Johnson & Johnson Targets Double-Digit Growth by End of Decade

Morgan Stanley downgraded Novo Nordisk to Underweight from Equal-weight while keeping a $40 price target, sending NVO shares down 2.1% on Friday. The bank argued the valuation does not fully reflect muted medium-term growth and the looming semaglutide patent cliff, with key protections for Ozempic, Rybelsus and Wegovy expiring around 2031 in Europe and 2032 in the United States. Semaglutide concentration is acute: adjusted sales of Wegovy injectable, Wegovy pill, Ozempic injection and the Ozempic pill/Rybelsus franchise totaled about DKK 112.2 billion in the first half of 2026, roughly 75.5% of total adjusted first-half sales. Eli Lilly's competitive pressure compounds the problem, as Mounjaro generated $18.6 billion in the first half, up 106%, and Zepbound generated $9.1 billion, up 60%, for a combined $27.7 billion, while Novo's first-half Ozempic sales declined 2% at CER and Wegovy product sales rose just 7% at CER. Lilly also launched oral Foundayo in the United States in April 2026, and smaller rivals Structure Therapeutics and Viking Therapeutics are advancing their own GLP-1 obesity therapies.

Teva Pharmaceutical Industries said its "Pivot to Growth" strategy has entered its second phase, with management pointing to branded-medicine momentum, a stabilized generics business, an expanding biosimilars portfolio and a strengthened balance sheet. Speaking at a Morgan Stanley event, President and Chief Executive Officer Richard Francis said the strategy, launched in 2023, rests on four pillars: delivering on the growth engine, stepping up innovation, creating a generics powerhouse, and focusing the business and capital allocation. Francis said Teva has cut debt and secured investment-grade ratings from all three major agencies more than a year ahead of its projection, completed an oversubscribed refinancing in the prior week, and converted ADS shares into ordinary shares to broaden investor access. He reiterated confidence that AUSTEDO can eventually exceed $3 billion in sales, ahead of the prior $2.5 billion target, and said AJOVY is approaching the $1 billion threshold faster than expected, while UZEDY and long-acting olanzapine together represent a $1.5 billion to $2 billion opportunity. Teva has 11 biosimilars on the market and expects to add roughly nine more by the end of the decade, and Francis said the company is on track to exceed its $800 million biosimilars target for 2027 a year early. Chief Medical Officer Eric Hughes said the TL1A therapy duvakitug, developed with Sanofi for ulcerative colitis and Crohn's disease, showed the highest phase 2 results reported for the class, and that ecopipam, a first-in-class D1 antagonist for Tourette's disease, received priority review with a potential launch in the first half of 2027.

Merck is relying on a growing pipeline and an expanding portfolio of newer medicines, including acquired assets, to offset the eventual loss of exclusivity for its blockbuster cancer drug Keytruda. Keytruda generated sales of $16.40 billion in the first half of 2026, up nearly 4.2% year over year, and is expected to remain strong until it loses patent exclusivity in 2028, after which biosimilars entering around 2028-2029 are likely to drive a sharp decline. Merck's phase III pipeline has almost tripled since 2021, and the company expects to launch 20 new drugs by 2030, with newer products already emerging as growth drivers: pulmonary arterial hypertension drug Winrevair and 21-valent pneumococcal conjugate vaccine Capvaxive generated $1.1 billion and $325 million, respectively, in first-half 2026 sales, while cancer drug Welireg sales surged 57% year over year to $470 million. Merck expects more than $70 billion of potential non-risk-adjusted commercial opportunity for the current pipeline by the mid-2030s, more than double the peak consensus sales estimate for Keytruda of $35 billion in 2028, and has stepped up acquisitions ahead of the patent expiry with deals for Verona Pharma, Cidara Therapeutics and Terns Pharmaceuticals. Management expects the Keytruda LOE period to look like a shallow dip with a fast return back to growth, even as Keytruda faces competition from Bristol Myers' Opdivo, Roche's Tecentriq and AstraZeneca's Imfinzi.