LouiseLouise MehrotraMehrotra ViceVice PresidentPresident InvestorInvestor RelationsRelations
““SafeSafe HarborHarbor”” StatementStatement This presentation may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could vary materially from the Company’s expectations and projections. Risks and uncertainties include general industry conditions and competition; economic conditions, such as interest rate and currency exchange rate fluctuations; technological advances and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approvals; domestic and foreign health care reforms and governmental laws and regulations; and trends toward health care cost containment. A further list and description of these risks, uncertainties and other factors can be found in Exhibit 99 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006. Copies of this Form 10-K, as well as subsequent filings, are available online at www.sec.gov, www.jnj.com or on request from the Company. The Company does not undertake to update any forward-looking statements as a result of new information or future events or developments.
WilliamWilliam C.C. WeldonWeldon ChairmanChairman ofof thethe BoardBoard && ChiefChief ExecutiveExecutive OfficerOfficer
TodayToday’’ss AgendaAgenda 20072007 BusinessBusiness && FinancialFinancial HighlightsHighlights SegmentSegment ResultsResults StrategicStrategic OutlookOutlook && BusinessBusiness PrioritiesPriorities BuildingBuilding OnOn OurOur FoundationFoundation OfOf GrowthGrowth BuildingBuilding OnOn OurOur FoundationFoundation OfOf GrowthGrowth 20072007 –– OverviewOverview SalesSales growthgrowth –– ReportedReported +14.6%+14.6% –– OperationalOperational +11.5%+11.5% –– ProformaProforma +4.2%*+4.2%* AdjustedAdjusted earningsearnings perper shareshare +10.4%**+10.4%** SignificantSignificant progressprogress acrossacross thethe businessesbusinesses
* Proforma operational growth including the net impact of PCH- See Appendix B for reconciliation ** Non GAAP. Excludes special items related to restructuring, intangible asset write-downs, IPR&D charges and the gain associated with the termination of the Guidant acquisition agreement. See Appendix A for reconciliation. BuildingBuilding OnOn OurOur FoundationFoundation OfOf GrowthGrowth 20072007 –– OverviewOverview SalesSales growthgrowth –– ReportedReported +14.6%+14.6% –– OperationalOperational +11.5%+11.5% –– ProformaProforma +4.2%*+4.2%* AdjustedAdjusted earningsearnings perper shareshare +10.4%**+10.4%** SignificantSignificant progressprogress acrossacross thethe businessesbusinesses MajorMajor costcost structurestructure improvementsimprovements $10$10 BillionBillion shareshare buybackbuyback OrganizationalOrganizational changeschanges focusedfocused onon growthgrowth
* Proforma operational growth including the net impact of PCH- See Appendix B for reconciliation ** Non GAAP. Excludes special items related to restructuring, intangible asset write-downs, IPR&D charges and the gain associated with the termination of the Guidant acquisition agreement. See Appendix A for reconciliation. BuildingBuilding OnOn OurOur FoundationFoundation OfOf GrowthGrowth FinancialFinancial HighlightsHighlights ---- 20072007 vs.vs. 20062006
%% ChangeChange TotalTotal CompanyCompany 20072 200720062006 TotalTotal OpsOps SalesSales $61.1B$61.1B $53.3B$53.3B 14.6%14.6% 11.5%11.5%
