Transcript Plans for Growth

1
4th Quarter 2016
Earnings Call Presentation
January 24, 2017
2
Joseph J. Wolk
Vice President
Investor Relations
3
Cautionary Note on Forward-Looking Statements
These presentations contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, future
operating and financial performance, product development, market position and business strategy. The viewer is cautioned not to rely on these forward-looking
statements. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties
materialize, actual results could vary materially from the expectations and projections of Johnson & Johnson. Risks and uncertainties include, but are not limited to,
economic factors, such as interest rate and currency exchange rate fluctuations; competition, including technological advances, new products and patents attained by
competitors; challenges inherent in product research and development, including uncertainty of clinical success and obtaining regulatory approvals; uncertainty of
commercial success for new and existing products; challenges to patents; the impact of patent expirations; the ability of the company to successfully execute strategic
plans, including business plans, transactions and restructuring plans; market conditions and the possibility that the on-going share repurchase program may be delayed,
suspended or discontinued; the impact of business combinations and divestitures; significant adverse litigation or government action, including related to product liability
claims; changes to applicable laws and regulations, including tax laws and global health care reforms; trends toward health care cost containment; changes in behavior
and spending patterns or financial distress of purchasers of health care products and services; financial instability of international economies and legal systems and
sovereign risk; manufacturing difficulties or delays, internally or within the supply chain; product efficacy or safety concerns resulting in product recalls or regulatory
action; increased scrutiny of the health care industry by government agencies; and the potential failure to meet obligations in compliance agreements with government
bodies. A further list and description of these risks, uncertainties and other factors can be found in Johnson & Johnson’s Annual Report on Form 10-K for the fiscal year
ended January 3, 2016, including in Exhibit 99 thereto, and the company’s subsequent filings with the Securities and Exchange Commission. Copies of these filings are
available online at www.sec.gov, www.investor.jnj.com, or on request from Johnson & Johnson. Any forward-looking statement made in these presentations speaks only
as of the date of this presentation. Johnson & Johnson does not undertake to update any forward-looking statement as a result of new information or future events or
developments.
Cautionary Note on Non-GAAP Financial Measures
These presentations refer to certain non-GAAP financial measures. These non-GAAP financial measures should not be considered replacements for, and should be read together
with, the most comparable GAAP financial measures.
A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the accompanying financial schedules of the
earnings release and the Investor Relations section of the Company’s website at www.investor.jnj.com.
4
Strategic Partnerships, Collaborations & Licensing Arrangements
During the course of this morning’s presentations, we will discuss a number of products and compounds developed
in collaboration with strategic partners or licensed from other companies. Following is an acknowledgement of those
relationships.
Immunology
REMICADE® and SIMPONI®/SIMPONI ARIA® marketing partners are Schering-Plough (Ireland) Company, a subsidiary of Merck & Co., Inc.
and Mitsubishi Tanabe Pharma Corporation, sirukumab developed in collaboration with GlaxoSmithKline, guselkumab licensed from
MorphoSys AG
Neuroscience
INVEGA SUSTENNA®/XEPLION®/INVEGA TRINZA®/TREVICTA® includes technology licensed from Alkermes, Inc.
Infectious
Diseases &
Virology
OLYSIO® developed in collaboration with Medivir AB, PREZCOBIX®/ REZOLSTA® fixed-dose combination, darunavir + C/F/TAF and
rilpivirine +F/TAF FDC developed in collaboration with Gilead Sciences, Inc., rilpivirine + dolutegravir FDC in collaboration with ViiV
Healthcare UK, JNJ-3872 (VX-787) licensed from Vertex, Pharmaceuticals, Inc.
Cardiovascular/
Metabolism
INVOKANA®/INVOKAMET®/VOKANAMET®/INVOKAMET® XR fixed-dose combination licensed from Mitsubishi Tanabe Pharma Corporation,
®
XARELTO co-developed with Bayer HealthCare AG
Oncology
IMBRUVICA® developed in collaboration and co-marketed in the U.S. with Pharmacyclics, LLC, an AbbVie company, ZYTIGA® licensed from
BTG International Ltd., VELCADE® developed in collaboration with Millennium: The Takeda Oncology Company, DARZALEX® licensed from
Genmab A/S, PROCRIT®/EPREX® licensed from Amgen Inc., and imetelstat licensed from Geron Corporation
Orthopaedics:
MONOVISC®/ORTHOVISC® licensed from Anika Therapeutics, Inc.
