Management's discussion and analysis of financial condition and results of operations
Results of operations
Sales to customers
Analysis of consolidated sales
For the fiscal nine months of 2026, worldwide sales were $74.8 billion, a total increase of 7.4%, including an operational* increase of 6.0% as compared to 2025 fiscal nine months sales of $69.6 billion. Currency fluctuations had a positive impact of 1.4% for the fiscal nine months of 2026. In the fiscal nine months of 2026, acquisitions and divestitures had a net positive impact of 0.3%, on worldwide operational sales growth, primarily related to CAPLYTA. In the fiscal nine months of 2026, the negative impact of the STELARA sales decline, due to biosimilar competition, on worldwide operational sales was approximately 4.7%.
Sales by U.S. companies were $42.8 billion in the fiscal nine months of 2026, which represented an increase of 8.3% as compared to the prior year. In the fiscal nine months of 2026, acquisitions and divestitures had net positive impact of 0.7% on U.S. operational sales growth, primarily related to CAPLYTA. In the fiscal nine months of 2026, the negative impact of the STELARA sales decline, due to biosimilar competition on U.S. operational sales was approximately 6.6%. Sales by international companies were $31.9 billion, which represented an increase of 6.2%, including an operational increase of 3.0%, and a positive currency impact of 3.2% as compared to the fiscal nine months sales of 2025. In the fiscal nine months of 2026, the net impact of acquisitions and divestitures on international operational sales growth was a negative 0.1%. In the fiscal nine months of 2026, the negative impact of the STELARA sales decline, due to biosimilar competition, on international operational sales was approximately 2.4%.
In the fiscal nine months of 2026, sales by companies in Europe achieved growth of 6.5%, which included an operational increase of 2.3% and a positive currency impact of 4.2%. Sales by companies in the Western Hemisphere, excluding the U.S., achieved growth of 10.6%, which included an operational increase of 4.5% and a positive currency impact of 6.1%. Sales by companies in the Asia-Pacific, Africa region achieved growth of 4.3%, including operational growth of 3.6% and a positive currency impact of 0.7%.
Fiscal nine months 2026
sales by geographic region (in billions)
sales by geographic region (in billions)
Fiscal nine months 2026
sales by segment (in billions)
sales by segment (in billions)
Note: values may have been rounded
*operational excludes the effect of translational currency
Form 10-Q | |||||
For the fiscal third quarter of 2026, worldwide sales were $25.4 billion, a total increase of 5.9%, which included operational growth of 6.0% and a negative currency impact of 0.1% as compared to 2025 fiscal third quarter sales of $24.0 billion. In the fiscal third quarter of 2026, the net impact of acquisitions and divestitures on worldwide operational sales growth was a negative 0.1%. In the fiscal third quarter of 2026, the negative impact of the STELARA sales decline, due to biosimilar competition, on worldwide operational sales was approximately 4.2%.
Sales by U.S. companies were $15.0 billion in the fiscal third quarter of 2026, which represented an increase of 9.1% as compared to the prior year. In the fiscal third quarter of 2026, there was no net impact from acquisitions and divestitures on U.S. operational sales growth. In the fiscal third quarter of 2026, the negative impact of the STELARA sales decline, due to biosimilar competition on U.S. operational sales was approximately 5.9%. Sales by international companies were $10.4 billion, a total increase of 1.5%, which included operational growth of 1.8% and a negative currency impact of 0.3%. In the fiscal third quarter of 2026, the net impact of acquisitions and divestitures on international operational sales growth was a negative 0.1%. In the fiscal third quarter of 2026, the negative impact of the STELARA sales decline, due to biosimilar competition, on international operational sales was approximately 2.1%.
In the fiscal third quarter of 2026, sales by companies in Europe experienced a sales decline of 0.6%, which included operational growth of 1.0% offset by a negative currency impact of 1.6%. Sales by companies in the Western Hemisphere, excluding the U.S., achieved growth of 12.5%, which included operational growth of 8.0% and a positive currency impact of 4.5%. Sales by companies in the Asia-Pacific, Africa region achieved growth of 1.0%, which included operational growth of 1.0% and 0.0% impact from currency.
Q3 2026
Sales by Geographic Region (in billions)
Sales by Geographic Region (in billions)
Q3 2026
Sales by Segment (in billions)
Sales by Segment (in billions)
Note: values may have been rounded
Analysis of sales by business segments
Innovative Medicine
Innovative Medicine segment sales in the fiscal nine months of 2026 were $48.6 billion, an increase of 8.8% as compared to the same period a year ago, with an operational increase of 7.4% and a positive currency impact of 1.4%. U.S. Innovative Medicine sales increased 9.9% as compared to the same period a year ago. International Innovative Medicine sales increased by 7.2%, including an operational increase of 3.6% and a positive currency impact of 3.6%. In the fiscal nine months of 2026, the net impact of acquisitions and divestitures on the Innovative Medicine segment operational sales growth was a positive 0.5%, primarily related to CAPLYTA. In the fiscal nine months of 2026, the negative impact of the STELARA sales decline, due to biosimilar competition, was an approximate 7.8%, 10.4% and 4.2% on worldwide, U.S. and international Innovative Medicine segment operational sales, respectively.
