Middle East Defense Spending Cuts Into Johnson & Johnson Device Sales
New Brunswick, Tuesday, 13 October 2026.
On October 13, 2026, Johnson & Johnson topped earnings expectations, but revealed that Middle East conflict forced regional governments to shift healthcare budgets toward defense, stalling medical device sales.
Earnings Beat Amidst Revenue Growth
Johnson & Johnson (NYSE: JNJ) reported third-quarter 2026 financial results on October 13 that surpassed Wall Street profit forecasts, driven by robust performance in its pharmaceutical division [1][2]. The healthcare giant posted third-quarter revenue of $25.4 billion, exceeding analysts’ average estimate of $25.28 billion, representing a beat of approximately 0.475 percent [1][3]. Adjusted earnings came in at $2.59 per share, topping expectations of $2.54, although GAAP earnings per share fell to $0.09 due to one-time costs [1][6]. Despite the positive earnings surprise, shares fell more than 2% before the bell, reflecting investor caution regarding international headwinds [1].
Geopolitical Headwinds Impact MedTech
While the Innovative Medicine segment grew 7.9% to $16.76 billion, the Medical Technology division saw sales rise only 2.5% to $8.6 billion [1][2]. Management highlighted that ongoing conflict in the Middle East dragged on medical-device revenues, slowing international expansion in key markets [1]. Chief Financial Officer Joseph Wolk noted that countries valuing premium healthcare systems, such as Kuwait, UAE, and Saudi Arabia, are reallocating budgets toward defense amidst soaring fuel costs [1]. Outside the U.S., the division’s sales were essentially flat, underscoring the vulnerability of global medtech supply chains to regional geopolitical disruptions [1][2].
Pharmaceutical Momentum and Product Dynamics
The pharmaceutical segment provided a strong counterbalance, with sales of immune disease treatment Tremfya jumping 68% to $2.4 billion, beating analysts’ estimates [1][4]. This growth increasingly replaces lost Stelara revenue, as sales of the latter fell 54% to $716 million amid generic competition [1]. Additionally, sales of blood cancer treatment Darzalex rose about 16% to $4.24 billion, though this figure fell short of analyst expectations of $4.4 billion [1][4]. The company also noted slow sales in its Abiomed heart pump business following a UK study earlier in the year that raised questions about Impella pumps during certain high-risk coronary procedures [1].
Updated Guidance and Market Outlook
Looking ahead, Johnson & Johnson raised its full-year sales forecast to about $101.2 billion at the midpoint, up from $101.1 billion previously [1]. The company increased its adjusted earnings forecast range with a new midpoint of $11.10 per share, up from $11.04, signaling confidence in cost control strategies despite revenue pressures [1][6]. As of October 12, 2026, J&J shares closed at $263.73, having risen 27% this year, outperforming both the broader market and most healthcare peers [1][5]. Management scheduled an Enterprise Business Review for December 8, 2026, to further detail strategic investments in high-growth areas [2][5].