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4th Quarter and Full-Year 2016 Sales
% Change
$ U.S. Billions
TOTAL COMPANY
4Q 2016
4Q 2015
Reported
Operational*
U.S.
$9.5
$9.3
2.6%
2.6%
International
8.6
8.5
0.6
1.9
$18.1
$17.8
1.7%
2.3%
FY 2016
FY 2015
Reported
Operational*
U.S.
$37.8
$35.7
6.0%
6.0%
International
34.1
34.4
(0.9)
1.8
Worldwide (WW)
$71.9
$70.1
2.6%
3.9%
Worldwide (WW)
TOTAL COMPANY
* Excludes impact of translational currency
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4th Quarter 2016 Financial Highlights
$ U.S. Billions, except EPS
4Q 2016
4Q 2015
% Change
$18.1
$17.8
1.7 Total
2.3 Ops*
GAAP Earnings
3.8
3.2
18.6
GAAP EPS
1.38
1.15
20.0
Adjusted Earnings**
4.4
4.0
7.9
Adjusted EPS**
1.58
1.44
9.7 Total
10.4 Ops*
Sales
* Excludes impact of translational currency
** Non-GAAP measure; excludes intangible amortization expense and special items; see reconciliation
7
Full-Year 2016 Financial Highlights
$ U.S. Billions, except EPS
FY 2016
FY 2015
% Change
Sales
$71.9
$70.1
2.6 Total
3.9 Ops*
GAAP Earnings
16.5
15.4
7.3
GAAP EPS
5.93
5.48
8.2
Adjusted Earnings**
18.8
17.4
7.6
Adjusted EPS**
6.73
6.20
8.5 Total
9.4 Ops*
* Excludes impact of translational currency
** Non-GAAP measure; excludes intangible amortization expense and special items; see reconciliation
8
Consumer Highlights – 4th Quarter 2016
Sales: $3.4B: WW 3.4%, U.S. 12.7%, Int’l (2.1)%
Ops Change*: WW 4.9%, U.S. 12.7%, Int’l 0.2%
KEY DRIVERS OF OPERATIONAL PERFORMANCE*
CONSUMER
SEGMENT
TOTAL WW
SALES $MM
REPORTED
% GROWTH
OPERATIONAL
% GROWTH*
Baby Care
$493
(3.9)%
(2.3)%
Beauty
1,063
17.7
18.7
397
(2.7)
(1.6)
Oral Care
OTC
1,039
2.1
Baby
Care
– OUS Hipoglos acquisition offset by softness in
cleansers and India demonetization
Beauty
– U.S. Vogue, Light Mask, and NeoStrata® acquisitions
(formerly
(~+19 pts), NEUTROGENA® strength driven by retail
restocking and new product inventory
Skin Care)
4.1
Oral Care
Women’s
Health
264
(6.7)
(4.4)
Wound
Care/Other
176
(9.7)
(9.5)
Total
Consumer
$3,432
3.4%
4.9%
* Excludes impact of translational currency
– U.S. continued shift to competitive, premium
products partially offset by strength in AVEENO®
Baby
– OUS Vogue acquisition (~+5 pts) and Dabao
strength with 11/11 event and new products/
geographic expansion for NEUTROGENA® and
AVEENO®
Women’s
Health
– U.S. TUCKS® divestiture
– U.S. REMBRANDT® divestiture and mouthwash
category down partially offset by increased share
Wound
Care/
Other
– U.S. SPLENDA® divestiture offset by retailer
restocking for BAND-AID®
Total
Consumer
– Venezuela (Vnz) negatively impacted WW growth
by 40 bps and OUS by 70bps
– OUS strong marketing campaigns bolstering
EMEA
OTC
– U.S. share gains in TYLENOL® and ZYRTEC®
coupled with inventory build due to replenishment
from Q3 burn and build for upcoming season
– OUS strength in anti-smoking aids and IMODIUM®
in EMEA and Canada partially offset by BeTotal
divestiture and softness in China
** Non-GAAP measure; see reconciliation
– OUS Venezuela impact offset by LATAM
promotional response and price
– OUS SPLENDA® divestiture
– Addt’l 2015 shipping days negatively impacted
growth: WW 460bps, US 700bps, OUS 330bps
– Excluding impact of acq/div/Vnz/2015 shipping
days**, WW +7.6%, U.S. +13.7%, OUS +4.1%
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Pharmaceutical Highlights – 4th Quarter 2016
Sales: $8.2B: WW 2.1%, U.S. 1.9%, Int’l 2.4%
Ops Change*: WW 2.6%, U.S. 1.9%, Int’l 3.7%
KEY DRIVERS OF OPERATIONAL PERFORMANCE*
PHARMACEUTICAL
SEGMENT
Immunology
Infectious
Diseases
Neuroscience
