# Johnson & Johnson (JNJ) — Narrative, FY2026 Q2

Sources: Annual Report on Form 10-K for the fiscal year ended December 28, 2025 (accession 0000200406-26-000016); Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 2026 (accession 0000200406-26-000153); Current Report on Form 8-K dated July 15, 2026 (accession 0000200406-26-000146).

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## Business

*From the FY2025 10-K, accession 0000200406-26-000016.*

Johnson & Johnson is a New Jersey holding company incorporated in 1887, with operating subsidiaries in virtually every country. It employs approximately 140,800 people (approximately 138,200 full-time-equivalent positions) in the research, development, manufacture and sale of healthcare products. The Chief Operating Decision Maker is the Chief Executive Officer; the Executive Committee sets strategy, and U.S. and international operating-company management groups run day-to-day operations within those parameters.

The company reports **two segments**:

**Innovative Medicine** — prescription pharmaceuticals sold directly to retailers, wholesalers, distributors, hospitals and healthcare professionals, across six therapeutic areas:

- *Oncology* — CARVYKTI (ciltacabtagene autoleucel, CAR-T for relapsed/refractory multiple myeloma), DARZALEX and DARZALEX FASPRO (daratumumab, multiple myeloma and AL amyloidosis), ERLEADA (apalutamide, prostate cancer), IMBRUVICA (ibrutinib, B-cell malignancies), RYBREVANT (amivantamab) and RYBREVANT FASPRO with LAZCLUZE (lazertinib) in EGFR-mutated non-small cell lung cancer, TALVEY (talquetamab-tgvs) and TECVAYLI (teclistamab-cqyv) bispecifics in myeloma, ZYTIGA (abiraterone acetate).
- *Immunology* — STELARA (ustekinumab), TREMFYA (guselkumab), SIMPONI / SIMPONI ARIA (golimumab), REMICADE (infliximab).
- *Neuroscience* — CAPLYTA (lumateperone), SPRAVATO (esketamine), INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA (paliperidone palmitate), CONCERTA (methylphenidate).
- *Pulmonary Hypertension* — OPSUMIT/OPSYNVI (macitentan; macitentan/tadalafil), UPTRAVI (selexipag).
- *Infectious Diseases* — EDURANT (rilpivirine), PREZISTA/PREZCOBIX/REZOLSTA (darunavir-based), SYMTUZA.
- *Cardiovascular and Metabolism* — XARELTO (rivaroxaban).

Many of these medicines were developed with strategic partners or licensed from third parties.

**MedTech** — devices and enabling technologies sold to wholesalers, hospitals and retailers and used by physicians, nurses, eye care professionals and clinics, in four franchises:

- *Cardiovascular* — electrophysiology (heart rhythm diagnosis and treatment), Abiomed mechanical circulatory support (Impella) for cardiogenic shock and high-risk PCI, Shockwave circulatory restoration for calcified coronary and peripheral artery disease, and neurovascular/stroke care, largely delivered through minimally invasive catheter-based approaches.
- *Orthopaedics* — joint reconstruction (hips, knees), trauma, spine and sports.
- *Surgery* — instrumentation, energy devices, stapling, wound closure, biosurgery, and digital/robotic technologies across open, laparoscopic and robotic procedures; also Mentor breast aesthetics and reconstruction.
- *Vision* — ACUVUE contact lenses, TECNIS premium intraocular lenses, and other cataract and refractive products.

**Planned Orthopaedics separation.** In October 2025 the company announced its intention to separate the Orthopaedics business, exploring multiple paths, with targeted completion within 18 to 24 months of the announcement.

**Economics and concentration.** Approximately 43% of fiscal 2025 sales occurred outside the U.S. (approximately 23% Europe, 5% Western Hemisphere excluding the U.S., 15% Asia-Pacific/Africa). In 2025 three wholesalers accounted for approximately 21.8%, 15.5% and 11.1% of total gross revenues. Product concentration is material: DARZALEX plus DARZALEX FASPRO was approximately **15.0%** of total 2025 revenues, STELARA approximately **6.5%**, and TREMFYA approximately **5.5%**.

**Intellectual property.** Genmab A/S owns two patent families underlying DARZALEX and licenses them exclusively to Janssen Biotech; royalties run **12%–20% of DARZALEX net sales** and totaled approximately **$2.4 billion in 2025** ($2.0 billion in 2024). Both families expire in the U.S. in **2029**; European compound/use protection in select countries extends to 2031/2032. TREMFYA's composition patent family is projected to expire in the U.S. in **2031**, with aggregate third-party royalties of roughly 5.0% of net sales. Biosimilar applications for STELARA have been filed with the U.S. FDA, EMA and other authorities, and continued global biosimilar launches are expected to keep pressuring STELARA sales.

**Manufacturing and other.** Subsidiaries operate **63 manufacturing facilities** totaling approximately 10.4 million square feet (Innovative Medicine 5.2 million, MedTech 5.1 million); 22 facilities are in the U.S., 22 in Europe, 7 in the Western Hemisphere excluding the U.S., and 12 in Africa/Asia/Pacific. Raw materials are generally available from multiple sources. Sales are not materially seasonal, though fourth-quarter spending is typically heavier. New products introduced in the prior five years accounted for approximately 25% of 2025 sales, and 2025 R&D spending was $14.7 billion.

**Regulatory environment.** The businesses face increasingly stringent regulation on safety, efficacy, manufacturing, advertising, labeling and safety reporting, plus rapidly expanding privacy, data-localization, cybersecurity and AI rules (U.S. state privacy laws; EU NIS2, EHDS, Data Act, Cyber Resilience Act and AI Act; China's personal information and data security regime). Under the Inflation Reduction Act, CMS-established Medicare pricing applies to selected drugs beginning in 2026 for Part D and 2028 for Part B. XARELTO, STELARA and IMBRUVICA were on the first Selected Drug list; CMS has indicated it will remove XARELTO and STELARA from the list beginning in 2027. In January 2026 CMS published the 2028 Selected Drug list, which includes **ERLEADA**. Janssen's July 2023 constitutional challenge to the IRA negotiation program continues — in December 2025 Janssen sought U.S. Supreme Court review of the Third Circuit's affirmance of the district court's ruling for the government. In January 2026 the company reached an agreement with the U.S. Administration to improve access to medicines and lower costs for U.S. patients.