Major Innovative Medicine therapeutic area sales - Fiscal Nine Months Ended
| (Dollars in Millions) | September 27, 2026 | September 28, 2025 |
Total Change |
Operations Change |
Currency Change | ||||||||||||||||||
Oncology | $21,981 | $18,519 | 18.7 | % | 16.8 | % | 1.9 | % | |||||||||||||||
DARZALEX | 12,410 | 10,448 | 18.8 | 17.0 | 1.8 | ||||||||||||||||||
CARVYKTI | 1,964 | 1,332 | 47.4 | 45.5 | 1.9 | ||||||||||||||||||
TECVAYLI | 774 | 494 | 56.7 | 55.7 | 1.0 | ||||||||||||||||||
TALVEY | 497 | 314 | 58.3 | 57.5 | 0.8 | ||||||||||||||||||
RYBREVANT/ LAZCLUZE | 866 | 518 | 67.4 | 67.5 | (0.1) | ||||||||||||||||||
ERLEADA | 2,967 | 2,615 | 13.5 | 10.8 | 2.7 | ||||||||||||||||||
IMBRUVICA | 1,822 | 2,139 | (14.8) | (17.5) | 2.7 | ||||||||||||||||||
Other Oncology(1) | 680 | 659 | 3.2 | 2.9 | 0.3 | ||||||||||||||||||
Immunology | 11,445 | 11,868 | (3.6) | (4.8) | 1.2 | ||||||||||||||||||
TREMFYA | 6,050 | 3,566 | 69.7 | 67.9 | 1.8 | ||||||||||||||||||
SIMPONI/ SIMPONI ARIA | 1,833 | 2,036 | (10.0) | (11.6) | 1.6 | ||||||||||||||||||
REMICADE | 1,154 | 1,398 | (17.5) | (18.4) | 0.9 | ||||||||||||||||||
STELARA | 2,112 | 4,848 | (56.4) | (57.2) | 0.8 | ||||||||||||||||||
Other Immunology | 297 | 21 | * | * | * | ||||||||||||||||||
Neuroscience | 6,887 | 5,722 | 20.3 | 19.5 | 0.8 | ||||||||||||||||||
SPRAVATO | 1,676 | 1,193 | 40.5 | 39.7 | 0.8 | ||||||||||||||||||
CAPLYTA(2) | 1,029 | 451 | * | * | - | ||||||||||||||||||
INVEGA SUSTENNA/ XEPLION/ INVEGA TRINZA/ TREVICTA | 3,051 | 2,824 | 8.0 | 7.4 | 0.6 | ||||||||||||||||||
CONCERTA/methylphenidate | 425 | 452 | (5.9) | (7.0) | 1.1 | ||||||||||||||||||
Other Neuroscience | 706 | 803 | (12.1) | (14.2) | 2.1 | ||||||||||||||||||
Pulmonary Hypertension | 3,175 | 3,253 | (2.4) | (3.0) | 0.6 | ||||||||||||||||||
UPTRAVI | 1,460 | 1,411 | 3.5 | 2.6 | 0.9 | ||||||||||||||||||
OPSUMIT/ OPSYNVI | 1,580 | 1,682 | (6.1) | (6.6) | 0.5 | ||||||||||||||||||
Other Pulmonary Hypertension | 135 | 160 | (15.6) | (15.4) | (0.2) | ||||||||||||||||||
Infectious Diseases | 2,465 | 2,434 | 1.3 | (1.1) | 2.4 | ||||||||||||||||||
EDURANT/rilpivirine | 1,145 | 1,103 | 3.8 | 0.0 | 3.8 | ||||||||||||||||||
PREZISTA/ PREZCOBIX/ REZOLSTA/ SYMTUZA | 1,196 | 1,196 | 0.0 | (0.9) | 0.9 | ||||||||||||||||||
Other Infectious Diseases | 124 | 135 | (8.2) | (11.7) | 3.5 | ||||||||||||||||||
Cardiovascular / Metabolism / Other | 2,614 | 2,842 | (8.0) | (8.5) | 0.5 | ||||||||||||||||||
XARELTO | 1,959 | 1,946 | 0.7 | 0.7 | - | ||||||||||||||||||
Other | 655 | 896 | (26.9) | (28.5) | 1.6 | ||||||||||||||||||
Total Innovative Medicine Sales | $48,567 | $44,638 | 8.8 | % | 7.4 | % | 1.4 | % | |||||||||||||||
Form 10-Q | |||||
Innovative Medicine segment sales in the fiscal third quarter of 2026 were $16.8 billion, an increase of 7.7% as compared to the same period a year ago, including an operational increase of 7.9% and a negative currency impact of 0.2%. U.S. Innovative Medicine sales increased 11.1% as compared to the same period a year ago. International Innovative Medicine sales increased by 2.4%, including an operational increase of 3.0% and a negative currency impact of 0.6%. In the fiscal third quarter of 2026, the impact of divestitures on the worldwide Innovative Medicine segment operational sales growth was a negative 0.1%. In the fiscal third quarter of 2026, the negative impact of the STELARA sales decline, due to biosimilar competition, was an approximate 6.9%, 9.2% and 3.8% on worldwide, U.S. and international Innovative Medicine segment operational sales, respectively.
Major Innovative Medicine therapeutic area sales - Fiscal Third Quarter Ended
| (Dollars in Millions) | September 27, 2026 | September 28, 2025 |
Total Change |
Operations Change |
Currency Change | ||||||||||||||||||
Oncology | $7,602 | $6,529 | 16.4 | % | 16.7 | % | (0.3) | % | |||||||||||||||
DARZALEX | 4,239 | 3,672 | 15.4 | 15.6 | (0.2) | ||||||||||||||||||
CARVYKTI | 710 | 524 | 35.5 | 35.2 | 0.3 | ||||||||||||||||||
TECVAYLI | 312 | 177 | 76.6 | 77.3 | (0.7) | ||||||||||||||||||
TALVEY | 171 | 122 | 40.9 | 42.1 | (1.2) | ||||||||||||||||||
RYBREVANT/ LAZCLUZE | 320 | 198 | 62.3 | 63.5 | (1.2) | ||||||||||||||||||
ERLEADA | 1,023 | 936 | 9.4 | 9.4 | 0.0 | ||||||||||||||||||
IMBRUVICA | 563 | 695 | (18.8) | (18.4) | (0.4) | ||||||||||||||||||
Other Oncology(1) | 262 | 207 | 26.3 | 26.7 | (0.4) | ||||||||||||||||||
Immunology | 4,221 | 4,168 | 1.3 | 1.4 | (0.1) | ||||||||||||||||||
TREMFYA | 2,396 | 1,424 | 68.3 | 68.2 | 0.1 | ||||||||||||||||||
SIMPONI/ SIMPONI ARIA | 568 | 687 | (17.3) | (17.1) | (0.2) | ||||||||||||||||||
REMICADE | 394 | 476 | (17.3) | (17.6) | 0.3 | ||||||||||||||||||
STELARA | 716 | 1,570 | (54.4) | (54.0) | (0.4) | ||||||||||||||||||
Other Immunology | 147 | 12 | * | * | * | ||||||||||||||||||
Neuroscience | 2,375 | 2,024 | 17.3 | 17.6 | (0.3) | ||||||||||||||||||
SPRAVATO | 624 | 459 | 36.1 | 36.0 | 0.1 | ||||||||||||||||||
CAPLYTA | 398 | 240 | 66.1 | 66.1 | - | ||||||||||||||||||
INVEGA SUSTENNA/ XEPLION/ INVEGA TRINZA/ TREVICTA | 998 | 929 | 7.3 | 7.5 | (0.2) | ||||||||||||||||||
CONCERTA/ methylphenidate | 143 | 140 | 2.1 | 2.9 | (0.8) | ||||||||||||||||||
Other Neuroscience | 212 | 256 | (17.3) | (16.2) | (1.1) | ||||||||||||||||||
Pulmonary Hypertension | 897 | 1,115 | (19.5) | (19.2) | (0.3) | ||||||||||||||||||
UPTRAVI | 483 | 484 | (0.1) | (0.2) | 0.1 | ||||||||||||||||||
OPSUMIT/ OPSYNVI | 372 | 578 | (35.7) | (35.2) | (0.5) | ||||||||||||||||||
Other Pulmonary Hypertension | 42 | 53 | (19.7) | (17.7) | (2.0) | ||||||||||||||||||
Infectious Diseases | 813 | 829 | (1.8) | (1.1) | (0.7) | ||||||||||||||||||
EDURANT/rilpivirine | 386 | 385 | 0.4 | 1.8 | (1.4) | ||||||||||||||||||
PREZISTA/ PREZCOBIX/ REZOLSTA/ SYMTUZA | 381 | 397 | (3.8) | (3.6) | (0.2) | ||||||||||||||||||
Other Infectious Diseases | 46 | 47 | (3.0) | (4.5) | 1.5 | ||||||||||||||||||
Cardiovascular / Metabolism / Other | 849 | 899 | (5.6) | (5.5) | (0.1) | ||||||||||||||||||
XARELTO | 653 | 635 | 2.7 | 2.7 | - | ||||||||||||||||||
Other | 197 | 264 | (25.5) | (25.3) | (0.2) | ||||||||||||||||||
