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Johnson & Johnson (NYSE: JNJ) has made significant business changes over the past few years. Perhaps the most notable was the company's decision to spin off its consumer health division into a stand-alone, publicly traded company. The drugmaker made this move partly because consumer health had become a drag on sales growth, and it bet that eventually, top-line growth would improve as a result of this spinoff. Now, management thinks that Johnson & Johnson could achieve double-digit sales growth by 2030. Does this guidance make the stock a buy? Let's find out.
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In the first nine months of the year, Johnson & Johnson reported $74.8 billion in sales, up 7.4% year over year. That's a strong performance for the pharmaceutical giant, and even more impressive given the biosimilar competition for Stelara. This immunology drug lost U.S. patent exclusivity in 2025. Stelara was a meaningful growth driver. In fact, even after losing exclusivity, it remains one of Johnson & Johnson's top-selling drugs.
Through Sept. 30, it generated $2.1 billion in sales, down 56.4% year over year. Excluding Stelara, Johnson & Johnson's total revenue through Sept. 30 grew by about 12.2% year over year. Looking forward, Johnson & Johnson could face more patent cliffs over the next five years. Darzalex, a cancer drug and the company's best-selling product, could lose U.S. patent exclusivity by the end of the decade.
To achieve its goal of double-digit sales growth, Johnson & Johnson will have to find new drugs to navigate upcoming patent expirations. Fortunately, the company has made progress along those lines. In recent years, Johnson & Johnson has launched several new products to diversify its pipeline, boost top-line growth, and overcome patent cliffs. The company's newest drugs include Icotyde, an oral pill for plaque psoriasis. Others include Inlexzo and Lazcluze, both of which are cancer drugs, and Imaavy, which is approved to treat myasthenia gravis, a chronic autoimmune condition.
Johnson & Johnson has estimated that all four of these products have peak sales potential exceeding $5 billion. These are projections, not results. But it's not hard to see the potential of these medicines. For instance, consider Icotyde, which belongs to the IL-23 pathway inhibitor category, a group of medicines that treat various diseases by blocking immune signals that cause excessive inflammation.
Most medicines in this group require injections. Icotyde became the first oral IL-23 pathway inhibitor to earn approval for plaque psoriasis. Since it offers a much more convenient option, it could carve out a niche in this large market, as it earns additional indications elsewhere. Multibillion-dollar peak sales don't seem outside this medicine's reach. Further, Johnson & Johnson has other highly promising candidates.
One of them is Milvexian, an investigational anticoagulant that could solve one problem today's anticoagulants face: it could reduce the significant bleeding risk they pose. Lastly, even within its medical device segment, Johnson & Johnson has made progress.
For instance, the company has earned U.S. clearance for the Ottava. This robotic-assisted surgery device will allow it to tap into the underpenetrated robotic surgery market -- Johnson & Johnson has estimated that fewer than 8% of eligible soft tissue surgeries are currently performed robotically.
Johnson & Johnson can see revenue growth rates increase as sales of newer products ramp up, even as it continues to face generic and biosimilar competition for older drugs.
Johnson & Johnson looks well-positioned to achieve its goal of double-digit sales growth by 2030, and there are several other reasons to buy the stock. Here are two of them. First, the company has taken significant steps toward resolving the thousands of talc-related lawsuits it has faced for years. A recent proposed settlement would have Johnson & Johnson pay $5.5 billion to plaintiffs, with the first payment of no more than $3 billion due in 2027 and no additional payment due before 2028.
For a company that could generate over $100 billion in annual sales this year, that's a fairly small price to pay to put thousands of lawsuits that have tarnished its public image in the rearview mirror. Second, Johnson & Johnson remains a fantastic income stock. The company's streak of 64 consecutive annual payout increases makes it a Dividend King, a status that requires at least 50 straight annual dividend increases. Dividend seekers should seriously consider adding this stock to their portfolios and holding it for the long term.
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Prosper Junior Bakiny has positions in Johnson & Johnson. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
Johnson & Johnson Sees a Path to Double-Digit Growth by 2030. Is the Dividend King a Buy? was originally published by The Motley Fool
