Johnson & Johnson’s 2024 Performance and Outlook for 2025
Johnson & Johnson (JNJ) experienced a lackluster 2024, with its stock declining by 7% against a robust 23% gain for the S&P 500. This underperformance contrasts sharply with the successes of other pharmaceutical giants like Eli Lilly and AbbVie. Several factors contributed to JNJ’s struggles, including dwindling Covid-19 vaccine sales, declining revenue from Remicade, and intensified competition for some of its key drugs. While 2024 presented challenges, it also highlighted JNJ’s strategic moves and set the stage for a potentially transformative 2025.
JNJ’s 2024 performance was shaped by three key trends. First, the company saw growth in its medical devices business, fueled by strategic acquisitions. Electrophysiology and cardiovascular sales showed positive momentum in recent quarters. Second, some of JNJ’s blockbuster drugs, including Darzalex, Erleada, and Tremfya, gained market share. Darzalex, in particular, emerged as a strong performer, generating approximately $3 billion in quarterly sales. However, the third trend presented a significant headwind: biosimilar competition for key drugs like Imbruvica, which experienced a 7% year-over-year sales decline in the first nine months of 2024.
JNJ’s 2024 strategy focused heavily on inorganic growth through acquisitions to bolster its MedTech division. Notable acquisitions included V-Wave for heart failure treatment, Shockwave Medical for cardiovascular intervention offerings, Yellow Jersey for the eczema drug NM26, and Proteologix, specializing in bispecific antibodies for immune-mediated diseases. These acquisitions, while strategically important, impacted JNJ’s financial position. Cash reserves decreased from $23 billion in 2023 to $20 billion by September 2024, while debt increased from $29 billion to $36 billion over the same period. Despite these shifts, JNJ maintained its commitment to shareholder returns, increasing its dividend by 4.2% and spending $2 billion on share repurchases in the first three quarters.
JNJ’s stock performance reflected these underlying trends. The stock price gradually declined from $155 in early January 2024 to $144 by year-end. A longer-term view reveals a volatile pattern over the past four years, with returns fluctuating between positive and negative territory. This volatility underscores the potential risks associated with individual stock investments and highlights the potential benefits of diversified portfolios.
Looking ahead to 2025, JNJ faces a complex landscape. The pharmaceutical side of the business anticipates challenges, particularly with the loss of exclusivity for Stelara, a top-selling drug with $11 billion in sales in 2023. Biosimilar competition for Stelara in Europe and the U.S. is expected to significantly impact sales, potentially offsetting gains from other drugs like Darzalex. Further uncertainty arises from the temporary pause in the use of the recently approved heart device Varipulse, following reports of neurovascular events. This setback could impact projected sales and requires close monitoring.
Despite these challenges, JNJ also has potential catalysts for growth in 2025. Promising new drugs like Carvykti for multiple myeloma and Spravato for depression are gaining market share, and this trend is expected to continue. Furthermore, JNJ anticipates potential FDA approval for Nipocalimab, a potential blockbuster treatment acquired through the acquisition of Momenta Pharmaceuticals. Another potential growth driver is Posdinemab, an investigational biologic for early-stage Alzheimer’s disease, which recently received fast-track designation from the FDA and could advance to late-stage clinical trials.
Overall, JNJ’s 2025 outlook presents a mixed bag of opportunities and challenges. While Stelara competition poses a significant headwind, the company’s diversified portfolio, pipeline of new drugs, and strategic acquisitions offer potential upside. With the stock trading at a relatively low forward P/E ratio, the market may already be pricing in the anticipated headwinds. However, investors should closely monitor developments related to Stelara competition, Varipulse, and the progress of new drug candidates to assess the full impact on JNJ’s future performance. Benchmarking JNJ’s performance against its peers can provide valuable context for evaluating its relative strengths and weaknesses.
In summary, JNJ’s 2024 performance was marked by strategic acquisitions, growth in certain product lines, and increasing competition. The company’s outlook for 2025 is complex, with challenges stemming from biosimilar competition and the Varipulse setback, but also opportunities arising from promising new drugs and potential FDA approvals. Investors should carefully consider these factors and monitor developments closely to assess JNJ’s future prospects. While individual stock investments like JNJ can be volatile, diversified portfolios can offer a smoother ride and potentially outperform the market.