Total Innovative Medicine Sales | $16,757 | $15,563 | 7.7 | % | 7.9 | % | (0.2) | % | |||||||||||||||
*percentage greater than 100% or not meaningful
(1) Includes sales of ZYTIGA which were previously disclosed separately
(2) Acquired with Intra-Cellular Therapies on April 2, 2025
Oncology products achieved operational sales growth of 16.7% as compared to the same period a year ago. Contributors to the growth were: DARZALEX (daratumumab) driven by strong share gains and market growth, CARVYKTI (ciltacabtagene autoleucel) driven by share gains and continued site expansion, TECVAYLI (teclistamab-cqyv) driven by share gains from the U.S. TECVAYLI + DARZALEX FASPRO approval, TALVEY (talquetamab-tgvs) driven by share gains from expansion in the community setting, RYBREVANT (amivantamab)/LAZCLUZE (lazertinib) driven by launch uptake and share gains, ERLEADA (apalutamide) due to continued share gains and market growth partially offset by unfavorable patient mix and Other Oncology driven by the U.S. launch uptake of INLEXZO (gemcitabine intravesical system). Growth was partially offset by a decline in IMBRUVICA (ibrutinib) sales due to share loss from competitive pressures and unfavorable patient mix.
Immunology products achieved operational sales growth of 1.4% as compared to the same period a year ago due to the growth of TREMFYA (guselkumab) driven by share gains across all indications with significant IBD launch momentum and market growth as well as growth in Other Immunology driven by IMAAVY (nipocalimab) and ICOTYDE (icotrokinra) launch uptake in the U.S. Growth was partially offset by a decline of STELARA (ustekinumab) driven by the impact of biosimilar competition and increasing adoption of novel classes as well as declines of SIMPONI/SIMPONI ARIA (golimumab) and REMICADE (infliximab) driven by share loss, biosimilar competition, and unfavorable patient mix partially offset by market growth.
The Company expects STELARA biosimilars to continue to negatively impact the Company's sales of STELARA. Biosimilars for SIMPONI have entered the European market in the second quarter of 2026, with a potential U.S. entrant later in 2026. This will likely result in a reduction in future sales.
Neuroscience products achieved operational growth of 17.6% as compared to the same period a year ago. The sales growth of SPRAVATO (esketamine) was driven by continued share gains, supported by increased patient demand due to strong physician adoption. Growth of CAPLYTA (lumateperone) was driven by strong continued momentum in the adjunctive treatment of Major Depressive Disorder (aMDD) launch and continued demand across bipolar disorder and schizophrenia. Growth of INVEGA SUSTENNA / XEPLION / INVEGA TRINZA / TREVICTA was primarily driven by favorable patient and inventory dynamics partially offset by share loss.
Pulmonary Hypertension products experienced an operational sales decline of 19.2% as compared to the same period a year ago. The sales of UPTRAVI (selexipag) were flat due to unfavorable patient mix partially offset by market and share growth. There are potential generic entrants in 2027 in the U.S. and Europe which will likely result in a reduction in future sales. The sales decline of OPSUMIT (macitentan)/OPSYNVI (macitentan/tadalafil) was driven by lower demand following U.S. generic entrants late in the second quarter of 2026. There are potential generic entrants in 2027 in Europe which will likely result in a reduction in future sales.
Infectious disease products experienced an operational sales decline of 1.1% as compared to the same period a year ago. The sales decrease of PREZISTA/ PREZCOBIX/ REZOLSTA/ SYMTUZA was driven by declines in share and market partially offset by favorable patient mix.
Cardiovascular / Metabolism / Other products experienced an operational sales decline of 5.5% as compared to the same period a year ago. The sales decline was partially offset by an increase in XARELTO (rivaroxaban) sales primarily driven by favorable patient mix partially offset by continued share erosion. There are potential generic entrants in 2027 in the U.S. which will likely result in a reduction in future sales.
The Company recently announced a policy revising the 340B pricing offer on its covered outpatient drugs to require covered entities to submit limited, commercially standard claims data for each 340B-eligible drug dispense or administration. Subject to each covered entity's submission of appropriate claims data, the Company will continue to offer the covered entity access to 340B pricing on the Company's covered outpatient drugs up-front at the time of purchase. The Company also recently updated its 340B contract pharmacy policy, which permits covered entities to designate up to one contract pharmacy for dispensing of the Company's 340B-priced covered outpatient drugs. A covered entity may continue to purchase and receive 340B pricing on such drugs dispensed or administered at its own eligible locations. Both policies include exceptions for certain covered entities.
The Company believes these policies are necessary to identify and address duplicate discounts, diversion, and other non-compliance and improve program oversight and dispute resolution. The 340B Drug Pricing Program is a U.S. federal government program that requires drug manufacturers to provide significant discounts on covered outpatient drugs to covered entities as a condition of manufacturers receiving reimbursement for their drugs under Medicaid and Medicare Part B.
Form 10-Q | |||||
MedTech
The MedTech segment sales in the fiscal nine months of 2026 were $26.2 billion, an increase of 4.9% as compared to the same period a year ago, with an operational increase of 3.5% and a positive currency impact of 1.4%. U.S. MedTech sales increased by 4.8%. International MedTech sales increased by 4.9%, including an operational increase of 2.2% and a positive currency impact of 2.7%. In the fiscal nine months of 2026, the net impact of acquisitions and divestitures on the MedTech segment operational sales growth was a negative 0.1%.