AdjustedAdjusted Earnings*Earnings* $12.1B$12.1B $11.1B$11.1B 8.68.6 %%
AdjustedAdjusted EPS*EPS* $4.15$4.15 $3.76$3.76 10.4%10.4%
FreeFree CashCash Flow**Flow** $12.2B$12.2B $11.6B$11.6B 5.2%5.2%
*Non-GAAP measure; Proforma excluding IPR&D charges and other special items. See Appendix A for reconciliation **Non-GAAP financial measure: defined as operating cash flow less capital spending; estimated as of 1/22/2008 BuildingBuilding OnOn OurOur FoundationFoundation OfOf GrowthGrowth 20072007 ---- FromFrom GuidanceGuidance toto ResultsResults Jan.Jan. 20072007 20072007 GuidanceGuidance ActualActual
OperationalOperational SalesSales IncreaseIncrease 11.5%11.5%--12.5%12.5% 11.5%11.5%
AdjustedAdjusted EPS*EPS* $3.88$3.88--$3.93$3.93 $4.15$4.15
*Non-GAAP measure; Proforma excluding IPR&D charges and other special items. See Appendix A for reconciliation BuildingBuilding OnOn OurOur FoundationFoundation OfOf GrowthGrowth 20072007 SalesSales byby SegmentSegment MD&D MD&D ConsumerConsumer ÇÇ3.9%*3.9%* 35% 24% ÇÇ44.2%*44.2%* $21.7B $14.5B
41% $24.9B
PharmaceuticalPharmaceutical ÇÇ4.3%*4.3%* *Operational Growth Total Sales -- $61.1B BuildingBuilding OnOn OurOur FoundationFoundation OfOf GrowthGrowth SegmentSegment OperatingOperating Profit*Profit* $15.9B $14.6B $6.0 %% toto SalesSales $5.7 20062006 25.7%25.7%
20072007 26.0%26.0% $7.6 $6.9
$2.0 $2.3
2006 2007 Consumer Pharm MD&D *Proforma including net impact of PCH; Refer to 3/2/07 8-K filing for 2006 PCH impact to operating profit; Excludes IPR&D and other special items BuildingBuilding OnOn OurOur FoundationFoundation OfOf GrowthGrowth CostCost StructureStructure ImprovementsImprovements
$1.3$1.3 -- $1.6$1.6 BillionBillion inin annualannual costcost savingssavings forfor 20082008 InitiativesInitiatives onon targettarget PermanentPermanent improvementsimprovements toto costcost structurestructure Building On Our Foundation of Growth OrganizingOrganizing toto accelerateaccelerate growthgrowth
Pharmaceuticals
Comprehensive Care Group MD&D Office of Strategy & Growth Surgical Care Group
Consumer SegmentSegment HighlightsHighlights ConsumerConsumer 20072007 BusinessBusiness HighlightsHighlights PCHPCH integrationintegration remainsremains onon tracktrack
OperationalOperational salessales growthgrowth +44.2%;+44.2%; proformaproforma +4.6%*+4.6%*
ApproximatelyApproximately 600600 newnew productproduct introductionsintroductions andand lineline extensionsextensions
–– LISTERINE Whitening Quick Dissolving Strips, AVEENO Positively Ageless, expanded TYLENOL Rapid Release line StrongStrong doubledouble--digitdigit growthgrowth inin keykey emergingemerging marketsmarkets * Proforma operational growth including the net impact of PCH. See Appendix B for reconciliation ConsumerConsumer MajorMajor FranchiseFranchise SalesSales && OperationalOperational GrowthGrowth RatesRates
2007 Sales: $14.5 Billion 2007 Ops Growth Rate: 44.2%
$ U.S. Billions McNeil OTC & Nutritionals
$5.1 Skin & +85% Skin & Hair Care $3.1 +12% $1.5 Oral Care >100% $2.0 $1.0 $1.8 +8% +71% +3%
All Other Baby & Kids Women's Health ConsumerConsumer MajorMajor FranchiseFranchise SalesSales && ProformaProforma OperationalOperational GrowthGrowth RatesRates
2007 Sales: $14.5 Billion 2007 Ops Growth Rate: 4.6%*
$ U.S. Billions McNeil OTC & Nutritionals
