With two Trump administration drug pricing deals in the books and more likely on the way, the U.S. policy environment could soon stabilize for many Big Pharma companies. That put Johnson & Johnson in an interesting position this week, as the drugmaker led the vanguard on the industry's third-quarter earnings reporting but has yet to strike a formal pricing accord with the government.
Still, comments from J&J’s chief executive suggest that the company is largely aligned with many of President Donald Trump’s policy goals on medicine costs and manufacturing—and that a favorable agreement resembling those struck by Pfizer and AstraZeneca could be on the horizon.
“We’ve been talking with this administration with an open dialogue since day one—even before day one,” CEO Joaquin Duato said on a conference call Tuesday, addressing an analyst question about the company’s current outlook on pharmaceutical import tariffs and drug pricing reform in the U.S.
“We are always looking, as we have done at Johnson & Johnson, for common ground to build [on] the administration priorities that are similar to ours,” he continued. “Priorities like making sure that American patients have access to innovation in an affordable and timely way; priorities like making sure that foreign entities do not free ride on American innovation; making sure that we are able to maintain the overall leadership that this country has in life sciences; and finally, making sure that we continue to invest in manufacturing in this country to build good middle class jobs.”
Duato stressed that J&J is committed to delivering on each of those aims, which echo many of the talking points the administration laid out this summer when it pressed 17 large drugmakers to embrace Trump’s “most favored nation” (MFN) approach to drug pricing and sales.
In essence, the framework seeks to align prices of branded drugs in the U.S. to costs in developed countries overseas. The President has also made direct-to-consumer sales channels and tougher negotiating on drug prices in foreign countries key components of the MFN agenda.
The strategy has so far yielded deals with Pfizer and AstraZeneca, with administration officials teasing that several more agreements are on the way. By making MFN commitments, Pfizer and AZ have also won timed exemptions from another key facet of Trump’s industry policy: tariffs.
Duato said on Tuesday that conversations between J&J and the administration are “ongoing,” noting that he couldn’t share details but that he felt “optimistic that we are going to land in a place which is going to create common ground between the administration and ourselves.”
Policy musings aside, J&J’s third-quarter earnings call was more or less business-as-usual for the New Jersey drug giant, save for the news that it plans to spin off its orthopedics business.
For the latest three-month earnings period, J&J delivered sales growth of 6.8% to $24 billion. J&J’s innovative medicine engine was firing on all cylinders and delivered overall sales slightly above analyst consensus estimates at nearly $16 billion for the period, Leerink Partners’ David Risinger wrote in a note to clients Tuesday.
In particular, 11 of J&J’s novel drugs turned out to have double-digit growth in Q3, the company’s EVP and worldwide chairman of innovative medicine, Jennifer Taubert, said on the Tuesday earnings call. As in previous quarters, Taubert was especially enthusiastic about Tremfya—J&J’s Stelara successor—which grew revenue more than 40% to $1.4 billion from July through September.
That roster of double-digit performers—which also includes medicines like Darzalex, Erleada, Spravato and Caryvkti—is expected to be J&J's "growth drivers throughout the rest of the decade," Taubert explained.
Taubert also touched on J&J’s latest approval in the drug-releasing system for bladder cancer, Inlezxo, which passed muster with the FDA in early September.
J&J’s Inlexzo field team is now “out in full launch mode,” Taubert noted, stressing J&J’s confidence that the bladder cancer product represents a “$5 billion-plus” asset for the company.
The drug has already generated excitement among doctors, Taubert said, noting that it was “really designed by urologists for urologists.”
With much of the attention on its current crop of branded drugs, J&J plans to focus most of its financial firepower internally, the executives said Tuesday. In particular, they hit back against the idea that J&J is in the market for a large-scale acquisition.
“We rely on a thoughtful, long-term approach to growing through any loss of exclusivity, and won’t carelessly deploy capital on speculative transactions out of desperation,” Joe Wolk, J&J’s chief financial officer, said on the call. “Our current portfolio and pipeline have momentum, and with the Stelara loss of exclusivity increasingly in the rear view mirror, we do not need to rely on large transactions to drive our growth.”
Wolk’s comments came shortly after reports surfaced that J&J is looking to buy out its immunology partner Protagonist Therapeutics. A report from The Wall Street Journal last week noted that the deal could value Protagonist at well over $4 billion.
Meanwhile, given its performance in the quarter, J&J has lifted its revenue projection for the full year. The company now expects to reel in 2025 sales between $93.5 billion and $93.9 billion, up from a previous range of $93.2 billion to $93.6 billion.