Major MedTech franchise sales - Fiscal Nine Months Ended
| (Dollars in Millions) | September 27, 2026 | September 28, 2025 |
Total Change |
Operations Change |
Currency Change | ||||||||||||||||||
Cardiovascular | $7,088 | $6,629 | 6.9 | % | 5.8 | % | 1.1 | % | |||||||||||||||
Electrophysiology | 4,509 | 4,209 | 7.1 | 5.6 | 1.5 | ||||||||||||||||||
Abiomed | 1,340 | 1,291 | 3.8 | 3.5 | 0.3 | ||||||||||||||||||
Shockwave | 965 | 828 | 16.6 | 16.6 | 0.0 | ||||||||||||||||||
Other Cardiovascular | 273 | 302 | (9.4) | (11.3) | 1.9 | ||||||||||||||||||
Surgery | 7,692 | 7,493 | 2.7 | 0.8 | 1.9 | ||||||||||||||||||
Advanced | 3,467 | 3,402 | 1.9 | 0.2 | 1.7 | ||||||||||||||||||
General | 4,225 | 4,092 | 3.3 | 1.3 | 2.0 | ||||||||||||||||||
Vision | 4,277 | 4,048 | 5.6 | 4.8 | 0.8 | ||||||||||||||||||
Contact Lenses/Other | 3,047 | 2,902 | 5.0 | 4.4 | 0.6 | ||||||||||||||||||
Surgical | 1,230 | 1,147 | 7.3 | 5.9 | 1.4 | ||||||||||||||||||
Orthopaedics | 7,146 | 6,820 | 4.8 | 3.6 | 1.2 | ||||||||||||||||||
Hips | 1,296 | 1,235 | 4.9 | 3.6 | 1.3 | ||||||||||||||||||
Knees | 1,216 | 1,155 | 5.3 | 4.2 | 1.1 | ||||||||||||||||||
Trauma | 2,504 | 2,333 | 7.3 | 6.2 | 1.1 | ||||||||||||||||||
| Spine, Sports & Other | 2,131 | 2,096 | 1.7 | 0.4 | 1.3 | ||||||||||||||||||
Total MedTech Sales | $26,204 | $24,991 | 4.9 | % | 3.5 | % | 1.4 | % | |||||||||||||||
MedTech segment sales in the fiscal third quarter of 2026 were $8.6 billion, an increase of 2.5% as compared to the same period a year ago, which included operational growth of 2.5% and currency impact of 0.0%. U.S. MedTech sales increased by 4.8%. International MedTech sales increased by 0.1%, including operational growth of 0.1% and a currency impact of 0.0%. In the fiscal third quarter of 2026, the net impact of acquisitions and divestitures on the MedTech segment operational sales growth was 0.0%.
Major MedTech franchise sales - Fiscal Third Quarter Ended
| (Dollars in Millions) | September 27, 2026 | September 28, 2025 |
Total Change |
Operations Change |
Currency Change | ||||||||||||||||||
Cardiovascular | $2,307 | $2,213 | 4.3 | % | 4.1 | % | 0.2 | % | |||||||||||||||
Electrophysiology | 1,487 | 1,418 | 4.9 | 4.4 | 0.5 | ||||||||||||||||||
Abiomed | 412 | 423 | (2.3) | (1.5) | (0.8) | ||||||||||||||||||
Shockwave | 325 | 278 | 16.8 | 17.2 | (0.4) | ||||||||||||||||||
Other Cardiovascular | 81 | 95 | (13.9) | (14.7) | 0.8 | ||||||||||||||||||
Surgery | 2,528 | 2,542 | (0.6) | (1.0) | 0.4 | ||||||||||||||||||
Advanced | 1,155 | 1,165 | (0.9) | (1.3) | 0.4 | ||||||||||||||||||
General | 1,373 | 1,378 | (0.3) | (0.8) | 0.5 | ||||||||||||||||||
Vision | 1,461 | 1,400 | 4.4 | 5.1 | (0.7) | ||||||||||||||||||
Contact Lenses/Other | 1,053 | 1,018 | 3.5 | 4.3 | (0.8) | ||||||||||||||||||
Surgical | 408 | 383 | 6.8 | 7.1 | (0.3) | ||||||||||||||||||
Orthopaedics | 2,345 | 2,274 | 3.2 | 3.4 | (0.2) | ||||||||||||||||||
Hips | 419 | 405 | 3.1 | 3.3 | (0.2) | ||||||||||||||||||
Knees | 386 | 377 | 2.5 | 3.1 | (0.6) | ||||||||||||||||||
Trauma | 844 | 793 | 6.4 | 6.5 | (0.1) | ||||||||||||||||||
Spine, Sports & Other | (0.1) | 0.1 | (0.2) | ||||||||||||||||||||
Total MedTech Sales | $8,642 | $8,430 | 2.5 | % | 2.5 | % | 0.0 | % | |||||||||||||||
The Cardiovascular franchise achieved operational sales growth of 4.1% as compared to the prior year fiscal third quarter. Electrophysiology sales growth was driven by procedure growth, commercial execution and new product performance (VARIPULSE, TRUPULSE, CRYSTAL and DUAL ENERGY STSF) partially offset by competitive pressures in Pulsed Field Ablation catheters and inventory dynamics outside the U.S. Abiomed sales decline was driven by lower patient volumes partially offset by sustained adoption of Impella 5.5. Shockwave sales growth was driven by strong adoption of Coronary and Peripheral portfolios and new product launches.
The Surgery franchise experienced an operational sales decline of 1.0% as compared to the prior year fiscal third quarter. The Advanced Surgery operational decline was primarily driven by China volume-based procurement, the impact of the surgery transformation program and disruptions in the Middle East across all platforms as well as competitive pressures in Endocutters and Energy. This was partially offset by the strength of the portfolio and commercial execution in Biosurgery and new product launches in Energy and Endocutters. The operational decline in General Surgery was primarily driven by China volume-based procurement partially offset by technology penetration and upgrades within the differentiated Wound Closure portfolio coupled with market expansion.
The Vision franchise achieved operational sales growth of 5.1% as compared to the prior year fiscal third quarter. The Contact Lenses/Other operational growth was driven by strong performance in the ACUVUE OASYS 1-Day family of products including recent launches and strategic price actions partially offset by inventory dynamics. The Surgical operational growth was primarily driven by the strength of recent product innovations, robust demand for premium IOLs and strong commercial execution partially offset by disruptions in the Middle East.