$5.1 Skin & +4% Skin & Hair Care $3.1 +6% $1.5 Oral Care +5% $2.0 $1.0 $1.8 +6% +13% (2%)
All Other Baby & Kids Women's Health
* Proforma operational growth including the net impact of PCH. See Appendix B for reconciliation WinningWinning inin HealthHealth CareCare AdvancingAdvancing ConsumerConsumer ProductsProducts
ContinuedContinued differentiationdifferentiation throughthrough sciencescience--basedbased innovationinnovation
LaunchLaunch ZYRTECZYRTEC OTCOTC
GrowGrow throughthrough innovation/geographicinnovation/geographic expansionexpansion ofof globalglobal brandsbrands andand franchisesfranchises –– LISTERINE,LISTERINE, NICORETTENICORETTE andand SkinSkin CareCare
AccelerateAccelerate growthgrowth inin emergingemerging marketsmarkets PharmaceuticalsPharmaceuticals 20072007 BusinessBusiness HighlightsHighlights NineNine productsproducts withwith salessales overover $1$1 BillionBillion VELCADEVELCADE exceededexceeded $500$500 millionmillion 70%70% ofof salessales comingcoming fromfrom #1#1 oror #2#2 marketmarket positionspositions DeliveredDelivered onon pipelinepipeline commitmentscommitments ContinuedContinued toto advanceadvance thethe pipelinepipeline –– SevenSeven toto tenten newnew filingsfilings byby 20102010 PharmaceuticalPharmaceutical MajorMajor ProductProduct SalesSales && OperationalOperational GrowthGrowth RatesRates
2007 Sales: $24.9 Billion 2007 Ops Growth Rate: 4.3% $$ U.S.U.S. BillionsBillions ACIPHEX/ACIPHEX/ HormonalHormonal PARIETPARIET DURAGESICDURAGESIC Anti-Infectives ContraceptivesContraceptives Anti-Infectives $1.2 CONCERTACONCERTA $0.9 $1.4 $1.6 TOPAMAXTOPAMAX $1.0 (14%) (11%) + 5% + 8% +9% $2.5 + 19% $5.4 OtherOther +7% $3.3 REMICADEREMICADE + 10% $4.7 $2.9 + 9% (12%)
EPREX / PROCRIT Anti-psychoticsAnti-psychotics EPREX / PROCRIT PharmaceuticalsPharmaceuticals –– MajorMajor ApprovalsApprovals && SubmissionsSubmissions ApprovedApproved FiledFiled DORIBAXDORIBAX zz CeftobiproleCeftobiprole IONSYSIONSYS zz PaliperidonePaliperidone palmitatepalmitate INTELENCEINTELENCE zz UstekinumabUstekinumab (TMC125(TMC125)) zz DapoxetineDapoxetine WinningWinning inin HealthHealth CareCare AdvancingAdvancing PharmaceuticalPharmaceutical PipelinePipeline PotentialPotential NMENME FilingsFilings 20072007--20102010 2007 2008 2009-2010 Approved Approved Planned Filings INTELENCEINTELENCE™™ (TMC125) (TMC125) DORIBAXDORIBAX™™ ( (doripenem)doripenem) InfectiousInfectious DiseaseDisease InfectiousInfectious DiseaseDisease TelaprevirTelaprevir(E.U.) (E.U.) Planned Filings InfectiousInfectious DiseaseDisease Filed CarisbamateCarisbamate CentralCentral NervousNervous SystemSystem CeftobiproleCeftobiprole InfectiousInfectious DiseaseDisease DACOGENDACOGEN™™ (E.U.) (E.U.) TMCTMC 207207 OncologyOncology PaliperidonePaliperidone PalmitatePalmitate InfectiousInfectious DiseaseDisease CentralCentral NervousNervous SystemSystem GolimumabGolimumab(CNTO (CNTO 148)148) ImmunologyImmunology UstekinumabUstekinumab(CNTO (CNTO 1275)1275) ImmunologyImmunology RivaroxabanRivaroxaban CardiovascularCardiovascular DiseaseDisease TMCTMC 278278 DapoxetineDapoxetine(E.U.) (E.U.) InfectiousInfectious DiseaseDisease ReproductiveReproductive HealthHealth TapentadolTapentadol PainPain
YONDELIS® YONDELISYONDELIS®® Filings assumed to be in U.S. Oncology OncologyOncology unless otherwise noted
