Medtech Under Pressure: Is J&J's Selloff a Sign of Broader Pharma Woes?

J&J Beats Q3 Estimates, Shares Fall Despite Strong Drug Sales

Johnson & Johnson's medical device unit grew only 2.5% in the third quarter, while drug sales rose 7.7%. The company's adjusted earnings of $2.59 per share topped estimates, but shares fell more than 5% on Tuesday.

Why Did MedTech Miss Outweigh 7.7% Drug Growth?

J&J's drug unit generated $16.76 billion, about 66% of quarterly sales. Tremfya, a psoriasis and bowel disease treatment, jumped 68.3% to nearly $2.4 billion. However, Darzalex, a blood cancer drug, reached $4.24 billion, short of the $4.4 billion analysts expected.

MedTech Sales Rose 2.5% to $8.64 Billion, Below Expectations

Device sales in the U.S. rose 4.8%, according to the earnings call, while Reuters reported sales elsewhere were essentially flat.

Is the J&J Selloff a Company Problem or a Medtech Problem?

Chief Financial Officer Joe Wolk blamed Gulf governments shifting budgets to defense, European austerity, and pricing pressure in China for the underperformance. Abiomed, J&J's heart pump unit, faces a U.K. study questioning the device's benefits in some high-risk procedures.

Guidance Cuts and Spin-Off Plans

J&J plans to spin off DePuy Synthes, its orthopedics unit, by mid-2027, following the Kenvue consumer health spinoff. The company prefers a spin-off to a sale, citing depressed medtech valuations as a factor.