SafeSafe HarborHarbor StatementStatement ThisThis presentationpresentation maymay containcontain “forward-looking“forward-looking statements”statements”a ass defineddefined inin thethe PrivatePrivate SecuritiesSecurities LitigationLitigation ReformReform ActAct ofof 1995.1995. TheseThese statementsstatements areare basedbased onon currentcurrent expectationsexpectations ofof futurefuture events.events. IfIf underlyingunderlying assumptionsassumptions proveprove inaccurateinaccurate oror unknownunknown risksrisks oror uncertaintiesuncertainties materialize,materialize, actualactualresults results couldcould varyvary materiallymaterially fromfrom thethe Company’sCompany’s expectationsexpectations andand projections.projections.
RisksRisks andand uncertaintiesuncertainties includeinclude generalgeneral industryindustry conditionsconditions andand competition;competition; economiceconomic conditions,conditions, suchsuch asas interestinterest raterate andand currencycurrency exchangeexchangerate rate fluctuations;fluctuations; technologicaltechnological advancesadvances andand patentspatents attainedattained byby competitors;competitors; challengeschallenges inherentinherent inin newnew productproduct dedevelopment,velopment, includingincluding obtainingobtaining regulatoryregulatory approvals;approvals; domesticdomestic andand foreignforeign healthhealth carecare reformsreforms andand governmentalgovernmental lawslaws andand regulations;regulations; andand trendstrends towardtoward healthhealth carecare costcost containment.containment.
AA furtherfurther listlist andand descriptiondescription ofof thesethese risks,risks, uncertaintiesuncertainties andandother other factorsfactors cancan bebe foundfound inin ExhibitExhibit 9999 toto thethe Company’sCompany’s AnnualAnnual ReportReport onon FormForm 10-K10-K forfor thethe fiscalfiscal yearyear endedended DecemberDecember 31,31, 2006.2006. CopiesCopies ofof thisthis FormForm 10-K,10-K, asas wellwell asas subsequentsubsequent filings,filings, areare availableavailable onlineonline atat www.sec.govwww.sec.gov,, www.jnj.comwww.jnj.com oror onon requestrequest fromfrom thethe Company.Company. TheThe CompanyCompany doesdoes notnot undertakeundertake toto updateupdate anyany forward-lookingforward-looking statementsstatements asas aa resultresult ofof newnew informationinformation oror futurefuture eventsevents oror developments.developments. ContentContent OverviewOverview ••Strategic Strategic PrinciplesPrinciples ••Historical Historical PerformancePerformance ••Segment Segment OverviewOverview ••Fourth Fourth QuarterQuarter 20072007 ResultsResults ••SummarySummary STRATEGICSTRATEGIC PRINCIPLESPRINCIPLES StrategicStrategic PrinciplesPrinciples
•• BroadlyBroadly BasedBased inin HumanHuman HealthHealth CareCare •• ManagedManaged forfor thethe LongLong TermTerm •• DecentralizedDecentralized ManagementManagement ApproachApproach •• PeoplePeople andand ValuesValues BroadlyBroadly BasedBased-- World’sWorld’s MostMost ComprehensiveComprehensive HealthHealth CareCare CompanyCompany
••2007 2007 SalesSales ofof $61.1$61.1 BillionBillion ••Over Over 250250 operatingoperating companiescompanies worldwideworldwide ••Leadership Leadership positionspositions inin ethicalethical andand OTCOTC pharmaceuticals,pharmaceuticals, medical/surgicalmedical/surgical products,products, diagnosticsdiagnostics andand aa varietyvariety ofof consumerconsumer productsproducts ••Exceptionally Exceptionally wellwell balancedbalanced BroadlyBroadly BasedBased –– AA StrategicStrategic AdvantageAdvantage 20072007 SegmentSegment OperatingOperating Profit*Profit*
$15.9B $14.6B $6.0 % to Sales $5.7 2006 25.7%