Carisbamate is licensed from SK-Bio Pharmaceuticals; Doripenem from Shionogi & Co.; Ceftobiprole from Basilea Pharmaceutica; Telaprevir from Vertex Pharmaceuticals Incorporated; Rivaroxaban from Bayer HealthCare; YONDELIS from PharmaMar; DACOGEN from MGI Pharma; Tapentadol from Grunenthal GmbH; and Dapoxetine from PPD-GenuPro. MD&DMD&D 20072007 BusinessBusiness HighlightsHighlights WorldWorld’’ss largestlargest medicalmedical technologytechnology businessbusiness NearlyNearly doubledouble--digitdigit growthgrowth forfor MD&DMD&D excludingexcluding drugdrug--elutingeluting stentsstents 80%80% ofof salessales comingcoming fromfrom #1#1 oror #2#2 marketmarket positionspositions MD&DMD&D MajorMajor FranchiseFranchise SalesSales && OperationalOperational GrowthGrowth RatesRates
2007 Sales: $21.7 Billion 2007 Ops Growth Rate: 3.9% $$ U.S.U.S. BillionsBillions VisionVision CareCare LifeScanLifeScan OCDOCD $2.2 $1.7 $2.4 +16% +7% +11% $3.4 CordisCordis (18%) EESEES $3.8 +10% $4.6 $3.6 +8% +7%
EthiconEthicon DePuyDePuy MD&DMD&D –– MajorMajor ApprovalsApprovals && LaunchesLaunches REALIZEREALIZE AdjustableAdjustable GastricGastric BandBand ANIMASANIMAS 20202020 GENESEARCHGENESEARCH MD&D:MD&D: TopTop 1010 MedicalMedical BreakthroughsBreakthroughs ofof 20072007 WinningWinning inin HealthHealth CareCare AdvancingAdvancing MD&DMD&D PipelinePipeline SelectedSelected TechnologiesTechnologies 2007 2007 2009-2010 Approvals & Launches* Submissions* Planned Submissions* ArticularArticularSurface Surface RepairRepair GENESEARCH GENESEARCHGENESEARCH (ASR)(ASR) HipHip BLNBLN AssayAssay FibrinFibrin EnhancedEnhanced SIGMASIGMA PatchPatch REALIZE Adjustable REALIZE Adjustable KneeKnee PlatformPlatform GastricGastric BandBand 2008 ConorConor SirolimusSirolimus-Eluting-Eluting EVITHROMEVITHROM TopicalTopical ThrombinThrombin Planned Submissions* StentStent(CE (CE Mark)Mark) VITROSVITROS 56005600 && ONETOUCHONETOUCH VITROSVITROS 36003600 SystemsSystems SelectSelect PFOPFO ClosureClosure DeviceDevice ACUVUEACUVUEPresbyopia Presbyopia (CE(CE Mark)Mark) HARMONICHARMONIC FocusFocus ContactContact LensesLenses NAVISTARNAVISTAR THERMOCOOLTHERMOCOOL PreeclampsiaPreeclampsia ANIMASANIMAS 20202020 InsulinInsulin PumpPump AblationAblation CatheterCatheter forforAFib AFib AssayAssay SOUNDSTARSOUNDSTARIntracardiac Intracardiac EXOSEALEXOSEAL VascularVascular EchoEcho CatheterCatheter ClosureClosure DeviceDevice CYPHERCYPHER EliteElite ACUVUEACUVUEOasys Oasys PROLIFTPROLIFT NextNext GenGen (Japan)(Japan) PelvicPelvic FloorFloor RepairRepair PercutaneousPercutaneous PRINEOPRINEO SkinSkin ClosureClosure SystemSystem Computer Assisted ComputerComputer AssistedAssisted AAA Stent Graft (CE(CE Mark)Mark) PersonalizedPersonalized SedationSedation AAA Stent Graft
*Filings assumed to be in U.S. unless otherwise noted StrategicStrategic OutlookOutlook 20082008 && BeyondBeyond OurOur CredoCredo TheThe FourFour TenetsTenets CustomersCustomers EmployeesEmployees CommunitiesCommunities StockholdersStockholders StrategicStrategic FrameworkFramework Our Credo
Operating Model Broadly Based Managed Decentralized People in Human for the Management and Health Care Long Term Approach Values TrackTrack RecordRecord ofof PerformancePerformance
7575 ConsecutiveConsecutive yearsyears ofof SalesSales increasesincreases 2424 ConsecutiveConsecutive yearsyears ofof EarningsEarnings increasesincreases* 4545 ConsecutiveConsecutive yearsyears ofof DividendDividend increasesincreases