**Cybersecurity governance.** The CIO (an Executive Committee member) and CISO own cybersecurity risk assessment and management; the Board's Regulatory Compliance & Sustainability Committee has primary oversight and receives quarterly CISO updates. The company states it is not aware of any cybersecurity incident that has had, or is reasonably likely to have, a material impact.

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## Risk factors

*Condensed from the FY2025 10-K, accession 0000200406-26-000016.*

**Competition and loss of exclusivity.** Both segments compete globally on cost-effectiveness, innovation, IP rights, product performance, pricing, availability and reimbursement rates. For Innovative Medicine, loss of patent exclusivity is typically followed by a substantial sales decline as generics and biosimilars enter. For MedTech, competitors' new products can render existing technologies less desirable or obsolete. The company also competes for acquisitions and licensing rights, which can drive up investment cost and impose onerous terms, and it carries integration and undisclosed-liability risk on deals.

**Intellectual property under pressure.** Public policy inside and outside the U.S. has become "increasingly unfavorable toward intellectual property rights." Competitors routinely challenge patent validity through litigation, oppositions and inter partes review. On an adverse outcome or an "at-risk" generic/biosimilar launch, the company "can lose a major portion of revenues for the referenced product in a very short period of time," potentially with a non-cash intangible impairment.

**Product liability and litigation.** The company is a defendant in numerous lawsuits over body powders containing talc, primarily JOHNSON'S Baby Powder. Matters may involve thousands of plaintiffs seeking indeterminate or punitive damages and can remain unresolved for years. Payments may exceed accruals, including where the company is jointly and severally liable. Notably, **the company does not purchase third-party product liability insurance**; it self-insures through a wholly owned captive subject to limits. Resolution of, or an increase in accruals for, any one matter in a period could have a material adverse effect on results and cash flows.

**Pricing and reimbursement.** Third-party payors — government programs, private insurers, managed care — continue to press prices down, aided in the U.S. by provider consolidation and payor/PBM purchasing power. The IRA has changed Part D design and subjects certain products to government-established pricing from 2026, with more products possible later; failure to follow the government's interpretation pending litigation can expose the company to penalties. Expanded third-party use of the 340B Federal Drug Discount Program and program abuse may hurt financial performance. Outside the U.S., the EU, U.K., Japan and China impose price controls, restrict access or reimbursement, or reduce the value of IP protection.

**Regulatory and government action.** The company is subject to an expanding volume of costly regulation; changes to FDA timing or requirements can delay new products, and new rules can create deadlines that outrun the company's or its suppliers' ability to comply, producing manufacturing delays and supply constraints. cGMP compliance failures can trigger fines, recalls, shortages, production interruptions and approval delays. Government investigations carry risk of significant civil and criminal penalties including **debarment from government healthcare programs**, which would be materially adverse. Reductions to the FDA's budget, employees and operations may slow response times and lengthen review periods.

**Product safety and reputational risk.** Product concerns — whether raised internally or by litigants, regulators or advocates, "whether or not based on scientific evidence" — can drive safety alerts, recalls, investigations, fines, declining sales and damage to brand equity, and have previously prompted manufacturing shutdowns and remediation costs.

**Manufacturing and supply chain.** The company operates 63 plants and sources from thousands of suppliers. Disruption can arise from regulatory action, quality deviations, labor disputes and shortages, fires, natural disasters, raw material shortages, political unrest, terrorism and pandemics, producing shortages, lost sales and remediation costs. Reliance on third-party manufacturers adds capacity, quality, yield, regulatory-compliance, IP-misappropriation and contract-termination risk. Counterfeit products distributed through illegal channels threaten patient safety, revenues and reputation.

**Innovation and pipeline.** Continued growth depends on developing differentiated products to offset losses from competition and expiring exclusivity; new products introduced in the past five years were approximately 25% of 2025 sales. Only a very few biopharmaceutical R&D programs become commercially viable products, and even approved products can be undercut by real-world safety and efficacy findings, competitor entry, reimbursement uncertainty or provider resistance. The company also flags AI-specific risk: technologies it develops or adopts may become obsolete earlier than planned, investments may not deliver the anticipated benefits, and emerging AI regulation may impose significant costs or limit continued use.

**International, currency and geopolitical.** Approximately 43% of 2025 sales were non-U.S., so dollar strength or weakness produces significant translation effects; a 1% change in the dollar against all currencies would have moved translated foreign sales by approximately $0.4 billion and net income by approximately $0.2 billion. Argentina, Turkey, Venezuela and Egypt are accounted for as highly inflationary (three-year cumulative inflation above 100%). Additional risks include illegal pharmaceutical importation, FCPA and U.K. Bribery Act exposure given heavy interaction with government-employed prescribers and government purchasers, expropriation, currency controls, and disruption from the Russia-Ukraine war, Middle East conflict and U.S.-China tensions. Tariffs, reciprocal tariffs and other trade-protection measures are explicitly called out.

**Credit and liquidity.** The company holds investment grade ratings from Moody's and S&P. A downgrade could raise borrowing costs, reduce commercial paper market capacity, require additional derivative collateral and impair access to capital markets.

**Orthopaedics separation.** Completion is subject to works-council and employee-representative consultations, final Board approval and regulatory approvals; there is no assurance on timing or that it will be completed at all. Costs to complete will be significant, expected strategic and financial benefits rest on assumptions that may prove incorrect, and the share price may be more volatile around the transaction.

**Other.** Tax law changes (including global minimum taxes) can force revaluation of deferred taxes and change the effective rate; tax authority positions could produce liabilities in excess of reserves. Recruiting and retaining highly skilled talent, and succession planning, are called out as business-critical. Climate change presents physical risk to facilities and supply chain, water-scarcity cost risk, and regulatory/customer-preference risk. Information security incidents — heightened by global tensions and increasing AI use — could cause reputational, competitive, operational and financial harm; cybersecurity insurance may not cover all losses. Privacy breaches could bring substantial fines, class actions and reputational damage.