TOTAL WW REPORTED OPERATIONAL
SALES $MM % GROWTH % GROWTH*
$2,936
6.0%
6.1%
761
(5.0)
(3.9)
1,470
(8.2)
Immunology
– Strong U.S. immunology market growth and
increased penetration for STELARA® and
SIMPONI ARIA®
– OUS strength across major regions for
STELARA® and SIMPONI® / SIMPONI ARIA®
Infectious
Diseases
– Lower sales of Hepatitis C products due to
competitive launches
– Strong sales of PREZCOBIX® and new product
launch of ODEFSEY®
(8.2)
Neuroscience – WW long-acting injectables grew on strength of
INVEGA TRINZA® /TREVICTA® and XEPLION®
Oncology
Cardiovascular/
Metabolism/
Other
Total Pharma
1,462
1,603
$8,232
14.8
(0.9)
2.1%
15.9
(0.1)
2.6%
– Lower U.S. sales of INVEGA® due to generic
entries
Oncology
– DARZALEX® continued strong uptake in U.S.;
launched in 15 countries in Europe
– Strong sales of IMBRUVICA® due to increased
patient uptake globally; U.S. total share leader
for 2nd line CLL and MCL, 1st line CLL and WM
– ZYTIGA® negative U.S. market growth (partly
higher utilization of patient assistance
foundations); competitive pressure for EMEA;
strong sales in ASPAC region
* Excludes impact of translational currency
** Non-GAAP measure; see reconciliation
Cardiovascular – INVOKANA®/INVOKAMET® U.S. modest
/ Metabolism /
market growth; TRx share of 6.1% in T2D
Other
market
– U.S. XARELTO® driven by continued TRx
share growth
Total
– Addt’l 2015 shipping days negatively impacted
Pharmaceutical
growth: WW 570bps, US 870bps, OUS
120bps
– Excluding impact of acq/div/Hep C/Vnz/2015
shipping days**, WW +9.9%, U.S. +11.8%,
OUS +7.1%
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Medical Devices Highlights – 4th Quarter 2016
Sales: $6.4B: WW 0.2%, U.S. (0.1)%, Int’l 0.6%
Ops Change*: 0.6%, U.S. (0.1)%, Int’l 1.3%
MEDICAL DEVICES
SEGMENT
TOTAL WW
SALES $MM
REPORTED OPERATIONAL
% GROWTH % GROWTH*
Cardiovascular
$485
10.5%
10.1%
Diabetes Care
462
(3.8)
(3.0)
-
***
***
2,387
(1.5)
(0.9)
Hips
350
(1.1)
(0.1)
Knees
395
(2.5)
(1.4)
Trauma
654
1.6
1.9
Spine & Other
988
(3.1)
(2.7)
2,387
(1.1)
(0.4)
908
4.4
5.2
General
1,102
(3.9)
(3.1)
Specialty
377
(4.8)
(4.8)
KEY DRIVERS OF OPERATIONAL PERFORMANCE*
Cardiovascular – Electrophysiology: +10% driven by strong
market growth and continued share uptake;
launch of THERMOCOOL SMARTTOUCH®
Contact Force Sensing Catheter in EMEA
– Impacted by divestiture of Cordis in Q4 2015
Diagnostics
Orthopaedics
Surgery
Advanced
Vision Care
Total Med Dev
721
11.3
10.3
$6,442
0.2%
0.6%
* Excludes impact of translational currency
Diabetes Care
Surgery
– General: Market growth in U.S., wound care and
suture performance in China, offset by hernia
declines in LATAM & China
– U.S. BGM impacted by negative price and
rebates offset by higher strip consumption;
ID lower due to competitive pressure
– Specialty: U.S. market share and market declines in
Mentor and Sterilmed; ASP divestitures offset by
U.S. market share and market growth in ASP
– OUS BGM Algeria import restrictions and ID
softness in consumables
Orthopaedics
– Hips: Strength in China, EMEA and continued
uptake of primary stem platform
Vision
Care
– Spine & Other: Lower OUS inventory levels
in prior period partially offset by share losses
in spine
– Spine: WW (4)%, U.S. (5)%, OUS (1)%
** Non-GAAP measure; see reconciliation
*** Not meaningful
– U.S. Inventory build, net price and consumption
growth driven by new products
– OUS driven by category and share growth primarily
due to new products
– Knees: ATTUNE® launch in China and
strength in EMEA
– Trauma: Continued success of TFNADVANCED™ nailing system, strong U.S.