* Non GAAP. Excludes IPR&D charges and other special items StrategicStrategic FrameworkFramework Our Credo
Operating Model Broadly Based Managed Decentralized People in Human for the Management and Health Care Long Term Approach Values
Business Priorities
Accelerating Developing Capitalizing Growth in Winning in on Leadership Health Care Emerging and Talent Convergence Markets WinningWinning inin HealthHealth CareCare J&JJ&J ServesServes 30%30% ofof GlobalGlobal HealthHealth Care:Care: WealthWealth ofof OpportunityOpportunity
$U.S.$U.S. BillionsBillions 20062006 SplitSplit ofof GlobalGlobal HealthcareHealthcare SpendSpend 100%=100%= $4$4 TrillionTrillion MD&D 6% J&J presence
Consumer 12%
Pharma 14%
Other Health Care Markets 68%
Source: OECD; Espicom, Euromonitor (2007); HRI Global MD&D Report; CIA World Fact Book WinningWinning inin HealthHealth CareCare MarketMarket LeadershipLeadership JohnsonJohnson && JohnsonJohnson #1#1 oror #2#2 Anti-AnemiaAnti-Anemia Lo-CalLo-Cal SweetenersSweeteners AntipsychoticsAntipsychotics BloodBlood GlucoseGlucose MonitoringMonitoring Anti-TNFAnti-TNF BloodBlood ScreeningScreening && TypingTyping HormonalHormonal ContraceptivesContraceptives ElectrophysiologyElectrophysiology diagnosticsdiagnostics && QuinoloneQuinolone Anti-Infective Anti-Infective catheterscatheters CoronaryCoronary Stents Stents DisposableDisposable ContactContact LensesLenses MinimallyMinimally InvasiveInvasive SurgerySurgery OTCOTC PharmaceuticalsPharmaceuticals OrthopaedicsOrthopaedics SanitarySanitary ProtectionProtection SuturesSutures WoundWound CareCare BabyBaby && KidsKids CareCare WinningWinning inin HealthHealth CareCare NurturingNurturing NewNew BusinessesBusinesses
$3.8B
$3.6B
$3.4B WinningWinning inin HealthHealth CareCare Surgical Care Group Organizing to accelerate growth
Comprehensive Care Group MD&D Surgical Care Group WinningWinning inin HealthHealth CareCare Surgical Care Group ComputerComputer AssistedAssisted PersonalizedPersonalized SedationSedation CAPSCAPS Computer-controlled drug delivery
StateState-of-the-art-of-the-art patientpatient monitoringmonitoring
SimpleSimple andand intuitiveintuitive useruser interfaceinterface WinningWinning inin HealthHealth CareCare Surgical Care Group Organizing to accelerate growth
Comprehensive Care Group MD&D Surgical Care Group WinningWinning inin HealthHealth CareCare Comprehensive Care Group
ChronicChronic DiseasesDiseases ShareShare ofof GlobalGlobal MortalitiesMortalities
NearlyNearly 50%50% ofof thethe DiseaseDisease BurdenBurden
60%60% ofof MortalitiesMortalities 55% 45%
CV, Cancer, Diabetes & Arthritis Other
*Source: WHO website and factsheet, Health Affairs (Thorpe, et.al.) Team Analysis WinningWinning inin HealthHealth CareCare Surgical Care Group Organizing to accelerate growth
Comprehensive Care Group MD&D Surgical Care Group WinningWinning inin HealthHealth CareCare J&JJ&J ExploresExplores OtherOther 70%70% ofof GlobalGlobal HealthHealth Care:Care: WealthWealth ofof OpportunityOpportunity $U.S.$U.S. BillionsBillions 20062006 SplitSplit ofof GlobalGlobal HealthcareHealthcare SpendSpend 100%=100%= $4$4 TrillionTrillion
MD&D J&J presence 6% Consumer 12%
Payors, Providers, Pharma Hospitals, Physician 14% Practices and Nurses, etc.