2007 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 8K filing for 2006 PCH impact to operating profit; Excludes IPR&D and other special items BroadlyBroadly BasedBased –– AA StrategicStrategic AdvantageAdvantage
••Rapidly Rapidly capitalizecapitalize onon attractiveattractive opportunitiesopportunities ••Knowledge Knowledge andand capabilitycapability transfertransfer ••Development Development ofof convergingconverging technologiestechnologies ••Accelerating Accelerating growthgrowth throughthrough geographicgeographic breadthbreadth ••Leveraging Leveraging scalescale StrategicStrategic PrinciplesPrinciples
•• BroadlyBroadly BasedBased inin HumanHuman HealthHealth CareCare •• ManagedManaged forfor thethe LongLong TermTerm •• DecentralizedDecentralized ManagementManagement ApproachApproach •• PeoplePeople andand ValuesValues LeadershipLeadership inin MajorMajor MarketsMarkets 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 andand QuinoloneQuinolone Anti-InfectiveAnti-Infective catheterscatheters CoronaryCoronary StentsStents DisposableDisposable ContactContact LensesLenses MinimallyMinimally InvasiveInvasive SurgerySurgery OTCOTC PharmaceuticalsPharmaceuticals OrthopaedicsOrthopaedics SanitarySanitary ProtectionProtection SuturesSutures WoundWound CareCare BabyBaby && KidsKids CareCare
*As of Dec 2007 GrowthGrowth StrategiesStrategies
••Organic Organic growthgrowth ––Strong Strong internalinternal R&DR&D capabilitycapability ––Nurture Nurture newnew businesses;businesses; PrunePrune wherewhere appropriateappropriate ••Strategic Strategic partneringpartnering andand licensinglicensing ••Selective Selective acquisitionsacquisitions ––Enhance Enhance existingexisting businessbusiness ––New New platformplatform forfor growthgrowth 19971997––20072007 TotalTotal ResearchResearch ExpenseExpense $U.S.$U.S. BillionsBillions
$7.7
$2.4
1997 2007 10.6% Percent to Sales 12.6%
The company has adopted SFAS No. 123(R) Shared Based Payment, applying the modified retrospective transition method. 1997-2005 reported financial statements have been restated accordingly. PartnerPartner ofof ChoiceChoice ••Over Over 100100 newnew thirdthird partyparty relationshipsrelationships annuallyannually ••In In househouse ventureventure capitalcapital (JJDC)(JJDC) ––Over Over $475$475 millionmillion investedinvested asas ofof 20072007 inin aa broadbroad arrayarray ofof companiescompanies ••Focus Focus onon earlyearly stagestage productproduct developmentdevelopment MergersMergers && AcquisitionsAcquisitions –– RecentRecent ExamplesExamples StrategicStrategic movesmoves toto enhanceenhance ourour growthgrowth raterate andand createcreate long-termlong-term valuevalue forfor ourour shareholdersshareholders
TypicallyTypically modestmodest inin size:size: overover 6060 inin thethe lastlast decadedecade •• Disc-O-TechDisc-O-Tech MedicalMedical Technologies,Technologies, Ltd.Ltd. (12/07)(12/07) -- AcquisitionAcquisition ofof certaincertain assets,assets, includingincluding intellectualintellectual propertyproperty rights,rights, relatedrelated toto thethe treatmetreatmentnt ofof vertebralvertebral compressioncompression fracturesfractures fromfrom Disco-o-TechDisco-o-Tech MediMedicalcal Technologies,Technologies, aa privatelyprivately heldheld company,company, andand itsits subsidiarysubsidiary •• EnsureEnsure Medical,Medical, Inc.Inc. (7/06)(7/06) -- AcquisitionAcquisition ofof EnsureEnsure Medical,Medical, aa privatelyprivately heldheld companycompany willwill provideprovide CordisCordis with with aa developmentdevelopment stagestage femoralfemoral artearteryry closureclosure devicedevice (ACD)(ACD) andand relatedrelated IPIP andand know-howknow-how •• ColBarColBar LifeScienceLifeScience Ltd. Ltd. (7/06)(7/06) -- AcquisitionAcquisition ofof ColBarColBar LifeScience,LifeScience, anan IsraeliIsraeli ventured-ventured-backed,backed, privatelyprivately heldheld medicalmedical devicedevice companycompany withwith expertiexpertisese inin collagen-basedcollagen-based productsproducts MergersMergers && AcquisitionsAcquisitions –– RecentRecent ExamplesExamples