market growth and BME acquisition
– Advanced: Endocutters +5%, Energy +5% and
Biosurgery +3%
Total
Medical
Devices
– Venezuela (Vnz) negatively impacted WW growth
by 10bps and OUS by 20bps
– Addt’l 2015 shipping days negatively impacted
growth: WW 370bps, US 490bps, OUS 260bps
– Excluding impact of acq/div/Vnz/2015 shipping
days**, WW +4.7%, U.S. +4.5%, OUS +5.0%
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Important Developments in 4th Quarter 2016
Pharmaceutical:
• European Commission (EC) approval of STELARA® (ustekinumab) for the treatment of adult patients with moderately to severely
active Crohn’s disease
• Biologic License Application submitted to U.S. Food and Drug Administration (FDA) and Marketing Authorisation Application submitted
to the European Medicines Agency (EMA) for guselkumab for the treatment of adults living with moderate to severe plaque psoriasis
• FDA approval of DARZALEX® (daratumumab) in combination with lenalidomide and dexamethasone, or bortezomib and
dexamethasone, for the treatment of patients with multiple myeloma who have received at least one prior therapy.
• EC granted orphan drug designation for ibrutinib for the treatment of graft-versus-host disease
• Supplemental Biologics License Application (sBLA) submitted to the U.S. FDA seeking approval of STELARA® (ustekinumab) for the
treatment of adolescents (12 to 17 years of age) with moderate to severe plaque psoriasis.
• Two sBLAs submitted to the FDA seeking approval of SIMPONI ARIA® (golimumab) for the treatment of adults living with active
psoriatic arthritis and the treatment of adults living with active ankylosing spondylitis.
• FDA approval of IMBRUVICA® (ibrutinib) for the treatment of patients with marginal zone lymphoma in patients who require systemic
therapy and have received at least one prior anti-CD20-based therapy (approved January 2017) .
Medical Devices:
• FDA approval for the sale of the OneTouch Vibe™ Plus Insulin Pump and Continuous Glucose Monitoring System for the treatment of
patients age two and older living with diabetes.
• FDA approval on expanded indication for general hemostasis for EVARREST® Fibrin Sealant Patch
• Completed the purchase of expandable cage technologies for spinal fusion and entered into a development agreement with
Interventional Spine, Inc.
12
Consumer Highlights – 2016 Full Year
Sales: $13.3B: WW (1.5)%, U.S. 3.8%, Int’l (4.8)%
Ops Change*: WW 1.5%, U.S. 3.8%, Int’l 0.1%
KEY DRIVERS OF OPERATIONAL PERFORMANCE*
CONSUMER
SEGMENT
TOTAL WW
SALES $MM
Baby Care
$2,001
(7.2)%
(2.7)%
Beauty
3,897
7.3
9.4
Oral Care
1,568
(0.8)
2.0
OTC
3,997
REPORTED OPERATIONAL
% GROWTH % GROWTH*
2.1
Baby
Care
– OUS Hipolgos acquisition offset by softness in
cleansers and India demonetization
Beauty
– U.S. Vogue, La Lumiere light mask, and NeoStrata®
acquisitions (~+10 pts); NEUTROGENA® strength
(formerly
driven by retail restocking and new product inventory
Skin Care)
– OUS Dabao e-commerce strength, Vogue acquisition
and AVEENO® share growth partially offset by
competitive pressure in China for Johnson’s Adult
coupled with softness in RoC®
4.8
Oral Care
Women’s
Health
1,067
(11.1)
(5.1)
Wound
Care/Other
797
(23.5)
(22.3)
Total
Consumer
$13,307
(1.5)%
1.5%
* Excludes impact of translational currency
– U.S. continued shift to competitive, premium
products partially offset by strength in AVEENO®
Baby
– U.S. category growth and LISTERINE® share gains
behind successful campaigns
– OUS strong marketing campaigns
OTC
– U.S. driven by re-launches and new products. Strong
consumption across the brands partially offset by
weaker season in upper respiratory
– OUS anti-smoking aid strength primarily in EMEA,
digestive health growth behind strong promotional
campaigns
** Non-GAAP measure; see reconciliation
Women’s
Health
– U.S. TUCKS® divestiture
Wound Care/
Other
– SPLENDA® divestiture
Total
Consumer
– Venezuela (Vnz) negatively impacted WW
growth by 120bps and OUS by 190bps
– OUS negative impact of Venezuela; excl.