The Orthopaedics franchise achieved operational sales growth of 3.4% as compared to the prior year fiscal third quarter. The operational growth in Hips was due to new product launches. The operational growth in Knees was driven by the strength of the ATTUNE portfolio driven in part by pull through related to the VELYS Robotic assisted solutions. The operational growth in Trauma was primarily driven by recently launched products and commercial execution partially offset by inventory dynamics outside the U.S. The operational growth in Spine, Sports & Other was driven by new product innovations partially offset by competitive pressures and inventory dynamics.
In October 2025, the Company announced its intention to separate its Orthopaedics business and expects the separation to be completed in mid-2027.
Form 10-Q | |||||
Analysis of consolidated earnings before provision for taxes on income
Consolidated earnings before provision for taxes on income for the fiscal nine months of 2026 was $12.8 billion representing 17.1% of sales as compared to $27.6 billion in the fiscal nine months of 2025, representing 39.7% of sales. Consolidated earnings before provision for taxes on income for the fiscal third quarter of 2026 was $34.0 million representing 0.1% of sales as compared to $7.5 billion in the fiscal third quarter of 2025, representing 31.2% of sales. The fiscal third quarter and nine months of 2026 includes a charge of approximately $5.5 billion related to the proposed talc ovarian litigation resolution and $1.0 billion of acquired in-process research and development expense related to the acquisition of Firefly Bio, Inc. The fiscal nine months of 2025 includes approximately $7.0 billion related to the talc reserve reversal.
Cost of products sold
(Dollars in billions. Percentages in chart are as a percent to total sales)
Fiscal nine months Q3 2026 versus Fiscal nine months Q3 2025
Cost of products sold increased slightly as a percent to sales driven by:
•Unfavorable product mix primarily driven by the decline of STELARA sales in the Innovative Medicine business
•Increased intangible asset amortization expense in the Innovative Medicine segment for Intra-Cellular (additional CAPLYTA indication)
partially offset by
•Impact of tariff recoveries of approximately $0.2 billion in the MedTech business
•Favorable currency in the Innovative Medicine business
The intangible asset amortization expense included in cost of products sold for the fiscal nine months of 2026 and 2025 was $3.7 billion and $3.4 billion, respectively.
Q3 2026 versus Q3 2025
Cost of products sold increased as a percent to sales primarily driven by:
•Unfavorable product mix primarily driven by the decline of STELARA sales in the Innovative Medicine business
•Increased intangible asset amortization expense in the Innovative Medicine segment for Intra-Cellular (additional CAPLYTA indication)
partially offset by
•Impact of tariff recoveries of approximately $0.2 billion in the MedTech business
The intangible asset amortization expense included in cost of products sold for the fiscal third quarters of 2026 and 2025 was $1.2 billion and $1.0 billion, respectively.
Selling, marketing and administrative expenses
(Dollars in billions. Percentages in chart are as a percent to total sales)
Fiscal nine months Q3 2026 versus Fiscal nine months Q3 2025
Selling, Marketing and Administrative Expenses increased as a percent to sales primarily driven by:
•Commercial investments in the Innovative Medicine and MedTech businesses
Q3 2026 versus Q3 2025
Selling, Marketing and Administrative Expenses was flat as a percent to sales.
Research and development expense
Research and development expense by segment of business was as follows:
| Fiscal Third Quarter Ended | Fiscal Nine Months Ended | |||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| (Dollars in Millions) | Amount | % of Sales* | Amount | % of Sales* | Amount | % of Sales* | Amount | % of Sales* | ||||||||||||||||||||||||
| Innovative Medicine | $3,888 | 23.2 | % | $2,944 | 18.9 | % | $9,576 | 19.7 | % | $8,361 | 18.7 | % | ||||||||||||||||||||
| MedTech | 764 | 8.8 | 728 | 8.6 | 2,256 | 8.6 | 2,052 | 8.2 | ||||||||||||||||||||||||
| Total research and development expense | $4,652 | 18.3 | % | $3,672 | 15.3 | % | $11,832 | 15.8 | % | $10,413 | 15.0 | % | ||||||||||||||||||||
| Percent increase over the prior year | 26.7 | % | 13.6 | % | ||||||||||||||||||||||||||||
*As a percent to segment sales | ||||||||||||||||||||||||||||||||
Fiscal nine months Q3 2026 versus Fiscal nine months Q3 2025 and Q3 2026 versus Q3 2025
Research and Development increased as a percent to sales primarily driven by:
•Acquired in-process research and development expense of approximately $1.0 billion related to the acquisition of Firefly Bio, Inc. (Firefly)
In-process research and development (IPR&D) impairments
In the fiscal nine months of 2026, the Company recorded a charge of approximately $0.4 billion primarily related to PreCardia, a non-strategic asset acquired as part of the Abiomed acquisition in 2022.
Form 10-Q | |||||
Interest (income) expense
Interest (income) expense in the fiscal nine months of 2026 was net expense of $136 million as compared to net income of $62 million in the fiscal nine months of 2025. The increase in net expense was driven by a lower average cash balance earning a lower rate of interest and a higher average debt balance. Interest (income) expense in the fiscal third quarter of 2026 was net expense of $31 million and was relatively flat as compared to net expense of $18 million in the fiscal third quarter of 2025. The balance of cash, cash equivalents and current marketable securities was $17.2 billion at the end of the fiscal third quarter of 2026 as compared to $18.6 billion at the end of the fiscal third quarter of 2025. The Company's debt position was $44.6 billion as of September 27, 2026, as compared to $45.8 billion the same period a year ago.
Other (income) expense, net*
Fiscal nine months Q3 2026 versus Fiscal nine months Q3 2025
Other (income) expense, net for the fiscal nine months of 2026 was an expense of $6.4 billion as compared to $7.7 billion of income in the prior year primarily due to the following:
| Fiscal Nine Months | ||||||||||||||||||||
| (Dollars in Billions)(Income)/Expense | September 27, 2026 | September 28, 2025 | Change | |||||||||||||||||
Litigation related(1) | $ | 6.1 | (6.9) | 13.0 | ||||||||||||||||
Orthopaedics separation related | 0.7 | 0.0 | 0.7 | |||||||||||||||||
Employee benefit related | (0.5) | (0.4) | (0.1) | |||||||||||||||||
Changes in the fair value/sale of securities | (0.3) | (0.3) | - | |||||||||||||||||
Sail Biomedicines Option Premium | 0.3 | 0.0 | 0.3 | |||||||||||||||||
Restructuring related | 0.2 | 0.1 | 0.1 | |||||||||||||||||
Acquisition, Integration and Divestiture related | 0.1 | 0.4 | (0.3) | |||||||||||||||||
Other |
(0.2) |
(0.6) | 0.4 | |||||||||||||||||
Total Other (Income) Expense, Net |
$ |
6.4 |
(7.7) |
14.1 | ||||||||||||||||
(1)The fiscal nine months of 2026 includes a charge of $5.5 billion related to the proposed talc ovarian litigation resolution. The fiscal nine months of 2025 include approximately $7.0 billion related to the talc reserve reversal. For additional details related to talc refer to Note 11 to the Consolidated Financial Statements.
