected to intensify through the rest of 2026. In addition, J&J expects generic impact for both Simponi and Opsumit to begin in 2026 as the drugs lose patent protection.
In addition, sales are being hurt by the impact of the Medicare Part D redesign under the Inflation Reduction Act (IRA). The Part D redesign is mainly affecting sales of drugs like Stelara, Erleada and pulmonary hypertension drugs.
JNJ’s Talc Lawsuits and MedTech China are Overhangs
J&J faces more than 75,000 lawsuits for its talc-based products, primarily baby powders. The lawsuits allege that its talc products contain asbestos, which caused many women to develop ovarian cancer. J&J insists that its talc-based products are safe and do not cause cancer. The company permanently discontinued the sales of the talc-based Johnson’s Baby Powder.
In April 2025, a bankruptcy court in Texas rejected J&J’s proposed bankruptcy plan to settle its talc lawsuits after a two-week trial in Houston. J&J has gone back to the traditional tort system to fight the lawsuits individually, with its bankruptcy strategy to settle the lawsuits failing for the third time.
In the MedTech segment, though overall sales improved in the last four quarters, J&J continues to face headwinds in China. Sales in China are being hurt by the impact of the volume-based procurement (VBP) program, which is a government-driven cost containment effort in China. J&J expects continued impacts from VBP issues in China in 2026, mainly in the second half.
Can J&J Navigate the Challenges?
Despite headwinds like the legal battle surrounding its talc lawsuits, the Stelara patent cliff, the upcoming LOE of key drugs Opsumit and Simponi and softness in MedTech China, J&J looks quite confident that it will be able to navigate these challenges.
J&J has delivered consistent earnings and sales growth, supported by strong growth of oncology drugs and newer medicines and resilient MedTech demand.
The company expects 2026 to be a year of accelerated growth. The company expects both its Innovative Medicines and MedTech segments to deliver stronger growth this year. The company is confident that it can achieve its target of generating around $100 billion in revenues in 2026. It expects sales to continue to improve in 2027, with a “line of sight” to double-digit growth by the end of the decade. J&J believes that it is already achieving this growth. Though J&J’s total revenues are currently rising in a mid-single-digit range, excluding Stelara, J&J’s top line grew in a double-digit range in the first quarter.
JNJ’s Price Performance, Valuation and Estimates
J&J’s shares have risen 13.1% in the past six months compared with a 5.0% increase 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 19.01 forward earnings, higher than 16.95 for the industry. The stock is also trading above its five-year mean of 15.65.
The Zacks Consensus Estimate for 2026 earnings has risen from $11.54 to $11.57 over the past 60 days, while that for 2027 earnings has gone up from $12.45 per share to $12.60 over the same time frame.
J&J has a Zacks Rank #3 (Hold) currently. 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).