Other Health Care Markets 68%
Source: OECD; Espicom, Euromonitor (2007); HRI Global MD&D Report; CIA World Fact Book WinningWinning inin HealthHealth CareCare
TransformationTransformation65 && GrowthGrowth 60SalesSales 18871887--20072007 Pfizer 55 Consumer 50 Healthcare
45 Centocor 40 DePuy Frontier 35 Cordis Contact Cordis 30 Lenses Ortho Biotech 25 Janssen McNeil 20 Laboratories Band-AID Ethicon 15 Johnson’s Baby 10 Surgical Cream Dressings 5
0 1887 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2006 2007 MD&D Consumer Pharm WinningWinning inin HealthHealth CareCare DynamicDynamic TrendsTrends inin HealthHealth CareCare
DemographicsDemographics TechnologyTechnology DemandDemand AffordabilityAffordability WinningWinning inin HealthHealth CareCare Organizing to Accelerate Growth
Pharmaceuticals
Comprehensive Care Group MD&D Office of Strategy & Growth Surgical Care Group
Consumer WinningWinning inin HealthHealth CareCare Organizing to Accelerate Growth
Office of Strategy & Growth WinningWinning inin HealthHealth CareCare WealthWealth ofof OpportunityOpportunity
$U.S.$U.S. BillionsBillions 20062006 SplitSplit ofof GlobalGlobal HealthcareHealthcare SpendSpend 100%=100%= $4$4 TrillionTrillion
MD&D J&J presence 6% Consumer 12%
Pharma 14%
Other Health Care Markets 68%
Source: OECD; Espicom, Euromonitor (2007); HRI Global MD&D Report; CIA World Fact Book WinningWinning inin HealthHealth CareCare R&DR&D SpendingSpending
$U.S.$U.S. BillionsBillions 5-Year5-Year CAGRCAGR ÇÇ13.4%13.4% $7.1 $7.7 $6.5 $5.3 $4.1 $4.8 ~8% ’07 vs ‘06
2002 2003 2004 2005 2006 2007 11.3%11.3% %% toto SalesSales 12.6%12.6% WinningWinning inin HealthHealth CareCare R&DR&D CapabilitiesCapabilities
Pharmaceuticals MD&D Consumer
Research Seven distinct global Broad formulation capabilities R&D units Biologics expertise Small molecules Diagnostic Consumer insights Drug delivery, capabilities form & formulations Rx to OTC switch Biomaterials capability expertise World-class global operations Emerging markets Engineering capability research center Outcomes based development New claims development Innovative technologies Broad Capabilities Working Together WinningWinning inin HealthHealth CareCare PipelinePipeline ProductivityProductivity GainsGains inin productivityproductivity SpeedSpeed toto marketmarket CostCost structurestructure EnhancedEnhanced discoveriesdiscoveries forfor patientspatients StrategicStrategic FrameworkFramework Our Credo
Operating Model Broadly Based Managed Decentralized People in Human for the Management and Health Care Long Term Approach Values
Business Priorities
Accelerating Developing Capitalizing Growth in Winning in on Leadership Health Care Emerging and Talent Convergence Markets CapitalizingCapitalizing onon ConvergenceConvergence ConvergenceConvergence –– TwoTwo ViewsViews
CONVERGENCE
Products & Patient-centric Technologies Solutions CapitalizingCapitalizing onon ConvergenceConvergence HeavyHeavy BleedingBleeding CapitalizingCapitalizing onon ConvergenceConvergence ConvergingConverging ProductsProducts && TechnologiesTechnologies CapitalizingCapitalizing onon ConvergenceConvergence ConvergenceConvergence –– TwoTwo ViewsViews
CONVERGENCE