•• VascularVascular ControlControl SystemsSystems (5/06)(5/06)- - AcquiredAcquired aa ventureventure fundedfunded privatelyprivately heldheld companycompany thatthat developeddeveloped technologytechnology thatthat willwill bebe usedused forfor thethe treatment treatment ofof fibroidsfibroids andand dysfunctionaldysfunctional uterineuterine bleedingbleeding •• GroupeGroupe Vendome Vendome SASA (5/06)(5/06) -- JohnsonJohnson && JohnsonJohnson ConsumerConsumer FranceFrance SASSAS acquiredacquired GroupeGroupe Vendome, Vendome, aa privatelprivatelyy heldheld FrenchFrench marketermarketer ofof adultadult andand babybaby skinskin carecare productsproducts •• FutureFuture MedicalMedical SystemsSystems GroupGroup NVNV (FMS)(FMS) (3/06)(3/06) -- TheThe acquisitionacquisition ofof FMS,FMS, willwill allowallow DePuyDePuy MitekMitek to to enteenterr thethe fluidfluid managementmanagement andand shavershaver marketsmarkets andand increaseincrease DePuyDePuy Mitek’sMitek’s pro productduct offeringsofferings inin thethe arthroscopicarthroscopic surgicalsurgical marketmarket •• AnimasAnimas CorporationCorporation (2/06)(2/06) -- AcquisitionAcquisition ofof AnimasAnimas Corporation,Corporation, anan insulininsulin deliverydelivery company,company, affordsaffords LifeScan,LifeScan, Inc.Inc. immediateimmediate entryentry intointo thethe fast-growingfast-growing insulininsulin deliverydelivery pumppump marketmarket •• HandHand Innovations,Innovations, LLCLLC (1/06)(1/06) -- DePuyDePuy acquired acquired HandHand InnovationsInnovations LLC,LLC, aa developerdeveloper andand marketermarketer ofof uppeupperr extremityextremity traumatrauma products.products. TheThe acquisitionacquisition willwill allowallow DePuyDePuy to to establestablishish aa presencepresence inin thethe treatmenttreatment ofof handhand andand wristwrist facturesfactures MergersMergers && AcquisitionsAcquisitions OccasionallyOccasionally SubstantialSubstantial
•• ConorConor Medsystems,Medsystems, Inc.Inc. (2/07-(2/07- $1.4B) $1.4B) -- CardiovascularCardiovascular devicedevice companycompany withwith uniqueunique controlledcontrolled drugdrug deliverydelivery technologytechnology •• PfizerPfizer ConsumerConsumer HealthcareHealthcare (12/06(12/06 -- $16.6B) $16.6B) -- GlobalGlobal businessbusiness ofof personalpersonal carecare andand over-the-counterover-the-counter (OTC)(OTC) productsproducts •• SciosScios Inc. Inc. (4/03(4/03 -- $2.4B) $2.4B)– – AA biopharmaceuticalbiopharmaceutical companycompany withwith aa marketedmarketed productproduct (NATRECOR®)(NATRECOR®) forfor cardiovascularcardiovascular diseasedisease andand researchresearch projectsprojects focusedfocused onon auto-immuneauto-immune diseasesdiseases •• ALZAALZA CorporationCorporation (6/01-(6/01- $12.3B) $12.3B)- - Research-basedResearch-based pharmaceuticalpharmaceutical companycompany withwith leadingleading drugdrug deliverydelivery technologiestechnologies •• Centocor,Centocor, Inc.Inc. (10/99(10/99 -- $4.9B) $4.9B)- - LeaderLeader inin monoclonalmonoclonal antibodyantibody technology,technology, acuteacute vascularvascular carecare andand immunologyimmunology productsproducts •• DePuy,DePuy, Inc.Inc. (11/98(11/98 -- $3.7B) $3.7B)- - CombinedCombined withwith existingexisting orthopaedicsorthopaedics business business establishedestablished JohnsonJohnson && JohnsonJohnson asas thethe leaderleader inin thirdthird largestlargest medicalmedical devicedevice categorycategory StrategicStrategic PrinciplesPrinciples •• BroadlyBroadly BasedBased inin HumanHuman HealthHealth CareCare •• ManagedManaged forfor thethe LongLong TermTerm •• DecentralizedDecentralized ManagementManagement ApproachApproach •• PeoplePeople andand ValuesValues DecentralizedDecentralized ManagementManagement ApproachApproach