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## Management's discussion and analysis — fiscal 2025

*From the FY2025 10-K, accession 0000200406-26-000016.*

### Consolidated sales

Worldwide sales rose **6.0% to $94.2 billion** in 2025, versus a 4.3% increase in 2024. Acquisitions and divestitures added a net 1.1% to worldwide growth (primarily CAPLYTA and Shockwave), versus 0.5% in 2024 (primarily Shockwave). U.S. sales were $53.8 billion, up 6.9% (acquisitions/divestitures a net positive 2.0%); international sales were $40.4 billion, up 5.0% (acquisitions/divestitures a net positive 0.1% on operational growth).

The dominant drag was STELARA: the decline, driven by biosimilar competition, cut approximately **6.2% from worldwide, 7.6% from U.S. and 4.4% from international operational sales**.

By region, Europe grew 6.5% (2.4% operational, 4.1% favorable currency); the Western Hemisphere excluding the U.S. grew 3.4% (8.4% operational, 5.0% adverse currency); Asia-Pacific/Africa grew 3.2% (3.1% operational). Five-year compound annual sales growth was 6.7% worldwide, 7.9% U.S., 5.2% international; ten-year, 5.2% / 5.8% / 4.5%.

### Innovative Medicine — $60.4 billion, +6.0% (+5.3% operational)

U.S. sales $36.3 billion (+7.0%); international $24.1 billion (+4.6%, +2.9% operational). Acquisitions/divestitures added 1.2% (CAPLYTA). The STELARA decline subtracted approximately 10.4% worldwide, 12.3% U.S. and 7.9% international from segment operational sales.

| Therapeutic area | 2025 ($M) | 2024 ($M) | Total change |
|---|---|---|---|
| Oncology | 25,380 | 20,781 | +22.1% |
| Immunology | 15,728 | 17,828 | −11.8% |
| Neuroscience | 7,837 | 7,115 | +10.1% |
| Pulmonary Hypertension | 4,437 | 4,282 | +3.6% |
| Infectious Diseases | 3,241 | 3,396 | −4.6% |
| Cardiovascular / Metabolism / Other | 3,778 | 3,562 | +6.1% |
| **Total Innovative Medicine** | **60,401** | **56,964** | **+6.0%** |

Key products: DARZALEX $14,351M (+23.0%), STELARA $6,078M (−41.3%), TREMFYA $5,155M (+40.5%), INVEGA franchise $3,810M (−9.8%), ERLEADA $3,574M (+19.2%), IMBRUVICA $2,823M (−7.1%), XARELTO $2,633M (+11.0%), SIMPONI/SIMPONI ARIA $2,668M (+21.8%), OPSUMIT/OPSYNVI $2,325M (+4.5%), UPTRAVI $1,902M (+4.7%), CARVYKTI $1,887M (+95.9%), REMICADE $1,768M (+10.2%), SPRAVATO $1,696M (+57.4%), PREZISTA family $1,579M (−7.7%), EDURANT $1,486M (+16.9%), CAPLYTA $700M (acquired April 2, 2025), TECVAYLI $670M (+22.1%), ZYTIGA $502M (−20.4%), TALVEY $463M (+61.3%), RYBREVANT/LAZCLUZE $734M.

Oncology growth came from DARZALEX share gains and market growth, ERLEADA share gains (partly offset by Medicare Part D redesign), CARVYKTI share gains and capacity expansion, and TECVAYLI, TALVEY and RYBREVANT/LAZCLUZE launches — partly offset by ZYTIGA loss of exclusivity and IMBRUVICA competitive pressure plus Part D redesign. Immunology fell on STELARA biosimilars and Part D redesign; TREMFYA grew on share gains and market growth, while SIMPONI and REMICADE benefited from the Merck, Sharp & Dohme return of European rights in Q4 2024. **U.S. STELARA sales were approximately $3.8 billion in 2025.** At least two SIMPONI biosimilars were pursuing U.S. approval, which would likely significantly reduce future sales, and the company expected generic OPSUMIT competition in 2026 with a likely significant reduction in future sales.

2025 approvals and filings advanced the pipeline across AKEEGA (metastatic castration-sensitive prostate cancer), CAPLYTA (adjunctive MDD), DARZALEX (CEPHEUS frontline transplant-ineligible myeloma; AQUILA smoldering myeloma), ICOTYDE (icotrokinra, psoriasis), INLEXZO (non-muscle-invasive bladder cancer), IMAAVY (nipocalimab, generalized myasthenia gravis including pediatrics), RYBREVANT subcutaneous (PALOMA-3), SPRAVATO TRD monotherapy, and multiple TREMFYA indications (ulcerative colitis, Crohn's disease, pediatric psoriasis, psoriatic arthritis structural damage).

### MedTech — $33.8 billion, +6.1% (+5.4% operational)

U.S. sales $17.4 billion (+6.6%); international $16.4 billion (+5.5%, +4.1% operational). Acquisitions/divestitures added a net 1.1%, primarily Shockwave.

| Franchise | 2025 ($M) | 2024 ($M) | Total change |
|---|---|---|---|
| Surgery | 10,137 | 9,845 | +3.0% |
| Orthopaedics | 9,258 | 9,158 | +1.1% |
| Cardiovascular | 8,928 | 7,707 | +15.8% |
| Vision | 5,468 | 5,146 | +6.3% |
| **Total MedTech** | **33,792** | **31,857** | **+6.1%** |

Within Cardiovascular: Electrophysiology $5,634M (+7.0%), Abiomed $1,751M (+17.1%), Shockwave $1,146M (acquired May 31, 2024). Cardiovascular growth reflected procedure growth, new products and commercial execution, partly offset by competitive pressure in pulsed field ablation catheters. Surgery growth was held back by China volume-based procurement and competitive pressure in Energy and Endocutters. Orthopaedics grew just 1.1%, with all platforms hurt by revenue disruption from the previously announced Orthopaedics restructuring (substantially complete), China volume-based procurement and selling days; Spine, Sports & Other declined 2.5% on U.S. Early Interventional competitive and price pressure. Vision grew on ACUVUE OASYS 1-Day performance, recent launches and strategic price actions.