Products & Patient-centric Technologies Solutions CapitalizingCapitalizing onon ConvergenceConvergence PatientPatient--centriccentric SolutionsSolutions Diabetes: Complex Treatment Course
Podiatrist Ophthalmologist
Endocrinologist Diabetes Nurse Specialist
Cardiologist Diabetes Educator
Primary Care Physician Nephrologist CapitalizingCapitalizing onon ConvergenceConvergence Diabetes:Diabetes: LifecycleLifecycle ofof thethe DiseaseDisease Treatment Lifestyle Band Bypass changes
Receptivity Joint replacement Diagnosis Predictive
Novel Medical Biomarkers Markers CapitalizingCapitalizing onon ConvergenceConvergence ExtraordinaryExtraordinary CapabilitiesCapabilities ExpertiseExpertise andand proprietaryproprietary technologytechnology DiverseDiverse capabilitiescapabilities andand talenttalent acrossacross broadbroad basebase TrackTrack recordrecord ofof innovationinnovation StrategicStrategic FrameworkFramework Our Credo
Operating Model Broadly Based Managed Decentralized People in Human for the Management and Health Care Long Term Approach Values
Business Priorities
Accelerating Developing Capitalizing Growth in Winning in on Leadership Health Care Emerging and Talent Convergence Markets AcceleratingAccelerating GrowthGrowth inin EmergingEmerging MarketsMarkets StrongStrong FoundationFoundation inin InternationalInternational MarketsMarkets Asia-Pacific,Asia-Pacific, AfricaAfrica W.W. HemisphereHemisphere $8.3B$8.3B $4.7B$4.7B U.S.U.S. 14% $32.4B$32.4B EuropeEurope 8% $15.7B$15.7B 25%
53%
20072007 SalesSales byby GeographicGeographic AreaArea AcceleratingAccelerating GrowthGrowth inin EmergingEmerging MarketsMarkets EmergingEmerging MarketsMarkets LeadLead inin HealthHealth CareCare ProductProduct GrowthGrowth OutsideOutside U.S.*U.S.* 2006 Market Size Incremental Growth 2006-15 2006-15 CAGR $ Billions $ Billions Percent
China 31 49 11 Japan 108 31 3 Russia 14 28 13
Brazil 25 25 8
India 13 23 12
UK 39 22 5
France 51 21 4 Germany 54 16 3
Italy 34 12 3 Developed Spain 25 12 4 Emerging
*Health Care products include pharmaceuticals, consumer products and medical devices and diagnostics Source: India Pharma 2015; IMS; Nicholas Hall; Datamonitor; Espicom; Euromonitor; interviews; team analysis AcceleratingAccelerating GrowthGrowth inin EmergingEmerging MarketsMarkets StrengthsStrengths inin EmergingEmerging MarketsMarkets SignificantSignificant presencepresence inin emergingemerging marketsmarkets StrongStrong andand growinggrowing businessesbusinesses DecentralizedDecentralized operatingoperating modelmodel GlobalGlobal footprintfootprint LocalLocal marketmarket insightsinsights AcceleratingAccelerating GrowthGrowth inin EmergingEmerging MarketsMarkets StrategiesStrategies ForFor EmergingEmerging MarketsMarkets AddressingAddressing localizedlocalized productproduct andand marketmarket strategystrategy BuildingBuilding onon ourour businessbusiness strengthsstrengths andand brandbrand equityequity FocusingFocusing onon midmid--tiertier demographicsdemographics ExploringExploring newnew categoriescategories andand newnew businessbusiness modelsmodels DeployingDeploying enterpriseenterprise--widewide approachapproach AcceleratingAccelerating GrowthGrowth inin EmergingEmerging MarketsMarkets LocalizedLocalized ProductProduct andand MarketMarket StrategyStrategy AcceleratingAccelerating GrowthGrowth inin EmergingEmerging MarketsMarkets 20082008 OlympicsOlympics AcceleratingAccelerating GrowthGrowth inin EmergingEmerging MarketsMarkets 20082008 OlympicsOlympics StrategicStrategic FrameworkFramework Our Credo
