J&J Expects Oncology Sales of USD 50B by 2030: Can It Achieve the Goal?
Oncology, at present, comprises around 27% of J&J's total revenues. Its oncology sales rose 22.3% on an operational basis in the second quarter to $6.3 billion, driven by strong market growth and share gains of key products such as multiple myeloma treatment Darzalex and prostate cancer drug, Erleada. New cancer drugs, such as Carvykti, Tecvayli, Talvey and Rybrevant, plus Lazcluze, contributed significantly to growth as they witnessed strong launches.
Though the $50 billion target was well above consensus, J&J seems quite confident in the target, citing strong growth in its marketed cancer drugs and the potential of upcoming launches like TAR-200 in bladder cancer and the subcutaneous formulation of Rybrevant plus Lazcluze for advanced EGFR-mutated non-small cell lung cancer (NSCLC). TAR-200 is under priority review with the FDA for treating non-muscle invasive bladder cancer and is expected to be approved this year. The subcutaneous formulation of Rybrevant plus Lazcluze has been recommended for approval in the EU while it is under review in the United States.
Meanwhile, J&J's oncology pipeline has gained strong momentum in the last year and a half, with promising developments in colorectal and head and neck cancers. In this period, J&J had eight proof-of-concept readouts, which led the candidates to move to late-stage pivotal studies across the portfolio. If these pipeline drugs are eventually approved, they can also boost JNJ's oncology sales.
In the five years from 2019 to 2024, J&J's oncology sales have doubled from $10.7 billion in 2019 to $20.8 billion in 2024. To achieve the $50 billion target in the next 5-6 years, the company needs to more than double its sales from 2024 levels. Though quite optimistic, the target is not unachievable.
Competition in the Oncology Space
Other large players in the oncology space are Pfizer PFE, AstraZeneca AZN, Merck MRK and Bristol-Myers.
Pfizer boasts a strong portfolio of approved cancer medicines like Xtandi, Lorbrena and the Braftovi-Mektovi combination. The addition of Seagen in 2023 also strengthened its position in oncology by adding four ADCs — Adcetris, Padcev, Tukysa and Tivdak. Pfizer also has a robust pipeline of cancer candidates with a focus on multiple modalities, including small molecules, antibody-drug conjugates (ADCs) and immuno-oncology biologics.
For AstraZeneca, oncology sales now comprise around 41% of total revenues. AstraZeneca's strong oncology sales growth is being driven by medicines such as Tagrisso, Lynparza, Imfinzi, Calquence and Enhertu (in partnership with Daiichi Sankyo). AstraZeneca is working on strengthening its oncology product portfolio through label expansions of existing products and progressing oncology pipeline candidates.
Merck's key oncology medicines are PD-L1 inhibitor, Keytruda and PARP inhibitor, Lynparza, which it markets in partnership with AstraZeneca. Keytruda, approved for several types of cancer, alone accounts for around 50% of Merck's pharmaceutical sales.
Bristol-Myers' key cancer drug is PD-LI1inhibitor, Opdivo, which accounts for around 20% of its total revenues.
JNJ's Price Performance, Valuation and Estimates
J&J's shares have outperformed the industry year to date. The stock has risen 14.6% in the year-to-date period compared with an increase of 1.5% for the industry.
Image Source: Zacks Investment Research
From a valuation standpoint, J&J is reasonably priced. Going by the price/earnings ratio, the company's shares currently trade at 14.97 forward earnings, slightly lower than 15.04 for the industry. The stock is also trading below its five-year mean of 15.70.
The Zacks Consensus Estimate for 2025 earnings has risen from $10.60 per share to $10.66 over the past 30 days, while that for 2026 has risen from $10.98 to $11.13 over the same timeframe.
J&J has a Zacks Rank #2 (Buy) currently. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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