Venezuela +4%
– Addt’l 2015 shipping days negatively impacted
growth: WW 110bps, US 150bps, OUS 80bps
– Excluding impact of acq/div/Vnz/2015
shipping days**, WW +4.3%, U.S. +5.6%,
OUS +3.4%
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Pharmaceutical Highlights – 2016 Full Year
Sales: $33.5B: WW 6.5%, U.S. 9.8%, Int’l 1.8%
Ops Change*: WW 7.4%, U.S. 9.8%, Int’l 4.0%
KEY DRIVERS OF OPERATIONAL PERFORMANCE*
PHARMACEUTICAL
SEGMENT
TOTAL WW REPORTED OPERATIONAL
SALES $MM % GROWTH % GROWTH*
$11,968
15.1%
15.9%
Infectious
Diseases
3,208
(12.3)
(11.2)
Neuroscience
6,085
Immunology
Oncology
Cardiovascular/
Metabolism/
Other
Total Pharma
Immunology
– Strong U.S. immunology market growth and
increased penetration of STELARA® and
SIMPONI ARIA®
– OUS – Strong growth in major regions
Infectious
Diseases
– Lower sales of Hepatitis C products due to
competitive launches
– Increased sales of HIV products including
EDURANT® and PREZCOBIX®
5,807
(2.8)
23.7
(2.3)
Neuroscience – Growth of long-acting injectable products offset
by generic competition for INVEGA®
– Divestiture of API business (Noramco)
25.2
– CONCERTA® positive impact of reclassification
of generic competitor products in U.S.
6,396
$33,464
(0.3)
6.5%
0.8
7.4%
Oncology
– Strong sales of IMBRUVICA® due to continued
patient uptake and additional country launches;
U.S. share leader 1st and 2nd line CLL, and 2nd
line MCL
– DARZALEX® continued strong uptake in the
U.S.; approved in 34 countries
– Generic competition for VELCADE®
* Excludes impact of translational currency
** Non-GAAP measure; see reconciliation
Cardiovascular – XARELTO® continued share growth; ~18%
/ Metabolism /
TRx share of broader oral anticoagulant market
Other
in 4Q
– INVOKANA®/INVOKAMET® defined U.S. T2D
market growth of 4.5% ; continued uptake in
EU and Canada
Total
– Addt’l 2015 shipping days negatively impacted
Pharmaceutical
growth: WW 150bps, US 240bps, OUS 30bps
– Excluding impact of acq/div/Hep C/Vnz/2015
shipping days**, WW +11.5%, U.S. +13.8%,
OUS +8.3%
14
Medical Devices Highlights – 2016 Full Year
Sales: $25.1B: WW (0.1)%, U.S. 1.1%, Int’l (1.2)%
Ops Change*: 0.9%, U.S. 1.1%, Int’l 0.7%
MEDICAL DEVICES
SEGMENT
TOTAL WW
SALES $MM
REPORTED OPERATIONAL
% GROWTH % GROWTH*
Cardiovascular
$1,849
(9.2)%
(9.2)%
Diabetes Care
1,789
(7.2)
(5.9)
66
(23.3)
(13.9)
9,334
0.8
1.8
Hips
1,361
2.2
3.6
Knees
1,524
1.9
3.2
Trauma
2,569
1.6
2.5
Spine & Other
3,880
(0.7)
0.1
Diagnostics
Orthopaedics
KEY DRIVERS OF OPERATIONAL PERFORMANCE*
Cardiovascular
9,296
0.9
2.3
Advanced
3,517
7.4
8.9
General
4,362
(2.7)
(1.2)
Specialty
1,417
(2.9)
(1.9)
Vision Care
2,785
6.8
6.4
$25,119
(0.1)%
0.9%
Total Med Dev
* Excludes impact of translational currency
Orthopaedics
(cont.)
