Key Points
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Johnson & Johnson and Novartis are encountering (or will soon encounter) significant patent expirations.
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Both corporations are capable of managing these difficulties due to their strong rosters and creative skills.
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Both pharmaceutical companies also offer strong dividend-paying stocks.
Pharmaceutical companies often face major obstacles. One of the most important is patent cliffs — situations where treatments lose their patent protection, leading to cheaper generic or biosimilar alternatives that reduce their market dominance. While these challenges can be difficult for drug manufacturers, some are able to manage them successfully and continue to perform strongly.
With that context, let’s examine two pharmaceutical companies that have encountered (or will encounter) the end of patents on some of their key products, yet are expected to manage the challenge:Johnson & Johnson (NYSE: JNJ) and Novartis (NYSE: NVS).
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1. Johnson & Johnson
In July 2024, Johnson & Johnson started encountering biosimilar competition for Stelara, an immunology drug and one of its top-selling medications, in Europe. The same situation happened in the U.S. in February of this year. As a result, sales of Stelara have plummeted. In the second quarter, the medication brought in $1.7 billion in revenue — a 42.7% drop compared to the same period last year.
Nevertheless, Johnson & Johnson maintains strong financial performance. The company’s revenue for the period increased by 5.8% compared to the previous year, reaching $23.7 billion. J&J also increased its forecasts for both revenue and net income for the year. In short, the company is doing fairly well, even though there was a decline in sales for Stelara.
J&J operates a highly varied business with an extensive range of medications within its pharmaceutical division. Among its key growth contributors are cancer treatments such as Darzalex and Erleada, along with Remicade, which addresses various immunology-related conditions. The company also has emerging products in development: Imaavy, designed for myasthenia gravis (a disorder that leads to muscle weakness), received approval earlier this year, while it is awaiting regulatory decisions on TAR-200, an extremely promising experimental drug for bladder cancer.
Additionally, Johnson & Johnson is a prominent participant in themedical deviceindustry. A key long-term growth factor for the company might be its robotic surgical system, the Ottava, which is currently in clinical trials within the United States.
J&J can overcome patent cliffs— and, in the same way, drug pricing discussions that also pose a threat to its operations — through innovation. That’s what the company is currently doing with Stelara, and it has the potential to continue in the future.
Ultimately, Johnson & Johnson is an excellent stock for dividends; it has increased its distributions for 62 straight years, positioning it as aDividend KingThe company is capable of overcoming all the challenges it encounters and continues to provide strong returns over time.
2. Novartis
Novartis is preparing for generic competition for Entresto, a treatment for heart failure, later this year in the United States. In the first half of the year, this medication brought in $4.6 billion in revenue, with nearly 52% coming from the U.S.
With more affordable generic versions available in its most crucial market for its top-selling medication, Novartis could be facing challenges — but it isn’t. The pharmaceutical company still anticipates double-digit revenue growth for the year, which is a solid result for apharmaceutical giant.
Even if the expiration of Entresto’s patent has a larger effect on financial performance next year, the company will still be okay. Novartis possesses a broad and varied range of medications across multiple treatment areas. Several of its products areblockbusters; seven had already brought in over $1 billion in sales within the first six months of 2025.
Novartis also has a number of newer products that are expected to support revenue growth over an extended period. For example, in April, the company received U.S. approval for Vanrafia, a treatment designed to address proteinuria (excess protein in urine) in patients with a rare kidney condition known as IgA nephropathy. Some analysts predict that Vanrafia may reach peak sales of $1.5 billion. With its broad range of offerings and ongoing introduction of new medications, Novartis is positioned to overcome the challenges posed by Entresto’s patent expiration.
Furthermore, the company is involved in patent disputes regarding the validity of generic versions of Entresto. Should it prevail in these legal challenges, it could be entitled to compensation from companies that intended to introduce those generics into the market.
Even if that doesn’t occur, the pharmaceutical company should maintain steady revenue and earnings over time, along with yearly increases in dividends. The firm has increased its distributions for 28 straight years. Although it faces the challenge of patents expiring, Novartis is still a leading choice for investors looking forblue chip dividend stocks.
Is it a good idea to invest $1,000 in Johnson & Johnson at this moment?
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Prosper Junior Bakinyholds shares in Johnson & Johnson. The Motley Fool advises investing in Johnson & Johnson. The Motley Fool possesses adisclosure policy.