Q3 2026 versus Q3 2025
Other (income) expense, net for the fiscal third quarter of 2026 reflected an expense of $5.8 billion as compared to $0.5 billion of income in the prior year primarily due to the following:
| Fiscal Third Quarter | ||||||||||||||||||||
| (Dollars in Billions)(Income)/Expense | September 27, 2026 | September 28, 2025 | Change | |||||||||||||||||
Litigation related(1) |
$ |
5.5 |
0.0 |
5.5 | ||||||||||||||||
Orthopaedics separation related | 0.3 | 0.0 | 0.3 | |||||||||||||||||
Sail Biomedicines Option Premium | 0.3 | 0.0 | 0.3 | |||||||||||||||||
Employee benefit related | (0.2) | (0.1) | (0.1) | |||||||||||||||||
Changes in the fair value/sale of securities | 0.0 | (0.4) | 0.4 | |||||||||||||||||
Acquisition, Integration and Divestiture related | 0.0 | 0.1 | (0.1) | |||||||||||||||||
Other | (0.1) | (0.1) | - | |||||||||||||||||
Total Other (Income) Expense, Net | $ | 5.8 | (0.5) | 6.3 | ||||||||||||||||
(1)The fiscal third quarter of 2026 includes a charge related to the proposed talc ovarian litigation resolution. For additional details related to talc refer to Note 11 to the Consolidated Financial Statements.
*Other (income) expense, net is the account where the Company records gains and losses related to the sale and write-down of certain investments in equity securities held by Johnson & Johnson Innovation - JJDC, Inc. (JJDC), changes in the fair value of securities, gains and
losses on divestitures and on sales of assets, certain transactional currency gains and losses, acquisition and divestiture-related costs, litigation accruals and settlements, investment (income)/loss related to employee benefit plans, as well as royalty income.
Segment income before tax
Income before tax by segment of business for the fiscal nine months were as follows:
| Income Before Tax | Segment Sales | Percent of Segment Sales | |||||||||||||||||||||||||||||||||
| (Dollars in Millions) | September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | |||||||||||||||||||||||||||||
| Innovative Medicine | $16,632 | $17,208 | $48,567 | $44,638 | 34.2 | % | 38.6 | % | |||||||||||||||||||||||||||
| MedTech | 3,192 | 3,912 | 26,204 | 24,991 | 12.2 | 15.7 | |||||||||||||||||||||||||||||
| Segment total | 19,824 | 21,120 | 74,771 | 69,629 | 26.5 | 30.3 | |||||||||||||||||||||||||||||
(Income) Expenses not allocated to segments(1) | 7,053 | (6,495) | |||||||||||||||||||||||||||||||||
| Earnings before provision for taxes on income | $12,771 | $27,615 | $74,771 | $69,629 | 17.1 | % | 39.7 | % | |||||||||||||||||||||||||||
(1)Amounts not allocated to segments include interest (income) expense, certain litigation expenses and general corporate (income) expense. The fiscal nine months of 2026 includes a charge of $5.5 billion related to the proposed talc ovarian litigation resolution. The fiscal nine months of 2025 include approximately $7.0 billion related to the talc reserve reversal. For additional details related to talc refer to Note 11 to the Consolidated Financial Statements.
Innovative Medicine segment
The Innovative Medicine segment income before tax as a percent of sales in the fiscal nine months of 2026 was 34.2% versus 38.6% for the same period a year ago. The decrease in the income before tax as a percent of sales for the fiscal nine months of 2026 as compared to the prior year was primarily driven by the following:
•Acquired in-process research and development expense of approximately $1.0 billion related to the acquisition of Firefly in 2026
•Expense of $0.3 billion primarily related to the option premium associated with Sail Biomedicines (Sail) in 2026
•Restructuring related costs of $0.3 billion in 2026
•Higher intangible asset amortization expense of $0.3 billion in 2026 related to Intra-Cellular (additional CAPLYTA indication)
•Unfavorable product mix in Cost of products sold, primarily driven by the decline of STELARA sales
partially offset by
•Favorable currency in Cost of products sold
MedTech segment
The MedTech segment income before tax as a percent of sales in the fiscal nine months of 2026 was 12.2% versus 15.7% for the same period a year ago. The decrease in the income before tax as a percent of sales for the fiscal nine months of 2026 was primarily driven by the following:
•Orthopaedics separation related costs of $0.7 billion in 2026
•Unfavorable changes in the fair value of securities of $0.2 billion versus 2025
•In-process research and development impairment charges of $0.4 billion in 2026, primarily related to PreCardia, a non-strategic asset acquired as part of the Abiomed acquisition in 2022
partially offset by
•Impact of tariff recoveries of approximately $0.2 billion included in Cost of products sold
Form 10-Q | |||||
Income before tax by segment of business for the fiscal third quarters were as follows:
| Income Before Tax | Segment Sales | Percent of Segment Sales | ||||||||||||||||||||||||||||||||||||
| (Dollars in Millions) | September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||||||||||||||
| Innovative Medicine | $5,066 | $6,446 | $16,757 | $15,563 | 30.2 | % | 41.4 | % | ||||||||||||||||||||||||||||||
| MedTech | 776 | 1,287 | 8,642 | 8,430 | 9.0 | 15.3 | ||||||||||||||||||||||||||||||||
| Segment total | 5,842 | 7,733 | 25,399 | 23,993 | 23.0 | 32.2 | ||||||||||||||||||||||||||||||||
(Income)/ Expenses not allocated to segments(1) | 5,808 | 240 | ||||||||||||||||||||||||||||||||||||
| Earnings before provision for taxes on income | $34 | $7,493 | $25,399 | $23,993 | 0.1 | % | 31.2 | % | ||||||||||||||||||||||||||||||
(1)Amounts not allocated to segments include interest (income) expense, certain litigation expenses and general corporate (income) expense. The fiscal third quarter of 2026 includes a charge of $5.5 billion related to the proposed talc ovarian litigation resolution. For additional details related to talc refer to Note 11 to the Consolidated Financial Statements.