– Spine: WW (1)%, U.S. 0%, OUS (1)%
Surgery
– Advanced: Endocutters +11%, Energy +8% and
Biosurgery +6%
– Impacted by divestiture of Cordis in Q4 2015
Diabetes Care
– General: Market growth in U.S., wound care
and suture performance in China, offset by
impact of PHYSIOMESH® & THERMACHOICE®
discontinuations and pricing pressure
– U.S. BGM negative price and ID competitive
pressure
– OUS BGM Algerian import restrictions and
negative price in China and Japan; ID driven
by growth in consumables
Diagnostics
Surgery
– Electrophysiology: +16% driven by strong
market growth and launch of THERMOCOOL
SMARTTOUCH® Contact Force Sensing
Catheter
Orthopaedics
– Divestiture of Ortho-Clinical Diagnostics in
June 2014
– Specialty: OUS Mentor & ASP share gains and
market growth partially offset by ASP divestitures
and aesthetic market decline in U.S.
Vision Care
– Hips: Primary stem platform and market growth
– OUS category growth and market share gains
primarily driven by demand generation programs
and new products as well as price
– Knees: Strong sales of ATTUNE® Knee System
and market growth
– Trauma: Continued success of TFNADVANCED™ nailing system and
market growth
– Spine & Other: US spine market growth, spine
new product launches and MONOVISC®
partially offset by U.S. spine share declines
and pricing pressure
** Non-GAAP measure; see reconciliation
– U.S. category growth and market share gains
driven by core and new products
Total Medical
Devices
– Venezuela (Vnz) negatively impacted WW
growth by 20bps and OUS by 40bps
– Addt’l 2015 shipping days negatively impacted
growth: WW 90bps, US 120bps, OUS 70bps
– Excluding impact of acq/div/Vnz/2015 shipping
days**, WW +3.8%, U.S. +2.9%, OUS +4.7%
15
Alex Gorsky
Chairman of the Board
&
Chief Executive Officer
16
17
Delivering Strong Total Shareholder Returns
AS OF 12/31/2016
1 YEAR
3 YEAR
5 YEAR
10 YEAR
20 YEAR
Johnson & Johnson
15.3%
11.0%
15.3%
9.0%
10.5%
Competitor Composite*
-0.2%
6.3%
13.0%
7.0%
8.5%
S&P 500
12.0%
8.9%
14.6%
6.9%
7.7%
S&P Pharm
-1.6%
8.4%
14.5%
9.0%
8.4%
S&P HC Equipment
6.5%
12.5%
16.3%
7.3%
9.5%
Dow Jones Industrial Average
16.5%
8.7%
12.9%
7.5%
8.2%
Data Source: Bloomberg
• For the list of companies included in the Competitor Composite, see page 40 of the company’s 2016 Proxy Statement, which can be found at www.investor.jnj.com
18
Creating Value through Portfolio Management in 2016
Invested more than $9 billion in R&D
Sustaining Investments in Innovation
Value-Creating Acquisitions
243 product approvals
14 Acquisitions & Licensing Agreements
67 Innovation Deals
Strategic Deals & Partnerships
21 New Development Deals
Seeking Strategic Options for Diabetes
Portfolio Optimization
8 Divestitures and Out-Licenses
19
Deploying Capital Aligned with Our Framework
1
Non-GAAP measure; defined as operating cash flow less capital spending
20
Leading Responsibly
We believe that investing in innovation to create differentiated
products that ultimately help people live longer, healthier and
happier lives is our first responsibility…
We are committed to
responsible pricing
resulting in accessible
products, representative
of the outcomes and
value delivered
We are continuing
our proud legacy of
managing our business
in a transparent manner
21
Shaping Policy Discussions Impacting
Our Stakeholders
Maintaining important
components of existing
health care system
Encouraging investments
in health care that yield
economic returns
Advocating for models
that reward innovation
and value
Modernizing the U.S. tax
code to improve global
competitiveness of U.S.based businesses
22
Near-Term Priorities
Enterprise
Deliver on our financial and quality commitments
Pharmaceutical
Drive continued growth while delivering on our near-term
pipeline
Medical Devices
Accelerate growth through innovation, portfolio management,
and new business models
Consumer
Enhance leadership in priority categories and continue to
improve profitability
23
Pharmaceutical
Industry-Leading Pipeline & Commercial Excellence
Priority: Drive continued growth while delivering
on our near-term pipeline