•• MostMost effectiveeffective managementmanagement structurestructure forfor ourour broadlybroadly basedbased businessbusiness •• FostersFosters engagementengagement –– SenseSense ofof ownershipownership –– EntrepreneurshipEntrepreneurship –– CollaborationCollaboration •• EnablesEnables customercustomer andand patient-focusedpatient-focused decisiondecision makingmaking StrategicStrategic PrinciplesPrinciples
•• BroadlyBroadly BasedBased inin HumanHuman HealthHealth CareCare •• ManagedManaged forfor thethe LongLong TermTerm •• DecentralizedDecentralized ManagementManagement ApproachApproach •• PeoplePeople andand ValuesValues OurOur CredoCredo
TheThe FourFour TenetsTenets ••Customers Customers ••EmployeesEmployees ••Community Community ••Stockholders Stockholders HISTORICALHISTORICAL PERFORMANCEPERFORMANCE WorldwideWorldwide NetNet TradeTrade SalesSales 20072007 SalesSales ByBy GeographicGeographic AreaArea
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 SegmentSegment
Total Sales - $61.1B
MD&DMD&D ConsumerConsumer(2)(2) ÇÇ3.9%3.9%(1)(1) 35% 24% ÇÇ44.2%44.2% (1)(1) $21.7B $14.5B
41% $24.9B
PharmaceuticalPharmaceutical ÇÇ4.3%4.3%(1)(1) (1) Operational Growth (2) Proforma growth including the net impact of PCH is 4.6% 20072007 -- CashCash FlowFlow
Operating Cash Flow $15.2B Free Cash Flow* $12.3B Net Cash/(Debt) Position ($.2)B
OneOne ofof OnlyOnly 44 U.S.U.S. IndustrialIndustrial CompaniesCompanies WithWith TripleTriple AA CreditCredit RatingRating
*Non-GAAP financial measure: defined as operating cash flow less capital spending 75 Consecutive years of Sales increases 24 Consecutive years of Earnings increases(1) 45 Consecutive years of Dividend increases
ReportedReported OperationalOperational AdjustedAdjusted NetNet YearYear SalesSales GrowthGrowth SalesSales GrowthGrowth EarningsEarnings GrowthGrowth(1)(1) 100100 +10.4 +10.4 +10.8%+10.8% +10.1%+10.1% 5050 +11.1 +11.1 +11.6+11.6 +14.0+14.0 2020 +10.7 +10.7 +10.8+10.8 +14.3+14.3 1010 +10.5 +10.5 +10.3+10.3 +13.7+13.7 55 +11.0 +11.0 +8.6+8.6 +13.3+13.3 11 +14.6 +14.6 +11.5+11.5 +8.6+8.6
ThroughThrough 12/31/0712/31/07 (1) Non GAAP. Excludes In-process R&D, and other special items. The company has adopted SFAS No. 123(R) Shared Based Payment, applying the modified retrospective transition method. 1995-2005 reported financial statements have been restated accordingly. TotalTotal ShareholderShareholder Returns*Returns* Through 12/31/07
Years 1 35 10 3.5% 4.0% 6.6% 9.1%
S&P 500 5.5% 8.5% 12.8% 5.9%
S&P Pharmaceutical 4.6% 5.4% 3.4% 3.7%
S&P H/C Equipment 5.1% 3.1% 10.2% 10.0%
* Assumes that all dividends are reinvested 19971997--20072007 GrossGross ProfitProfit MarginMargin %% ToTo SalesSales
73% 72% 70.9% 71% 70% 69% 68% 67.3% 67% 66% 65% 64% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
The company has adopted SFAS No. 123(R) Shared Based Payment, applying the modified retrospective transition method. 1997-2005 reported financial statements have been restated accordingly. 19971997--20072007 Selling,Selling, GeneralGeneral && AdministrativeAdministrative %% ToTo SalesSales
40.0%
36.5%
35.0% 33.5%
30.0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