Innovative Medicine segment
The Innovative Medicine segment income before tax as a percent of sales in the fiscal third quarter of 2026 was 30.2% versus 41.4% for the same period a year ago. The decrease in the income before tax as a percent of sales for the fiscal third quarter of 2026 as compared to the prior year was primarily driven by the following:
•Acquired in-process research and development expense of approximately $1.0 billion related to the acquisition of Firefly in 2026
•Expense of $0.3 billion primarily related to the option premium associated with Sail Biomedicines (Sail) in 2026
•Higher intangible asset amortization expense of $0.2 billion in 2026 related to Intra-Cellular (additional CAPLYTA indication)
•Favorable changes of $0.2 billion in the fair value of securities in 2025 as compared to 2026
•Restructuring related costs of $0.1 billion in 2026
•Unfavorable product mix in Cost of products sold, primarily driven by the decline of STELARA sales
partially offset by
•Favorable currency in Cost of products sold
MedTech segment
The MedTech segment income before tax as a percent of sales in the fiscal third quarter of 2026 was 9.0% versus 15.3% for the same period a year ago. The decrease in the income before tax as a percent of sales for the fiscal third quarter of 2026 as compared to the prior year was primarily driven by the following:
•Orthopaedics separation related costs of $0.4 billion in 2026
•Unfavorable changes in the fair value of securities of $0.2 billion versus 2025
•In-process research and development impairment charge of $0.3 billion in 2026, related to PreCardia, a non-strategic asset acquired as part of the Abiomed acquisition in 2022
partially offset by
•Impact of tariff recoveries of approximately $0.2 billion included in Cost of products sold
Restructuring
In the fiscal second quarter of 2026, the Company initiated a supply chain restructuring program primarily in the Innovative Medicine segment to exit certain manufacturing locations as part of its optimization efforts to streamline operations. The program is expected to be substantially complete by the end of 2029 with estimated costs between $0.7 billion and $0.8 billion, and include site and supplier exit costs, decommissioning and asset impairments costs. The pre-tax restructuring expense was $74 million in the fiscal third quarter of 2026, of which $103 million was recorded in Restructuring, a reversal of $18 million of expense in Cost of products sold and a reversal of $11 million of expense in Other income and expense on the Consolidated Statement of Earnings primarily related to exit costs. The pre-tax restructuring expense was $274 million in the fiscal nine months of 2026, of which $103 million was recorded in Restructuring and $171 million in Other income and expense on the Consolidated Statement of Earnings primarily related to asset impairments and exit costs. Total project costs of approximately $0.3 billion have been recorded since the restructuring was announced.
In fiscal 2025, the Company initiated a restructuring program of its Surgery franchise within the MedTech segment to simplify and focus operations by exiting certain non-strategic product lines and optimize select sites across the network. The pre-tax restructuring expense was $80 million in the fiscal third quarter of 2026, of which $44 million was recorded in Restructuring, $6 million in Cost of products sold and $30 million in Other income and expense on the Consolidated Statement of Earnings primarily related to product exits. The pre-tax restructuring expense was $194 million in the fiscal nine months of 2026, of which $105 million was recorded in Restructuring, $30 million in Cost of products sold and $59 million in Other income and expense on the Consolidated Statement of Earnings primarily related to product exits. The pre-tax restructuring expense was $128 million in the fiscal third quarter of 2025, of which $35 million was recorded in Restructuring and $93 million in Other income and expense on the Consolidated Statement of Earnings. The pre-tax restructuring expense was $157 million in the fiscal nine months of 2025, of which $64 million was recorded in Restructuring and $93 million in Other income and expense on the Consolidated Statement of Earnings. Total project costs of approximately $0.4 billion have been recorded since the restructuring was announced. This program will be completed as of the fiscal fourth quarter of 2026 at a total project cost of approximately $0.6 billion.
In fiscal 2023, the Company initiated a restructuring program of its Orthopaedics franchise within its MedTech segment to streamline operations by exiting certain markets, product lines and distribution network arrangements. The pre-tax restructuring expense was $41 million in the fiscal third quarter of 2026, of which $34 million was recorded in Restructuring and $7 million in Cost of products sold on the Consolidated Statement of Earnings primarily for costs related to market and product exits. The pre-tax restructuring expense was $65 million in the fiscal nine months of 2026, of which $39 million was recorded in Restructuring, $1 million in Other (Income)/Expense and $25 million in Cost of products sold on the Consolidated Statement of Earnings primarily for costs related to market and product exits. The pre-tax restructuring expense was $40 million in the fiscal third quarter of 2025, of which $28 million was recorded in Restructuring and $12 million in Cost of products sold on the Consolidated Statement of Earnings primarily for costs related to market and product exits. The pre-tax restructuring expense was $145 million in the fiscal nine months of 2025, of which $80 million was recorded in Restructuring, $35 million in Cost of products sold and $30 million in Other (Income)/Expense on the Consolidated Statement of Earnings primarily for costs related to asset impairments as well as market and product exits. Total project costs of approximately $0.9 billion have been recorded since the restructuring was announced. This program will be completed as of the fiscal fourth quarter of 2026 at a total project cost of approximately $1.0 billion.
For further details related to the restructuring refer to Note 12 to the Consolidated Financial Statements.
Provision for taxes on income
The worldwide effective income tax rate for the fiscal nine months was 14.0% in 2026 and 21.5% in 2025.
For further details related to the fiscal 2026 provision for taxes refer to Note 5 to the Consolidated Financial Statements.
Form 10-Q | |||||
Liquidity and capital resources
Dividends to shareholders
*Includes business combinations and asset acquisitions
Cash flows
Cash and cash equivalents were $16.9 billion at the end of the fiscal third quarter of 2026 as compared with $19.7 billion at the end of fiscal year 2025. The primary sources and uses of cash that contributed to the $2.8 billion decrease were:
(Dollars In Billions) | ||||||||
19.7 |
Q4 2025 Cash and cash equivalents balance | |||||||
18.9 |
net cash generated from operating activities | |||||||
(4.9) |
net cash used for investing activities | |||||||
(16.8) |
net cash used for financing activities | |||||||
$ |
16.9 |
Q3 2026 Cash and cash equivalents | ||||||
In addition, the Company had $0.3 billion in marketable securities at the end of the fiscal third quarter of 2026 and $0.4 billion at the end of fiscal year 2025.