### Earnings and expenses

Consolidated pre-tax earnings were **$32.6 billion (34.6% of sales)** in 2025 versus $16.7 billion (18.8%) in 2024. Net earnings were **$26.8 billion**, diluted EPS **$11.03** (2024: $14.1 billion and $5.79). The swing is dominated by talc accounting: 2025 included an approximately **$7.0 billion reversal** of previously accrued talc reserves, while 2024 included approximately **$5.1 billion of talc charges**.

- *Cost of products sold* rose as a percent of sales on unfavorable mix from the STELARA decline and adverse transactional currency in Innovative Medicine, and tariffs, adverse transactional currency and macroeconomic factors in MedTech — partly offset by a smaller acquisition-related inventory step-up ($0.1 billion in 2025 versus $0.4 billion in 2024 for Shockwave). Intangible amortization inside cost of products sold was $4.6 billion (2024: $4.5 billion).
- *Selling, marketing and administrative* fell as a percent of sales on corporate administrative rationalization and planned leverage in Innovative Medicine, partly offset by CAPLYTA-related investment.
- *R&D* was **$14,665M, down 14.9%** (Innovative Medicine $11,827M or 19.6% of segment sales; MedTech $2,838M or 8.4%). The decline is against a 2024 base that carried $1.25 billion of acquired IPR&D for the NM26 bispecific (Yellow Jersey), $0.5 billion for V-Wave and a $0.3 billion Laminar milestone, plus 2025 prioritization leverage. IPR&D impairments were approximately $0.1 billion in 2025 (a non-strategic Abiomed asset) versus $0.2 billion in 2024.
- *Other (income) expense, net* was **income of $7.2 billion** in 2025 versus expense of $4.7 billion in 2024 — an $11.9 billion swing, of which litigation-related items account for $11.5 billion (the $7.0 billion talc reversal and a $0.8 billion Auris shareholder litigation expense in 2025, against approximately $5.1 billion of talc charges in 2024).
- *Interest*: income $1.1 billion (2024: $1.3 billion); expense $1.0 billion (2024: $0.8 billion), higher on a larger average debt balance following the Q1 2025 senior unsecured note issuance.
- *Effective tax rate*: **17.7%** in 2025 versus 15.7% in 2024.

**Segment pre-tax margin.** Innovative Medicine 36.9% of segment sales (2024: 33.2%); MedTech **12.2%** (2024: 11.7%). MedTech's margin improvement came from a $0.2 billion Abiomed contingent-value-right liability reduction versus $1.0 billion of 2024 Shockwave-related costs, and the absence of 2024 acquired IPR&D — partly offset by $0.9 billion of litigation expense (mainly Auris), higher restructuring ($0.5 billion versus $0.2 billion) and tariffs and adverse transactional currency in cost of products sold.

**Restructuring.** The 2025 MedTech Surgery program cost $205 million pre-tax in 2025, with total program cost then estimated at $0.9–$1.0 billion. The 2023 MedTech Orthopaedics program cost $307 million pre-tax in 2025 ($167 million in 2024, $319 million in 2023) with approximately $0.8 billion recorded to date and the program substantially complete. The 2023 Innovative Medicine R&D prioritization program was completed in Q4 2024 at approximately $0.6 billion.

### Liquidity, capital and dividends

Cash and equivalents fell to **$19.7 billion** at year-end 2025 from $24.1 billion, a $4.4 billion decline: $24.5 billion generated from operations, $23.6 billion used in investing and $5.5 billion used in financing. Investing was dominated by **$17.5 billion of acquisitions net of cash acquired** plus $4.8 billion of capital expenditures. Financing included $12.4 billion of dividends, $6.0 billion of buybacks and $9.6 billion of net debt proceeds.

Total debt was **$47.9 billion** at year-end 2025 versus $36.6 billion in 2024, the increase driven by approximately **$9.2 billion of senior unsecured notes issued in Q1 2025** to fund the approximately $14.5 billion Intra-Cellular acquisition (closed April 2, 2025) and general corporate purposes. **Net debt was $27.8 billion** versus $12.1 billion a year earlier. Total debt was 37.0% of total capital (34.0% in 2024). Shareholders' equity per share was $33.86 versus $29.70. Contractual debt maturities: $2.0 billion in 2026, $3.2 billion 2027, $3.1 billion 2028, $2.2 billion 2029, $2.7 billion 2030 and $28.3 billion thereafter — $41.4 billion of principal plus $16.7 billion of interest.

Identified funding needs at year end included an approximately **$3.4 billion talc reserve**, $2.0 billion of current-portion corporate bonds and approximately $1.1 billion remaining on opioid settlements.

The dividend was increased in 2025 for the **63rd consecutive year**; cash dividends paid were $5.14 per share (2024: $4.91). On January 2, 2026 the Board declared $1.30 per share payable March 10, 2026.

**Pricing discipline.** For 2015–2025 the weighted-average compound annual growth rate of U.S. net price increases for the company's healthcare products was below U.S. CPI.

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## Current quarter — fiscal Q2 2026 (quarter ended June 28, 2026)

*From the Q2 FY2026 10-Q, accession 0000200406-26-000153, and the July 15, 2026 8-K, accession 0000200406-26-000146.*

### Headline results

| | Q2 2026 | Q2 2025 | Change |
|---|---|---|---|
| Worldwide sales | $25,310M | $23,743M | +6.6% (+5.6% operational) |
| Net earnings | $5,534M | $5,537M | −0.1% |
| Diluted EPS | $2.27 | $2.29 | −0.9% |
| Adjusted net earnings | $7,081M | $6,699M | +5.7% |
| Adjusted diluted EPS | $2.90 | $2.77 | +4.7% |

Quarterly sales surpassed $25 billion for the first time. U.S. sales were $14,533M (+7.3%); international $10,777M (+5.7%, +3.4% operational, +2.3% currency). The STELARA decline cut approximately 4.6% from worldwide operational sales (6.6% U.S., 2.1% international).

