The company completed the acquisition of Intra-Cellular Therapies, Inc. for $14.5 billion in April 2025, adding CAPLYTA to its neuroscience portfolio, and acquired Shockwave Medical Inc. for $12.6 billion in May 2024, enhancing its cardiovascular offerings. These acquisitions contributed positively to operational sales growth, particularly in MedTech.

Oncology products achieved 22.3% operational sales growth for the six months ended June 29, 2025, driven by strong performance in DARZALEX and CARVYKTI. The Cardiovascular franchise also saw robust operational sales growth of 20.0%, significantly boosted by the Shockwave Medical acquisition.

The Immunology segment experienced a notable operational decline of 16.0% for the six months ended June 29, 2025, primarily due to the 38.2% operational sales decline of STELARA, a key product facing increasing biosimilar competition in both U.S. and international markets.

Management initiated a new restructuring program in the MedTech Surgery franchise, with estimated costs between $0.9 billion and $1.0 billion, to simplify and focus operations. This follows an ongoing Orthopaedics restructuring program, demonstrating a commitment to optimizing the cost structure and exiting non-strategic product lines.

Selling, marketing and administrative expenses decreased as a percent of sales to 24.8% in Q2 2025 from 25.3% in Q2 2024, driven by corporate administrative expense rationalization. Research and development expense also decreased as a percent of sales to 14.8% in Q2 2025 from 15.3% in Q2 2024, reflecting portfolio rationalization and expense phasing.

The company reversed approximately $7.0 billion of previously accrued talc reserves in the fiscal six months of 2025, reducing the total present value of the reserve to $4.0 billion. This reflects management's ongoing efforts to achieve a comprehensive resolution to the talc claims, although litigation continues.

Despite a $7.0 billion reserve reversal, the company still holds a $4.0 billion reserve for talc-related liabilities. Bellwether trials are scheduled for November 2025 in California and January 2026 in New Jersey, indicating continued exposure to significant legal proceedings and potential adverse judgments.

The Inflation Reduction Act (IRA) introduces provisions that redesign the Medicare Part D benefit, shifting a greater portion of costs to manufacturers. Janssen Pharmaceuticals has filed litigation challenging the constitutionality of the IRA's Medicare Drug Price Negotiation Program, highlighting potential future financial impacts.

The recently enacted One Big Beautiful Bill Act (OBBBA) in the U.S. modifies corporate income tax, including an increase in the statutory tax rate on foreign earnings. The company estimates a one-time re-measurement cost of approximately $1.0 billion in the fiscal third quarter of 2025 due to these changes.

DARZALEX continues to achieve strong sales driven by continued share gains and market growth. Similarly, CARVYKTI sales are boosted by sustained share gains and capacity expansion, demonstrating the company's ability to compete effectively in critical oncology markets.

STELARA sales experienced a substantial operational decline of 43.2% in the second quarter and 38.6% for the six months ended June 29, 2025, primarily due to the impact of biosimilar competition. This highlights a significant challenge to the company's market exclusivity and revenue generation from this key immunology product.

The acquisitions of Intra-Cellular Therapies (CAPLYTA) and Shockwave Medical (IVL technology) strategically enhance the company's portfolio in mental health and cardiovascular interventions, respectively. These moves are designed to strengthen its competitive advantages and drive future growth in high-potential therapeutic areas.

Cost of products sold increased to 32.1% of sales in Q2 2025 from 30.6% in Q2 2024. This was primarily driven by an unfavorable product mix due to the decline in STELARA sales, increased intangible asset amortization related to the Intra-Cellular acquisition, and macroeconomic factors impacting the MedTech business.

The company initiated a restructuring program for its MedTech Surgery franchise, with estimated costs of $0.9 billion to $1.0 billion over the next two years, to simplify operations and exit non-strategic product lines. This is in addition to the ongoing Orthopaedics restructuring program, which is expected to be substantially completed by the end of fiscal year 2025.

Selling, marketing and administrative expenses decreased as a percentage of sales due to corporate administrative expense rationalization. Research and development expense also decreased as a percentage of sales, driven by planned leverage and expense phasing, indicating improved operational efficiency in these areas.

The company completed a prioritization of its R&D investment within the Innovative Medicine segment in fiscal 2023, focusing on the most promising medicines with the greatest benefit to patients. This strategic shift aims to maximize returns on R&D spending, which for the six months ended June 29, 2025, was $6,741 million.

The acquisition of Intra-Cellular Therapies, Inc. adds CAPLYTA and a promising clinical-stage pipeline in CNS disorders. The Shockwave Medical acquisition brings innovative intravascular lithotripsy technology, and Ambrx Biopharma provides a synthetic biology platform for next-generation antibody drug conjugates, bolstering the company's technological edge.

The company faces ongoing patent infringement lawsuits from generic and biosimilar manufacturers targeting key products like XARELTO, INVEGA SUSTENNA, ERLEADA, SPRAVATO, INVOKANA, and CAPLYTA. Unfavorable outcomes in these cases could lead to significant market share and revenue losses due to early generic entry.

The company used $14,458 million for acquisitions (net of cash acquired) during the fiscal six months ended June 29, 2025. This includes the $14.5 billion acquisition of Intra-Cellular Therapies, Inc., indicating a strong focus on external growth through strategic M&A to expand its therapeutic portfolios.

Long-term debt increased to $39,235 million as of June 29, 2025, from $30,651 million at December 29, 2024. This was primarily due to the issuance of $9.2 billion in senior unsecured notes in Q1 2025 to fund the Intra-Cellular Therapies acquisition and for general corporate purposes, shifting the capital structure.

The company paid $6,118 million in cash dividends ($2.54 per share) for the fiscal six months ended June 29, 2025, and repurchased $2,127 million of common stock. The Board of Directors also declared a regular quarterly cash dividend of $1.30 per share for Q2 and Q3 2025, signaling a commitment to returning capital to shareholders.

The provided 10-Q filing primarily focuses on financial performance, operations, and legal risks. While 'environmental protection' is mentioned as a regulatory risk and 'global climate' as an economic risk, there are no dedicated sections or detailed disclosures regarding specific ESG commitments, progress, or sustainability risks and opportunities.

Despite the Russia-Ukraine war and Middle East conflict, the company states that it continues to supply products relied upon by patients for healthcare purposes in affected regions. This implicitly demonstrates a commitment to social responsibility by ensuring access to essential medical products during crises.

The company's management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 29, 2025, ensuring accurate and timely reporting. This indicates robust internal governance practices for financial transparency and compliance with SEC regulations.

The company acknowledges that inflation rates and currency exchange rates continue to affect worldwide economies and its operations. Specific countries like Venezuela, Argentina, Turkey, and Egypt are noted as highly inflationary, indicating ongoing challenges from the global macroeconomic environment.

Trends toward healthcare cost containment, managed care, and government pressure on pricing continue to impact the company's business. The Inflation Reduction Act (IRA) and its Medicare Drug Price Negotiation Program are significant regulatory changes expected to shift costs to manufacturers, influencing market dynamics.

The financial impact of the Russia-Ukraine war and the conflict in the Middle East was not material to the company's financial results for the fiscal second quarter and six months ended June 29, 2025. While long-term implications are difficult to predict, current operations in these regions represent less than 1% of consolidated assets and revenues.