Cash flow from operations of $18.9 billion was the result of:
(Dollars In Billions) | ||||||||
$ |
11.0 |
Net earnings | ||||||
6.8 |
non-cash expenses and other adjustments primarily for depreciation and amortization, stock-based compensation and asset write-downs partially offset by deferred tax provision and net gain on sale of assets/businesses | |||||||
(2.9) |
an increase in accounts receivable and inventories | |||||||
1.4 |
an increase in accounts payable and accrued liabilities | |||||||
1.4 |
a decrease in other current and non-current assets | |||||||
1.1 |
an increase in other current and non-current liabilities | |||||||
0.1 |
rounding | |||||||
$ |
18.9 |
Net cash flows from operations | ||||||
Cash flow used for investing activities of $4.9 billion was primarily from:
(Dollars In Billions) | ||||||||
$ |
(3.7) |
additions to property, plant and equipment | ||||||
0.1 |
proceeds from the disposal of assets/businesses, net | |||||||
(0.4) |
acquisitions, net of cash acquired | |||||||
(1.0) |
acquired in-process research and development assets/related milestones | |||||||
(0.5) |
net purchases of investments | |||||||
0.9 |
credit support agreements activity, net | |||||||
(0.3) |
Other and rounding | |||||||
$ |
(4.9) |
Net cash used for investing activities | ||||||
Cash flow used for financing activities of $16.8 billion was primarily from:
(Dollars In Billions) | ||||||||
$ |
(9.6) |
dividends to shareholders | ||||||
(6.0) |
repurchase of common stock | |||||||
(2.9) |
net repayment of short and long term debt | |||||||
2.3 |
proceeds from stock options exercised/employee withholding tax on stock awards, net | |||||||
(0.6) |
Other, primarily Auris shareholder payment (described in Note 11), Credit support agreements and rounding | |||||||
$ |
(16.8) |
Net cash used for financing activities | ||||||
The Company has access to substantial sources of funds at numerous banks worldwide and has the ability to issue up to $20 billion in Commercial Paper. Furthermore, in June 2026, the Company secured a new 364-day Credit Facility of $12.5 billion (expiration on June 23, 2027) which may be used for general corporate purposes including to support commercial paper borrowings. Interest charged on borrowings under the credit line agreement is based on either Secured Overnight Financing Rate (SOFR) Reference Rate or other applicable market rate as allowed plus applicable margins. Commitment fees under the agreement are not material.
As of September 27, 2026, the Company had cash, cash equivalents and marketable securities of approximately $17.2 billion and had approximately $44.6 billion of notes payable and long-term debt for a net debt position of $27.4 billion as compared to the prior year fiscal third quarter net debt position of $27.2 billion. The Company anticipates that operating cash flows, the ability to raise funds from external sources, borrowing capacity from existing committed credit facilities and access to the commercial paper markets will continue to provide sufficient resources to fund operating needs, including the Company's remaining balance of approximately $9.0 billion related to talc matters, $3.2 billion related to the current portion of Corporate bonds due and approximately $2.6 billion for the option to acquire Sail (refer to Note 10 to the Consolidated Financial Statements for further details) and the remaining approximately $0.9 billion related to opioid settlements. In addition, the Company monitors the global capital markets on an ongoing basis and from time to time may raise capital when market conditions are favorable.
Dividends
On July 15, 2026, the Board of Directors declared a regular cash dividend of $1.34 per share, payable on September 8, 2026, to shareholders of record as of August 25, 2026.
On October 13, 2026, the Board of Directors declared a regular cash dividend of $1.34 per share, payable on December 8, 2026, to shareholders of record as of November 24, 2026. The Company expects to continue the practice of paying regular quarterly cash dividends.
Other information
New accounting pronouncements
Refer to Note 1 to the Consolidated Financial Statements for new accounting pronouncements.
Form 10-Q | |||||
Economic and market factors
The Company operates in certain countries where the economic conditions continue to present significant challenges. The Company continues to monitor these situations and take appropriate actions. Inflation rates and currency exchange rates continue to have an effect on worldwide economies and, consequently, on the way the Company operates. The Company has accounted for operations in Venezuela, Argentina, Turkey and Egypt as highly inflationary, as the prior three-year cumulative inflation rate surpassed 100%. In the face of increasing costs, the Company strives to maintain its profit margins through cost reduction programs, productivity improvements and periodic price increases.
The long-term implications of regional conflicts on the Company are difficult to predict. The financial impact of known existing conflicts, particularly in the Middle East, negatively impacted growth in the MedTech Surgery business in the fiscal third quarter of 2026.
Governments around the world consider various proposals to make changes to tax laws, which may include increasing or decreasing existing statutory tax rates. In connection with various government initiatives, companies are required to disclose more information to tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in other countries. A change in statutory tax rate in any country would result in the revaluation of the Company's deferred tax assets and liabilities related to that particular jurisdiction in the period in which the new tax law is enacted. This change would result in an expense or benefit recorded to the Company's Consolidated Statement of Earnings. The Company closely monitors these proposals as they arise in the countries where it operates. Changes to the statutory tax rate may occur at any time, and any related expense or benefit recorded may be material to the fiscal quarter and year in which the law change is enacted.
The Company may be further impacted by the imposition of tariffs, trade protection measures or other policies adopted by any jurisdiction that favor domestic companies and technologies over foreign competitors.
The Company faces various worldwide health care changes that may continue to result in pricing pressures that include health care cost containment and government legislation relating to sales, promotions and reimbursement of health care products including recent actions in the U.S. and foreign countries such as Germany. Recent U.S. policy initiatives have focused on prescription drug affordability, including the use of, international reference pricing methodologies, intended to reduce costs for American patients and the U.S. Government. The Company has entered into voluntary agreements with the U.S. government that include patient affordability initiatives, participation in certain pricing programs, and continued investment in U.S.-based research, development, and manufacturing capabilities. The Company continues to implement and evaluate the potential effects of these agreements and related policy initiatives.
Changes in the behavior and spending patterns of purchasers of healthcare products and services, including delaying medical procedures, rationing prescription medications, reducing the frequency of physician visits and foregoing healthcare insurance coverage, may continue to impact the Company's businesses.
The Company faces regular intellectual property challenges from third parties, including generic and biosimilar manufacturers, seeking to manufacture and market generic and biosimilar versions of key pharmaceutical products prior to the expiration of the applicable patents. These challengers file Abbreviated New Drug Applications or abbreviated Biologics License Applications with the FDA or otherwise challenged the coverage and/or validity of the Company's patents. In the event the Company is not successful in defending the patent claims challenged in the resulting lawsuits, generic or biosimilar versions of the products at issue may be introduced to the market, resulting in the potential for substantial market share and revenue losses for those products, and which may result in a non-cash impairment charge in any associated intangible asset. There is also risk that one or more competitors could launch a generic or biosimilar version of the product at issue following regulatory approval even though one or more valid patents are in place.