For the fiscal six months, worldwide sales were **$49.4 billion, up 8.2%** (+6.0% operational, +2.2% currency), with acquisitions and divestitures adding 0.5% (mainly CAPLYTA) and STELARA subtracting approximately 5.0%. U.S. six-month sales were $27.9 billion (+7.8%), international $21.5 billion (+8.7%, +3.6% operational).

### Innovative Medicine — Q2 $16,384M, +7.8% (+6.8% operational)

U.S. +8.9%, international +6.0% (+3.6% operational). STELARA subtracted approximately 7.6% worldwide, 10.4% U.S. and 3.6% international from segment operational sales.

| Therapeutic area | Q2 2026 ($M) | Q2 2025 ($M) | Total change |
|---|---|---|---|
| Oncology | 7,406 | 6,312 | +17.3% |
| Immunology | 3,844 | 3,993 | −3.7% |
| Neuroscience | 2,337 | 2,051 | +14.0% |
| Pulmonary Hypertension | 1,143 | 1,113 | +2.6% |
| Infectious Diseases | 763 | 803 | −5.0% |
| Cardiovascular / Metabolism / Other | 889 | 930 | −4.3% |
| **Total** | **16,384** | **15,202** | **+7.8%** |

Notable products: DARZALEX $4,207M (+18.9%), **TREMFYA $2,046M (+72.5%)**, INVEGA franchise $1,015M (+2.3%), ERLEADA $995M (+9.5%), **STELARA $740M (−55.2%)**, XARELTO $664M (+7.1%), CARVYKTI $657M (+49.4%), SIMPONI/SIMPONI ARIA $618M (−10.5%), OPSUMIT/OPSYNVI $602M (+3.4%), IMBRUVICA $599M (−18.6%), SPRAVATO $584M (+40.8%), UPTRAVI $494M (+3.8%), CAPLYTA $361M (+70.9%), REMICADE $338M (−25.8%), RYBREVANT/LAZCLUZE $289M (+60.8%), TECVAYLI $260M (+56.5%), TALVEY $174M (+63.3%), Other Immunology $104M (IMAAVY and ICOTYDE in the U.S.).

Oncology growth came from DARZALEX share gains and market growth, CARVYKTI share gains and site expansion, TECVAYLI launch uptake and share gains following the U.S. TECVAYLI + DARZALEX FASPRO approval and community-setting expansion, TALVEY community expansion, RYBREVANT/LAZCLUZE launch uptake, and ERLEADA share gains — partly offset by IMBRUVICA share loss to competition. Immunology declined on STELARA biosimilars, adoption of novel classes and unfavorable patient mix, plus SIMPONI and REMICADE share loss, offset by TREMFYA's share gains across all indications with significant IBD launch momentum. Neuroscience grew on SPRAVATO demand and CAPLYTA's adjunctive MDD launch momentum.

**Three explicit exclusivity warnings this quarter.** STELARA biosimilars are expected to continue pressuring sales. **SIMPONI biosimilars entered the European market in Q2 2026, with a potential U.S. entrant later in 2026**, which will likely reduce future sales. **Generic OPSUMIT competition entered the U.S. market late in Q2 2026**, likewise likely to reduce future sales; the quarter already reflected U.S. inventory burn ahead of it.

### MedTech — Q2 $8,926M, +4.5% (+3.6% operational)

U.S. +3.9%, international +5.2% (+3.2% operational).

| Franchise | Q2 2026 ($M) | Q2 2025 ($M) | Total change | Operational |
|---|---|---|---|---|
| Cardiovascular | 2,404 | 2,313 | +4.0% | +3.1% |
| — Electrophysiology | 1,533 | 1,468 | +4.4% | +3.1% |
| — Abiomed | 440 | 448 | −2.0% | −2.0% |
| — Shockwave | 335 | 292 | +14.6% | +14.7% |
| Surgery | 2,653 | 2,555 | +3.9% | +2.3% |
| Vision | 1,451 | 1,369 | +6.0% | +5.6% |
| Orthopaedics | 2,418 | 2,305 | +4.9% | +4.2% |
| **Total MedTech** | **8,926** | **8,541** | **+4.5%** | **+3.6%** |

Electrophysiology growth came from procedure growth, commercial execution and new products (VARIPULSE, TRUPULSE, NUVISION, CRYSTAL), offset by competitive pressure in pulsed field ablation catheters and China inventory dynamics. **Abiomed declined 2.0%** on lower U.S. procedure volumes, partly offset by non-U.S. growth including Impella 5.5 adoption. Shockwave grew on Coronary and Peripheral adoption and new launches. Surgery growth was restrained by China volume-based procurement, the surgery transformation program in Biosurgery and Energy, and Endocutter competition. Orthopaedics improved to +4.2% operational on new hip launches, ATTUNE knees with VELYS robotic pull-through, recently launched trauma products, and shoulders.

The Orthopaedics separation remains on the October 2025 path: multiple routes still being explored, targeted completion within 18 to 24 months of announcement.

### Margins, expenses and one-offs

Consolidated pre-tax earnings were **$6.7 billion, 26.7% of sales** in Q2 2026 versus $6.5 billion and 27.3% a year earlier. For the six months, pre-tax earnings were $12.7 billion (25.8% of sales) versus $20.1 billion (44.1%) — the prior-year period included the approximately $7.0 billion talc reserve reversal, so the year-over-year decline is an accounting artifact, not operating deterioration.

- Cost of products sold fell as a percent of sales on operational drivers and favorable currency in both segments, partly offset by unfavorable mix from the STELARA decline and **tariffs in MedTech**. Intangible amortization in cost of products sold was $1.2 billion in Q2 2026 ($1.3 billion prior year); $2.5 billion for six months ($2.4 billion).
- SM&A rose as a percent of sales on commercial investment in both segments.
- R&D was **$3,653M in Q2 (14.4% of sales)**, up 3.9%; Innovative Medicine $2,875M (17.5% of segment sales, down from 18.9%) on expense phasing, MedTech $778M (8.7%, up from 7.6%) on increased Surgery and Cardiovascular investment. Six-month R&D was $7,180M, up 6.5%.
- Interest was net expense of $62 million in Q2 (prior year $48 million); six-month net expense of $105 million versus net income of $80 million, on a lower average cash balance and a higher average debt balance.
- Other (income) expense, net was an expense of $0.3 billion in Q2 (prior year $0.1 billion), with litigation-related expense of $0.3 billion, Orthopaedics-separation costs of $0.2 billion and restructuring of $0.2 billion. For six months it was an expense of $0.6 billion versus $7.2 billion of income, including **$0.8 billion of talc charges in 2026** against the roughly $7.0 billion 2025 reversal, plus $0.4 billion of Orthopaedics separation costs.
- Six-month effective tax rate **15.5%** versus 17.8%.

