JNJ's second-quarter results beat expectations, with strong pharmaceutical performance; Japan medical devices should watch US surgical volume trends

Overview

This report uses Johnson & Johnson's 2Q26 results as a starting point to analyze the read-across implications for Japan healthcare companies under coverage. Goldman Sachs' US team views JNJ's results as overall positive: the company delivered a sales beat for the sixth consecutive quarter and raised FY26 guidance again after already increasing it in the first quarter. The key positive driver was Innovative Medicine, while softer near-term growth in MedTech makes US surgical volume trends a key variable to watch for Japan medical device companies going forward.

Core views

The core views are as follows: first, JNJ's pharmaceutical business performed strongly, especially as Icotyde's launch ramp, insurance coverage, and clinical positioning show that highly efficacious and convenient oral drugs still have significant demand, which has competitive read-across implications for related pharmaceutical companies such as Takeda; second, JNJ MedTech's second-quarter growth was below prior quarters and its long-term target, but the company said surgical volumes were stable and expected sales improvement in the second half, so for Japanese medical device companies such as Sysmex, Terumo, and Olympus, management commentary on US surgical volumes and outlook during the upcoming earnings season will be very important; third, JNJ raised full-year sales and profit guidance, reinforcing the resilience of demand for large healthcare companies, although segment performance differed.

Analysis framework

The report uses an event-driven cross-company read-across approach: it first compares JNJ's 2Q26 total revenue and segment revenue against Goldman Sachs' estimates and the Visible Alpha consensus, then combines management commentary on Icotyde, MedTech, and surgical volumes to map the potential impact on covered Japanese companies in pharmaceuticals and medical devices.

Methodology notes

• equity_researchread-across analysis

  cross-company read-across

  Using JNJ's results, guidance, and management commentary to infer reference implications for demand, competition, and earnings trends among Japanese healthcare companies under coverage.

• equity_researchGS Factor Profile

  Goldman Sachs factor profile

  The Goldman Sachs factor profile compares stocks with the market and industry peers across four dimensions: growth, financial returns, valuation multiples, and composite score, to provide investment context.

• equity_researchM&A Rank

  M&A probability ranking

  Goldman Sachs uses M&A ranks from 1 to 3 to assess the probability that a covered company becomes an acquisition target, where 1 represents high probability, 2 medium probability, and 3 low probability.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Johnson & Johnson (JNJ)

  core event company

  Strengths

  2Q26 results beat expectations, with sales beating expectations for the sixth consecutive quarter; Innovative Medicine was strong; FY26 sales and EPS guidance was raised again.

  Weaknesses

  MedTech segment revenue was slightly below expectations, and 2Q organic growth slowed to 3.7% yoy.

  Comparison

  Innovative Medicine performed above expectations, while MedTech was relatively weak, creating clear segment divergence.

  Risks

  If second-half improvement in MedTech does not materialize, it could weaken the read-across for recovering medical device demand.

• Takeda Pharmaceutical

  Japanese pharmaceutical read-across target

  Strengths

  The report states Takeda is rated Neutral with a current price of ¥5,288; the competitive context between its zasocitinib and Icotyde is mentioned.

  Weaknesses

  Icotyde has shown a strong launch ramp after US approval and launched earlier than Takeda's zasocitinib, which may create competitive pressure.

  Comparison

  Icotyde's prescriptions, insurance coverage, and convenience indicate accelerating competition in the oral psoriasis treatment space.

  Risks

  If competitors establish a first-mover advantage, commercialization ramp-up for Takeda's follow-on products may face a higher hurdle.

• Sysmex

  Japanese medical device read-across target

  Strengths

  The report states Sysmex is rated Buy with a current price of ¥1,541.

  Weaknesses

  The slowdown in JNJ MedTech growth indicates that medical device demand still needs validation.

  Comparison

  Goldman Sachs will watch Japanese medical device companies' comments on volume trends and future outlook in the 1Q3/27 earnings season.

  Risks

  If US surgical volumes come in below expectations, it could affect judgment on medical device-related demand.

• Terumo

  Japanese medical device read-across target

  Strengths

  The report states Terumo is rated Neutral with a current price of ¥2,180.

  Weaknesses

  Weak external MedTech growth may cause the market to focus more on volume-price and surgical volume indicators.

  Comparison

  Like Olympus and Sysmex, its future earnings commentary will be used to validate surgical volume trends.

  Risks

  If surgical volume trends do not improve, confidence in second-half sales improvement may be pressured.

• Olympus

  Japanese medical device read-across target

  Strengths

  The report states Olympus is rated Neutral with a current price of ¥1,747.

  Weaknesses

  Near-term read-across signals for the medical device sector are less clear than those for pharmaceuticals.

  Comparison

  The market will watch how Olympus and other Japanese medical device companies comment on US surgical volumes and future outlook.

  Risks

  A slower-than-expected recovery in surgical volumes could affect demand for related products and investment sentiment.

Key data

• JNJ 2Q26 total revenueUSD25.3 bn0.5% above Goldman Sachs' estimate and 0.7% above the Visible Alpha consensus.
• Innovative Medicine revenueUSD16.4 bnAbove Goldman Sachs' estimate of USD16.2 bn and the consensus of USD16.1 bn.
• MedTech revenueUSD8.93 bnSlightly below Goldman Sachs' estimate of USD8.94 bn and the consensus of USD8.99 bn.
• MedTech organic sales growth3.7% yoyBelow 5.9% yoy in 4Q25, 4.7% yoy in 1Q26, and also below the long-term target of 5%-7%.
• FY26 adjusted operational sales growth guidance6.2%-6.8%Previously 5.6%-6.6%.
• FY26 adjusted EPS guidanceUSD11.60-11.75Previously USD11.45-11.65.
• Icotyde prescription volumemore than 18,000 prescriptions and more than 11,000 patientsManagement viewed the prescription ramp since launch as very strong.
• Icotyde commercial insurance coveragemore than 50% within 90 daysProgress was faster than JNJ expected.

Impact & implications

The implication for investment judgment is that the positive read-across is clearer for pharmaceuticals: Icotyde's rapid uptake indicates that high efficacy, good safety, and the convenience of once-daily dosing have commercial appeal, which may intensify competition among similar oral psoriasis drugs. The read-across for medical devices is more observational: JNJ MedTech's slowing growth indicates near-term pressure, but if management's view of stable surgical volumes and second-half improvement materializes, it could support the demand outlook for Japanese medical device companies. Investors should treat Japanese companies' commentary on US surgical volumes during earnings season as a confirmation signal.

Risks

• The slowdown in JNJ MedTech growth may indicate that improvement in medical device demand remains unstable.
• If US surgical volume trends do not remain stable or improve as JNJ management expects, it could weaken the positive read-across for Japanese medical device companies.
• Icotyde's strong launch ramp may intensify competition in the oral psoriasis treatment market, putting pressure on follow-on products.
• The report is mainly a read-across based on JNJ's results and management commentary, not a full reassessment of the fundamentals of all covered Japanese companies.

What to watch

• Whether JNJ MedTech sales growth improves in 2H26.
• Whether US surgical volume trends remain stable, and related commentary from Japanese medical device companies during the 1Q3/27 earnings season.
• Ongoing changes in Icotyde's prescription volume, patient count, and commercial insurance coverage.
• The competitive landscape between Takeda's zasocitinib and competitors such as Icotyde in terms of efficacy, safety, dosing convenience, and launch timing.
• The outlook from Sysmex, Terumo, and Olympus on future demand, orders, and regional growth.