What happened

Shares of healthcare titan Johnson & Johnson (NYSE:JNJ) trailed the market through the first six months of 2018 by shedding 13%, compared to a 2% uptick in the S&P 500, according to data provided by S&P Global Market Intelligence.

^SPX Chart

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The decline has pushed the stock below broader market returns over the past one-year and three-year time frames.

So what

Johnson & Johnson's latest results haven't given investors much to worry about. In fact, sales and profits beat expectations in the most recent quarter, thanks mainly to a booming pharmaceutical segment. The drugmaker's portfolio continues to grow, which is helping offset some of the pain from declining prices for its blockbuster Remicade treatment.

Two laboratory researchers at work

Image source: Getty Images.

Now what

CEO Alex Gorsky and his team raised their sales outlook in April, and now believe organic growth should range between 4% and 5%, up from the prior target of between 3.5% and 4.5%. Over the short term, investors are concerned that a political battle over drug pricing might harm Johnson & Johnson's profitability, and so shares are likely to react to major news on that front.

The long-term competitive outlook is bright, though. It's especially so considering that reduced tax expenses are slated to power a 15% increase in research and development spending over the next four years, to $30 billion.