**Segment pre-tax margin.** Q2 Innovative Medicine **38.1%** of segment sales, up from 36.5%, helped by favorable securities fair-value changes, lower Intra-Cellular acquisition and integration costs and R&D phasing, partly offset by $0.2 billion of restructuring, unfavorable STELARA mix and commercial investment. Q2 MedTech **13.2%**, down from 14.1%, on $0.3 billion of Orthopaedics separation costs, higher R&D, commercial investment and **tariffs in cost of products sold**, partly offset by operational drivers and favorable currency. Six-month margins were 36.4% (from 37.0%) and 13.8% (from 15.9%) respectively.

### Restructuring

A **new supply chain restructuring program** was initiated in Q2 2026, primarily in Innovative Medicine, to exit certain manufacturing locations. Estimated cost **$650–$750 million**, substantially complete by end of 2029, covering site and supplier exit costs, decommissioning and asset impairments; **$200 million was recorded in Q2 2026**, primarily asset impairments.

The MedTech Surgery program (initiated 2025) recorded $59 million in Q2 and $114 million for six months, approximately $0.3 billion since announcement, total program now estimated at **$0.6–$0.7 billion** (revised down from the $0.9–$1.0 billion estimate in the FY2025 10-K), substantially complete by end of fiscal 2026. The MedTech Orthopaedics program (initiated 2023) recorded $17 million in Q2 and $24 million for six months, approximately $0.8 billion since announcement, completing in Q4 2026 at a total of approximately $1.0 billion. Total restructuring expense was $276 million in Q2 2026 and $338 million for six months (versus $79 million and $134 million).

### Liquidity and capital

Cash and equivalents rose to **$20.4 billion** at June 28, 2026 from $19.7 billion at year-end 2025: $11.1 billion generated from operations, $2.2 billion used in investing, $8.2 billion used in financing. Marketable securities were $0.3 billion.

Operating cash flow of $11.1 billion comprised $10.8 billion of net earnings plus $4.6 billion of non-cash adjustments, less $2.9 billion of working capital build in receivables and inventories, $1.0 billion decrease in payables and accruals, $1.6 billion decrease in other liabilities, plus $1.3 billion from other assets. Investing was $2.4 billion of capital expenditures, $0.3 billion of acquisitions, offset by $0.5 billion of credit support agreement activity. Financing was **$6.4 billion of dividends and $4.2 billion of buybacks**, offset by $1.5 billion of net debt proceeds and $1.5 billion from option exercises, with $0.6 billion of other outflow primarily the **Auris shareholder payment**.

**Cash, equivalents and marketable securities of approximately $20.8 billion** against approximately **$49.0 billion of notes payable and long-term debt** gives a **net debt position of $28.2 billion**, improved from $31.9 billion at the prior-year quarter. Identified funding needs: the approximately **$3.7 billion talc balance**, $1.7 billion of current-portion corporate bonds and approximately $0.9 billion remaining on opioid settlements.

The company can issue up to $20 billion of commercial paper and, **in June 2026, secured a new 364-day credit facility of $12.5 billion expiring June 23, 2027** (replacing the $10 billion facility secured in June 2025), priced off SOFR or another applicable market rate plus margin.

**Dividends and buybacks.** The Board declared $1.34 per share on April 14, 2026 (paid June 9, 2026) — a 3.1% increase from $1.30 and the **64th consecutive year of increases**, indicating $5.36 annualized. During Q2 2026 the company repurchased 970,250 shares at an average $229.54, all under a systematic plan supporting compensation programs; no shares were purchased under publicly announced plans or programs.

### Guidance

Full-year 2026 guidance was **raised** on July 15, 2026 (prior guidance from April 2026 in parentheses):

| Measure | July 2026 | April 2026 |
|---|---|---|
| Adjusted operational sales growth | 6.2%–6.8% (mid 6.5%) | 5.6%–6.6% (mid 6.1%) |
| Operational sales | $100.3B–$100.9B (mid $100.6B), +6.8% at midpoint | $99.7B–$100.7B (mid $100.2B) |
| Estimated reported sales | $100.8B–$101.4B (mid $101.1B), +7.3% at midpoint | $100.3B–$101.3B (mid $100.8B) |
| Adjusted operational diluted EPS | $11.50–$11.65 (mid $11.58), +7.3% at midpoint | $11.30–$11.50 (mid $11.40) |
| Adjusted diluted EPS | $11.60–$11.75 (mid $11.68), +8.2% at midpoint | $11.45–$11.65 (mid $11.55) |

Adjusted EPS guidance rose $0.13 and adjusted operational EPS $0.18 versus April. Management framed 2026 as the year the company passes **$100 billion of annual revenue for the first time in its 140-year history**. Reported sales guidance assumes a $1.15 euro average rate (April assumed $1.17). The company does not provide forward-looking GAAP measures, citing inability to predict litigation outcomes, unusual gains and losses, acquisition expenses and purchase accounting adjustments.

### Notable in-quarter regulatory and clinical events

FDA approval of the Dual Energy THERMOCOOL SMARTTOUCH SF platform; CHMP recommendation for TECVAYLI plus daratumumab in relapsed/refractory multiple myeloma; FDA label expansion establishing TREMFYA as the only IL-23 inhibitor proven to help stop further joint damage; FDA approval of a CAPLYTA sNDA on reduced relapse risk in schizophrenia; CE Mark for the ETHICON 4000 stapler; FDA Priority Review for IMAAVY in warm autoimmune hemolytic anemia. Data readouts included TALVEY plus DARZALEX FASPRO in earlier-line myeloma, IMAAVY in wAIHA, lupus and Sjögren's disease, RYBREVANT FASPRO in head and neck cancer, ERLEADA perioperative prostate cancer (metastasis or death risk reduction), TREMFYA in perianal fistulizing Crohn's disease, and JNJ-4804 in refractory inflammatory bowel disease.