Operating Model Broadly Based Managed Decentralized People in Human for the Management and Health Care Long Term Approach Values
Business Priorities
Accelerating Developing Capitalizing Growth in Winning in on Leadership Health Care Emerging and Talent Convergence Markets DevelopingDeveloping LeadershipLeadership && TalentTalent HonorsHonors && RecognitionsRecognitions CHIEFCHIEF EXECUTIVEEXECUTIVE StrategicStrategic FrameworkFramework Our Credo
Operating Model Broadly Based Managed Decentralized People in Human for the Management and Health Care Long Term Approach Values
Business Priorities
Accelerating Developing Capitalizing Growth in Winning in on Leadership Health Care Emerging and Talent Convergence Markets
DominicDominic J.J. CarusoCaruso ViceVice President,President, FinanceFinance && ChiefChief FinancialFinancial OfficerOfficer
SaveSave thethe DateDate JuneJune 5,5, 20082008 MD&DMD&D BusinessBusiness ReviewReview
Appendix A – Reconciliation of Non-GAAP Measures: Q4’07 vs. Q4’06
Johnson & Johnson and Subsidiaries Reconciliation of Non-GAAP Measures
Fourth Quarter % Incr. / Full Year % Incr. / (Dollars in Millions Except Per Share Data) 2007 2006 (Decr.) 2007 2006 (Decr.) Net Earnings - as reported $ 2,374 2,168 9.5%$ 10,576 11,053 -4.3% Guidant acquisition agreement termination fee - - - (368) In-process research & development (IPR&D) - 217 807 448 Restructuring expenses - - 528 - Natrecor intangible write down 441 - 441 - International tax restructuring (267) - (267) - Net Earnings - as adjusted $ 2,548 2,385 6.8%$ 12,085 11,133 8.6%
Diluted Net earnings per share - as reported $ 0.82 0.74 10.8%$ 3.63 3.73 -2.7% Guidant acquisition agreement termination fee - - - (0.12) In-process research & development (IPR&D) - 0.07 0.28 0.15 Restructuring expenses - - 0.18 - Natrecor intangible write down 0.15 - 0.15 - International tax restructuring (0.09) - (0.09) - Diluted Net earnings per share - as adjusted $ 0.88 0.81 8.6%$ 4.15 3.76 10.4%
The Company believes investors gain additional perspective of underlying business trends and results by providing a measure of net earnings and diluted net earnings per share that excludes IPR&D and other special items in order to evaluate ongoing business operations. Appendix B – Reconciliation of As Reported and Pro-Forma Net Trade Sales: Q4’07 vs. Q4’06
FOURTH QUARTER TWELVE MONTHS Reported Growth Pro-Forma Growth (1) Reported Growth Pro-Forma Growth (1)
Total% Oper.% Total% Oper.% Total% Oper.% Total% Oper.%
Skin Care 15.8% 9.3% 9.8% 3.6% 15.9% 11.6% 10.0% 5.8% Baby & Kids Care 16.5 8.4 14.7 6.6 13.9 8.1 12.1 6.4 Oral Care 235.4 231.4 4.1 (0.3) 266.5 263.7 7.7 4.6 OTC / Nutritionals 86.9 83.3 10.7 6.0 87.5 84.9 7.4 4.0 Women's Health 9.8 2.1 5.0 (2.5) 8.4 3.2 3.3 (1.7)
Consumer Segment Worldwide 48.5% 42.5% 9.9% 4.0% 48.3% 44.2% 8.6% 4.6%
Worldwide 16.6% 11.9% 9.4% 4.6% 14.6% 11.5% 7.4% 4.2%
(1) 2006 baseline includes Pfizer Consumer Health (PCH) sales and excludes PCH acquisition related divestitures