Strategy: Focus on five therapeutic areas of high
unmet medical need, robust innovation and commercial
capabilities
Plans for Growth:
• Increase penetration in markets such as anti-coagulants,
psoriasis, and long-acting anti-psychotics
• Capitalize on early launch successes of DARZALEX®,
IMBRUVICA®, and STELARA® in Crohn’s disease
• Anticipate regulatory approval for Guselkumab
and Sirukumab
24
Pharmaceutical Pipeline – Key Events in 2017
Potential Approvals US/EU*
Guselkumab
– Psoriasis (US)
Sirukumab
– Rheumatoid Arthritis (US/ EU)
DARZALEX®
– Relapsed Refractory Multiple Myeloma (EU)
DARUNAVIR
STR D/C/F/TAF
– HIV (EU)
Potential Clinical Data Presentations
Phase 3
Guselkumab
XARELTO
– GVHD relapsed/refractory (US)
IMBRUVICA®
– Marginal Zone Lyhmphoma (US)
SIMPONI®/
SIMPONI ARIA®
STELARA®
– Aria AS (US)
®
– Psoriasis
– LT VTE prevention
ZYTIGA®
– Hormone naïve metastatic PC
DARZALEX®
– FLMM nontransplant
IMBRUVICA®
– MCL frontline maintenance
Rilpivirine+dolutegravir
FDC (ViiV)
– HIV
INVOKANA®
– T2DM – cardiovascular outcomes
– Aria PSA (US)
– Pediatric psoriasis (US)
Phase 2
– Low/int-1 risk
Planned Submissions US/EU
Imetelstat
– MF relapse/refractory
Apalutamide
– Pre-metastatic PC (US)
Rilpivirine+dolutegravir
FDC (ViiV)
– HIV (US/ EU)
DARUNAVIR STR
D/C/F/TAF
JNJ-1575 (AL-8176)**
– RSV
JNJ-3872
– Influenza
– HIV (US)
Guselkumab
– PsA
IMBRUVICA®
– GVHD relapsed/refractory (US)
DARZALEX®
– Smoldering Multiple Myeloma (SMM)
ZYTIGA®
– Hormone-naïve metastatic PC (EU)
*Based on submissions in 2016
** data availability will be determined by enrollment rates, driven by RSV seasonality
25
Medical Devices
Comprehensive Portfolio & Accelerated Growth Strategy
Priority: Accelerate growth through innovation, portfolio
management, and new business models
Strategy: Drive growth in priority platforms, sustain
leadership in core platforms, implement novel
commercial models and invest in disease areas
of significant unmet needs
Plans for Growth:
• Continue progress on restructuring
• Target 12+ major product launches
• Accelerate the impact from strategic acquisitions
• Integrate holistic, insights-driven capabilities to help
health systems navigate value-based care
26
Consumer
Iconic Brands & Unparalleled Consumer Insights
Priority: Enhance leadership in priority categories
and continue to improve profitability
Strategy: Focus on critical geographies
and our iconic mega-brands
Plans for Growth:
• Continue to grow faster than the market and gain share
• Launch key, science-based new products
• Accelerate growth from our recent acquisitions
in the beauty franchise
• Continue to use supply chain and SG&A efficiencies
to achieve benchmark margins
27
Dominic Caruso
Executive Vice President,
Chief Financial Officer
28
Full-Year 2016 Condensed Consolidated Statement of Earnings
(Unaudited; Dollars and Shares in
Millions Except Per Share Figures)
TWELVE MONTHS
2016
Am ount
Sales to custom ers
$
Percent
2015
Percent
to Sales
71,890
100.0
Cost of products sold
21,685
Selling, m arketing and adm inistrative expenses
Am ount
Increase
to Sales
(Decrease)
2.6
70,074
100.0
30.2
21,536
30.7
0.7
19,945
27.7
21,203
30.3
(5.9)
9,095
12.7
9,046
12.9
0.5
29
0.0
224
0.3
Interest (incom e) expense, net
358
0.5
Other (incom e) expense, net
484
0.7
Research and developm ent expense
In-process research and developm ent
Restructuring
Earnings before provision for taxes on incom e
Provision for taxes on incom e
424
(2,064)
491
0.7
509
0.7
27.5
19,196
27.4
3.2
3,263
4.5
3,787
5.4
(13.8)
23.0
$
15,409
22.0
7.3
$
5.48
$
16,540
Net earnings per share (Diluted)
$
5.93
2,788.9
Effective tax rate
0.6
(2.9)
19,803
Net earnings
Average shares outstanding (Diluted)
$
Percent
8.2
2,812.9
16.5 %
19.7 %
Adjusted earnings before provision for taxes and net earnings (1)
Earnings before provision for taxes on incom e
$
22,759
31.7
$
22,003
31.4
3.4
Net earnings
$
18,764
26.1
$
17,445
24.9
7.6
Net earnings per share (Diluted)
$
6.73
$
6.20
Effective tax rate
17.6 %
8.5
20.7 %
(1) See Reconciliation of Non-GAAP Financial Measures.