---

## Legal proceedings and product liability

*From the Q2 FY2026 10-Q, accession 0000200406-26-000153, with background from the FY2025 10-K, accession 0000200406-26-000016.*

The company accrues for loss contingencies when a liability is probable and the amount can be reasonably estimated. For matters where a loss is probable or reasonably possible, it states it is **unable to estimate the possible loss or range of loss beyond the amounts accrued**. Management's stated opinion is that the ultimate outcome, net of accrued liabilities, is not expected to have a material adverse effect on financial position, but that resolution or an increase in accruals in any period may materially affect results of operations and cash flows for that period.

### Talc

**Approximately 76,000 plaintiffs in the United States** had direct claims in pending lawsuits as of June 28, 2026 alleging injury from body powders containing talc, primarily JOHNSON'S Baby Powder (74,360 as of December 28, 2025).

*History.* Beginning in October 2021 the company undertook a series of restructurings that placed all talc liabilities in two entities — **Red River Talc, LLC** (North American ovarian and other gynecological cancer claims) and **Pecos River Talc LLC** (mesothelioma, governmental unit and certain other North American claims). Three successive Chapter 11 proceedings were filed; **all three were dismissed**. The proposed "prepackaged" plan solicited in May 2024 would have paid a present value of approximately $6.475 billion over 25 years (nominal approximately $8.0 billion at a 4.4% discount rate) covering 99.75% of then-pending suits. To account for it, the company recorded a cumulative incremental charge of approximately $5.0 billion in 2024, bringing the year-end 2024 reserve to a present value of approximately $11.6 billion (nominal approximately $13.5 billion). In March 2025 the Texas Bankruptcy Court dismissed the case and the company **reversed approximately $7.0 billion**, declined to appeal, and returned to the tort system.

Separately, the June 2020 Missouri Court of Appeals decision in *Ingham* reduced a July 2018 $4.7 billion verdict to $2.1 billion; the company paid approximately $2.5 billion including interest in June 2021 after certiorari was denied.

*Current reserve.* As of Q2 2026 the total present value of the talc reserve is approximately **$3.7 billion**, comprising executed settlement agreements, litigation defense and other costs; **approximately 40% is a current liability** (up from approximately $3.4 billion and one-third current at year-end 2025). Six-month 2026 talc charges were $0.8 billion.

*Ovarian cancer MDL (D.N.J.).* The court is addressing Daubert motions on general causation, specific causation and certain asbestos testing methods. In January 2026 the Special Master issued a Report and Recommendation on general causation excluding certain plaintiff expert opinions while allowing others; the company appealed to the district court. In May 2026 the Special Master held evidentiary hearings on specific causation, after which **plaintiffs withdrew two of their specific causation experts**. In June 2026 the company filed a Motion to Show Cause requiring plaintiffs to explain why the MDL should not be dismissed. Ovarian cancer and mesothelioma trials are being scheduled in various state courts through 2026 and beyond, and the company also faces litigation in Canada.

*Securities class action (D.N.J., filed February 2018).* Alleges failure to disclose alleged asbestos contamination in talc body powders. Class certification was granted in December 2023 and **affirmed by the Third Circuit in July 2025**; rehearing was denied in October 2025 and the **U.S. Supreme Court denied certiorari in April 2026**. Expert discovery is proceeding.

*Imerys / Cyprus.* Talc supplier Imerys entities filed Chapter 11 in February 2019 and Cyprus Mines in February 2021. A July 2024 global settlement agreement resolves indemnity disputes and insurance-proceeds entitlements; the Delaware Bankruptcy Court approved it in October 2024. Insurers' appeal was denied by the district court in August 2025 and is now before the Third Circuit, where **briefing is complete and a ruling is pending**.

### Opioids

The company and Janssen Pharmaceuticals have been named in close to **3,500 lawsuits** over opioid marketing (DURAGESIC, NUCYNTA, NUCYNTA ER), plus suits by NAS plaintiffs, hospitals and payors. Two cases litigated to judgment were both won at trial or on appeal. A July 2021 agreement settles state and subdivision claims for **up to $5.0 billion**, approximately 80% paid by the end of fiscal 2025; hospital cases were resolved in September 2024. Roughly **23 state-court cases, 285 cases in the Ohio MDL and 3 other federal cases** remain, plus Canadian actions including a British Columbia opt-in class action with a common issues trial scheduled for 2028. Approximately **$0.9 billion of opioid settlement obligations remained** as of the Q2 2026 filing.

### Other product liability

Pending U.S. plaintiff counts at December 28, 2025: pelvic meshes 5,190; ELMIRON 790; DePuy PINNACLE Acetabular Cup System 680; ETHICON PHYSIOMESH 110; DePuy ASR hip systems 30.

### Intellectual property and antitrust

*INVEGA SUSTENNA.* In May 2026 Janssen settled confidentially with Pharmascience, Mallinckrodt (now Keenova Therapeutics) and SpecGx; in June 2026 it stipulated dismissal with Aurobindo and settled confidentially with Eugia.

*ERLEADA.* Canadian trial against Sandoz scheduled to begin **August 2026**. The Hetero U.S. case settled confidentially in May 2026 and was dismissed. A new U.S. suit was filed in June 2026 against MSN Pharmaceuticals, MSN Laboratories and Novadoz.

*SPRAVATO.* Trial against Sandoz took place February 2026; post-trial briefing is complete and a decision is awaited.

*CAPLYTA.* Aurobindo settled confidentially in June 2026 and was dismissed; trial against Zydus is scheduled for **March 2027**.

*CARVYKTI.* In January 2026 2seventy bio sued in the Unified Patent Court (Brussels) against the company, Janssen entities and Legend Biotech over EU Patent No. 3 689 383, seeking damages and an injunction; the U.S. government (HHS Office of Technology Transfer), as patent owner, intervened in May 2026. Oral hearing scheduled March 2027.

