The Population Reference Bureau expects the number of Americans aged 65 and older to climb from 58 million in 2022 to 82 million by 2050. The aging population is fueling demand for healthcare. US healthcare spending is forecast to hit $6 trillion in 2026 from $5.7 trillion in 2025.
This trend reflects an expanding market for medical products companies. Yet for large healthcare companies, legal issues can erode the benefits of favorable market conditions. That's why Johnson & Johnson's (NYSE:JNJ) proposed settlement of long-running talc lawsuits warrants significant investor attention.
Johnson & Johnson (NYSE:JNJ) has agreed to pay $5.5 billion to settle lawsuits alleging that its talc-based products caused ovarian cancer. The proposed settlement covers nearly 80,000 outstanding claims. For more than a decade, the company has made multiple attempts to resolve these lawsuits but suffered setbacks.
Things recently tilted in the company's favor after a federal judge questioned some key expert testimonies linking talc to individual cancer cases and disqualified one plaintiffs' law firm. If the settlement is finalized, it could reduce legal uncertainty that has weighed on Johnson's shares and management attention for years. Johnson & Johnson (NYSE:JNJ) and AbbVie (NYSE:ABBV) are two of the pharmaceutical industry leaders.
But they present varying investment profiles. Johnson runs a more diversified business that goes well beyond pharmaceutical products to include medical devices and surgical technology. AbbVie is heavily focused on branded medicines, particularly in areas like immunology and oncology therapy.
From a valuation standpoint, Johnson trades at a trailing price-to-earnings (P/E) multiple of about 30x, compared with roughly 70x for AbbVie. Johnson has a dividend yield of 2.05%. While J&J is a Dividend King with 64 consecutive years of raises, AbbVie pays a fatter 2.78%.
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