29
4Q 2016 Condensed Consolidated Statement of Earnings
(Unaudited; Dollars and Shares in
Millions Except Per Share Figures)
30
Full-Year 2016 – Adjusted Income Before Tax by Segment*
% to Sales
$22.8B
$22.0B
$3.3
$13.1
$12.3
$2.8
Q4 YTD 2016
Q4 YTD 2015
Pharmaceutical
39.1%
39.1%
Medical Devices
32.2%
35.6%
Consumer
19.9%
14.3%
Total
31.7%
31.4%
Pharmaceutical
Medical Devices
$8.1
$2.0
$1.9
$8.9
Consumer
Expenses Not Allocated to Segments
$2.6
$0.7
($1.0)
2016**
$1.9
$0.8
($1.1)
2015
* Non-GAAP measure; excludes amortization expense and special items; see reconciliation
** Estimated as of 1/24/17
31
2017 Guidance
JANUARY 2017
Net Interest Expense
$500 - $600 million
Net Other Income*
$1.1 - $1.3 billion
Pre-tax Operating Margin**
Maintain to slightly improve
Effective Tax Rate*
19.0% - 20.0%
* Non-GAAP measure; excludes intangible amortization expense and special items
** Sales less: COGS, SM&A and R&D expenses
32
2017 Guidance – Sales
ESTIMATED
OPERATIONAL*
ESTIMATED
CURRENCY
ESTIMATED
REPORTED**
Sales Change vs. PY
$74.8B - $75.5B
4.0% - 5.0%
($0.7B)
(1.0%)
$74.1B - $74.8B
3.0% - 4.0%
Net Impact: Acq./Div.
(1.0 - 1.5%)
Sales ex. Acq./Div. Change vs. PY
3.0% - 3.5%
JANUARY 2017
* Excludes the impact of translational currency
** Euro Average Rate: January 2017 = $1.07
33
2017 Guidance – EPS
JANUARY 2017
Adjusted EPS* Change vs. PY
ESTIMATED
OPERATIONAL**
$7.05 - $7.20
4.8% - 7.0%
ESTIMATED
CURRENCY
ESTIMATED
REPORTED***
($0.12)
(1.8%)
$6.93 - $7.08
3.0% - 5.2%
* Non-GAAP measure; excludes intangible amortization expense and special items
** Excludes the impact of translational currency
*** Euro Average Rate: January 2017 = $1.07
34
2017 Guidance – Sales and EPS Summary
JANUARY 2017
Sales Change vs. PY
ESTIMATED
OPERATIONAL1
ESTIMATED
CURRENCY
ESTIMATED
REPORTED2
$74.8B - $75.5B
4.0% - 5.0%
($0.7B)
(1.0%)
$74.1B - $74.8B
3.0% - 4.0%
($0.12)
(1.8%)
$6.93 - $7.08
3.0% - 5.2%
Sales ex. Acq./Div. Change vs. PY3
3.0% - 3.5%
Adjusted EPS4 Change vs. PY
$7.05 - $7.20
4.8% - 7.0%
Adjusted Pre-tax Operating Margin4,5
1
2
3
Excludes the impact of translational currency
Euro Average Rate: January 2017 = $1.07
Excludes Acq./Div impact of (1.0% - 1.5%)
Maintain to slightly improve
4
5
Non-GAAP measure; excludes intangible amortization expense and special items
Sales less: COGS, SM&A and R&D expenses
35
Save the Date
Pharmaceutical
Business Review
Wednesday, May 17, 2017
Hyatt Regency, New Brunswick