*DARZALEX.* In February 2026 BIOCAD filed an unfair competition action in the Arbitrazh Court of Moscow Region against Genmab and Johnson & Johnson LLC concerning daratumumab patent term extension and market entry from March 24, 2026.

*SIMPONI / SIMPONI ARIA.* In March 2026 Janssen sued Accord BioPharma and Bio-Thera in D. Del. over biosimilar aBLAs; **Janssen moved for a preliminary injunction in May 2026, with a hearing scheduled for September 2026**. Accord, Intas and Bio-Thera filed four IPR petitions in March 2026. In June 2026 Janssen filed a further suit in E.D. Va. against Alvotech entities over their SIMPONI and SIMPONI ARIA biosimilar aBLAs.

*Abiomed / Maquet.* In February 2026 the Federal Circuit remanded the 2016 declaratory judgment action after reviewing claim constructions; discovery will restart. In the separate November 2017 suit, **trial was held in May 2026 and the jury returned a verdict in Abiomed's favor**; post-trial briefing is ongoing.

*STELARA antitrust (E.D. Va.).* Class certification was granted December 2025; in January 2026 the court granted summary judgment for Janssen on the claim regarding Momenta-acquired patents; plaintiffs appealed to the Fourth Circuit in March 2026.

*Biosense Webster / Innovative Health.* A May 2025 jury verdict for Innovative Health and an August 2025 permanent injunction on Biosense Webster's business practices are on appeal; **briefing was completed in June 2026**.

*Auris / Fortis Advisors.* **The company paid a $0.8 billion judgment inclusive of interest in January 2026** on the breach of contract and fraud claims tied to Ethicon's 2019 Auris acquisition.

*TRACLEER / Actelion antitrust.* The parties agreed to settle in February 2026.

### Government proceedings

*HIV qui tam (D.N.J.).* A June 2024 jury found no anti-kickback liability but found liability on part of the off-label promotion claims for PREZISTA and INTELENCE. The court dismissed the state-law portion in March 2025 and entered judgment on federal claims. The appeal to the Third Circuit was argued March 2026 with a decision pending; **in April 2026 the Third Circuit ordered the parties to mediate**.

*REMICADE / SIMPONI ARIA qui tam (D. Mass.).* Summary judgment argument was heard May 2026 with no decision issued; **trial is scheduled for November 2026**.

*DePuy Synthes False Claims Act (S.D. Fla.).* In June 2026 three relators — sales representatives for competitor companies — filed an amended complaint alleging the company and DePuy Synthes, with Tenet Healthcare, Delray Medical Center and West Boca Medical Center, caused submission of false claims to federal and Florida healthcare programs. DOJ declined to intervene. The company is defending.

*ZYTIGA pricing qui tam (D.N.J.).* Motion to dismiss denied December 2021; Daubert proceedings ongoing.

### General litigation

*Anti-Terrorism Act (D.D.C.).* U.S. service members allege defendants funded terrorist organizations through sales practices under Iraqi Ministry of Health contracts. The D.C. Circuit **affirmed its reversal of the dismissal in January 2026** and **denied rehearing in April 2026**.

*ERISA prescription-drug benefits class action (D.N.J.).* Fiduciary duty claims were dismissed in November 2025 and final judgment was entered for defendants in January 2026; plaintiffs appealed to the Third Circuit.

*Xoma / TREMFYA (E.D. Pa.).* Breach of contract and unjust enrichment claims over a license for TREMFYA commercialization; the court denied Janssen's motion to dismiss in December 2025.

---

## Subsequent events

*Post-period developments disclosed in the Q2 FY2026 10-Q, accession 0000200406-26-000153 (period ended June 28, 2026, filed July 23, 2026), and the July 15, 2026 8-K, accession 0000200406-26-000146.*

**Pending acquisition — Firefly Bio, Inc., $1 billion in cash.** On June 8, 2026 the company announced a definitive agreement to acquire **Firefly Bio, Inc.**, a biotechnology company advancing its proprietary Firelink degrader antibody conjugate (DAC) platform, for **$1 billion in cash**. The transaction had not closed as of the period end; **closing is expected in fiscal Q3 2026**, subject to regulatory approvals and customary closing conditions. Results will be reported in the Innovative Medicine segment from the acquisition date.

**Raised full-year guidance and Q2 results (July 15, 2026).** The company reported Q2 EPS of $2.27 and adjusted EPS of $2.90 and raised 2026 guidance: estimated reported sales to a $101.1 billion midpoint (+7.3%) and adjusted EPS to an $11.68 midpoint (+8.2%), an increase of $0.13 versus April guidance; adjusted operational EPS rose $0.18 to an $11.58 midpoint.

**Dividend declaration (July 15, 2026).** The Board declared a regular quarterly cash dividend of **$1.34 per share, payable September 8, 2026 to shareholders of record August 25, 2026**. The company expects to continue paying regular quarterly cash dividends.

**Talc — ovarian cancer MDL.** In **July 2026 the court granted the company's Motion to Show Cause**, requiring plaintiffs to explain why the MDL should not be dismissed following their withdrawal of two specific-causation experts; a case management conference on the motion is **scheduled for August 2026**. Also in **July 2026 the Special Master issued a Report and Recommendation on certain asbestos testing methods, granting in part the company's motion**.

**INVEGA SUSTENNA — Canada.** In **July 2026 the Supreme Court of Canada dismissed Pharmascience's appeal** of the Federal Court's decision that Canadian Patent No. 2,655,335 is not invalid, preserving the patent.

**TRACLEER antitrust settlement finalized.** In **July 2026 the court granted final approval** of the settlement of the consolidated putative class actions against Actelion entities (D. Md.) alleging refusal to supply generic manufacturers with TRACLEER samples. The parties had agreed to settle in February 2026.

No post-period financings, borrowings or divestitures were disclosed. The most recent financing action, the **$12.5 billion 364-day credit facility expiring June 23, 2027**, was secured in June 2026, within the quarter.