Chief Financial Officer Joseph Wolk said the arrangement will reduce 2026 earnings by several hundred million dollars but characterized the impact as manageable in the context of overall growth. The company did not disclose specific product-level concessions.
Investor Reaction and Recent Share Performance
Despite the stronger-than-expected forecast, Johnson & Johnson shares fell 2.7 percent in pre-market trading on Wednesday. The stock had advanced approximately 43 percent during 2025, driven by demand for oncology and immunology medicines and broad gains for large-cap healthcare equities.
Analysts noted that investors appear to be weighing the near-term cost of price reductions, potential legal risks tied to the company’s talc products and competitive pressure on several key drugs. Market sentiment could remain volatile as the industry adjusts to evolving U.S. trade policies and the looming entry of biosimilars.
Fourth-Quarter 2025 Results Edge Past Expectations
Johnson & Johnson also reported financial results for the quarter ended December 31, 2025. Adjusted net income totaled $6 billion, or $2.46 per share, narrowly topping the $2.44 per-share consensus. Quarterly revenue reached $24.56 billion, exceeding estimates of $24.16 billion.
In the pharmaceutical division, Darzalex maintained double-digit growth, supported by expanded indications in multiple myeloma. Tremfya, prescribed for moderate-to-severe plaque psoriasis and psoriatic arthritis, delivered solid uptake in both the United States and international markets. By contrast, psoriasis blockbuster Stelara recorded a sharper-than-expected sales decline as lower-priced biosimilar versions gained traction in Europe and Canada.
The medical-devices segment benefited from elective procedure volumes returning to pre-pandemic levels and continued adoption of the company’s orthopedic robotics platform. Management noted, however, that tariff uncertainty remains a headwind for surgical equipment sourced from overseas suppliers.
Drug-Pricing Deal Provides Tariff Relief
The U.S. government in early January unveiled a plan requiring selected drugmakers to lower domestic list prices in order to qualify for relief from new tariffs on pharmaceutical imports. Johnson & Johnson opted into the program, securing tariff exemptions that cover components used in its vaccine production and sterile-injectable lines. Similar agreements were reached by several multinational peers, including Pfizer, Merck and Bristol Myers Squibb.
A brief overview of the initiative is available from the Office of the United States Trade Representative, which oversees tariff policy.
While short-term profit will be affected, Johnson & Johnson said the deal offers greater visibility around input costs and supply-chain planning through the end of the decade.
Legal Update on Talc Litigation
On Tuesday, a court-appointed special master recommended allowing expert testimony that links Johnson & Johnson’s talc-based baby powder to ovarian cancer claims. The recommendation pertains to multidistrict litigation in federal court and could influence parallel proceedings in several state jurisdictions.
The company maintains that its talc products are safe, citing decades of testing and regulatory clearance. Johnson & Johnson has fought thousands of lawsuits alleging that long-term talc use caused cancer, and previously attempted to resolve the matter through a subsidiary’s bankruptcy filing, an effort that was dismissed by the courts. A final decision on whether the expert testimony will be admitted is pending.
Product Portfolio and Competitive Landscape
Beyond Darzalex and Tremfya, Johnson & Johnson highlighted a pipeline of late-stage candidates in oncology, immunology and neuroscience. Management expects these assets to compensate for anticipated revenue erosion from Stelara as biosimilar competitors gain U.S. approval in 2026.
Stelara generated more than $10 billion in annual sales at its peak. A drop in revenue is incorporated into current guidance, according to the company. Excluding Stelara, management estimates that the broader pharmaceutical portfolio is expanding at a mid-teens percentage rate.
Analysts will monitor forthcoming clinical data and regulatory milestones, particularly those related to the company’s gene therapy platform and next-generation cell therapies.
Outlook and Key Variables
Johnson & Johnson’s 2026 forecast assumes stable foreign-exchange rates, moderate inflation and no additional tariff measures beyond those already announced. The company cautioned that major variables include the timing of biosimilar launches, potential settlements or judgments in talc litigation, and macroeconomic shifts affecting elective medical procedures.
Management reiterated its capital allocation priorities, emphasizing dividend growth, targeted bolt-on acquisitions and share repurchases when appropriate. Johnson & Johnson ended 2025 with a strong balance sheet and investment-grade credit ratings, providing flexibility for strategic initiatives.
In the near term, investors will look toward the company’s first-quarter 2026 earnings release for updated color on pricing dynamics, litigation developments and progress in late-stage drug trials. The firm is scheduled to present at several industry conferences during the first half of the year.
Crédito da imagem: Brendan McDermid / Reuters