The company has adopted SFAS No. 123(R) Shared Based Payment, applying the modified retrospective transition method. 1997-2005 reported financial statements have been restated accordingly. SEGMENTSEGMENT OVERVIEWOVERVIEW ConsumerConsumer SegmentSegment OverviewOverview ••Worldwide Worldwide annualannual salessales inin 20072007 ofof $14.5$14.5 billionbillion ••Principal Principal productsproducts in:in: ––Over-the-Counter Over-the-Counter PharmaceuticalsPharmaceuticals andand NutritionalsNutritionals ––SkinSkin CareCare ––Baby Baby && KidsKids CareCare ––Wound Wound CareCare ––OralOral CareCare ––Women’s Women’s HealthHealth ••Launched Launched moremore thanthan 600600 newnew productsproducts andand lineline extensionsextensions ••Integration Integration ofof PfizerPfizer ConsumerConsumer HealthcareHealthcare (PCH)(PCH) remainsremains onon tracktrack ConsumerConsumer SegmentSegment SalesSales –– MajorMajor FranchiseFranchise && 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 MedicalMedical DevicesDevices && DiagnosticsDiagnostics SegmentSegment OverviewOverview
•• WorldwideWorldwide annualannual salessales inin 20072007 ofof $21.7$21.7 billionbillion •• LargestLargest medicalmedical devicedevice companycompany inin thethe worldworld •• GlobalGlobal presencepresence inin medical,medical, surgicalsurgical andand diagnosticdiagnostic categoriescategories •• 77 largelarge franchisesfranchises •• 80%80% ofof salessales comingcoming fromfrom #1#1 oror #2#2 marketmarket positionposition MD&DMD&D MajorMajor FranchiseFranchise SalesSales && OperationalOperational GrowthGrowth RatesRates
2007 Sales: $21.7 Billion 2007 Ops Growth Rate: 3.9% $$ U.S.U.S. BillionsBillions VisionVision CareCare LifeScanLifeScan OCDOCD $2.2 $1.7 $2.4 +16% +7% +11% $3.4 CordisCordis (18%) EESEES $3.8 +10% $4.6 $3.6 +8% +7%
EthiconEthicon DePuyDePuy MD&DMD&D –– MajorMajor ApprovalsApprovals && LaunchesLaunches
•• REALIZEREALIZE AdjustableAdjustable GastricGastric BandBand •• ANIMASANIMAS 20202020 •• GENESEARCHGENESEARCH PharmaceuticalPharmaceutical SegmentSegment OverviewOverview
•• WorldwideWorldwide annualannual salessales inin 20072007 ofof $24.9$24.9 billionbillion •• OverOver 100100 drugsdrugs marketedmarketed inin approximatelyapproximately 125125 countriescountries •• NineNine productsproducts withwith revenuesrevenues overover $1$1 billionbillion •• SixSix moremore productsproducts withwith revenuesrevenues overover $200$200 millionmillion •• RobustRobust R&DR&D pipelinepipeline •• KeyKey licensinglicensing && strategicstrategic partnershipspartnerships PharmaceuticalsPharmaceuticals SegmentSegment LeadingLeading inin ResearchResearch capabilitiescapabilities BiologicsBiologics SmallSmall moleculesmolecules DrugDrug delivery,delivery, formform && formulationsformulations World-classWorld-class globalglobal operationsoperations
OutcomesOutcomes basedbased developmentdevelopment
InnovativeInnovative technologiestechnologies PharmaceuticalPharmaceutical SegmentSegment SalesSales –– MajorMajor ProductsProducts && OperationalOperational GrowthGrowth RatesRates
2007 Sales: $24.9 Billion 2007 Ops Growth Rate: 4.3% $$ U.S.U.S. BillionsBillions ACIPHEX/ACIPHEX/ Hormonal Hormonal PARIETPARIET DURAGESICDURAGESIC Anti-Infectives ContraceptivesContraceptives Anti-Infectives $1.2 CONCERTACONCERTA $0.9 $1.4 $1.6 TOPAMAX $1.0 (14%) TOPAMAX (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 RecentRecent PharmaceuticalPharmaceutical ApprovalsApprovals
•• INTELENCE™INTELENCE™ -- treatment treatment ofof humanhuman immunodeficiencyimmunodeficiency virusvirus typetype 1(HIV-1)1(HIV-1) infectioninfection inin antiretroviralantiretroviral treatment-experiencedtreatment-experienced adultadult patientspatients (1/08 (1/08 US)US) •• DORIBAX™DORIBAX™ (doripenem)(doripenem) -- treatment treatment forfor complicatedcomplicated intra-abdominalintra-abdominal andand complicatedcomplicated urinaryurinary tracttract infectionsinfections (US (US 10/07)10/07) •• REMICADEREMICADE ®-®- treatmenttreatment ofof PsoriaticPsoriatic Arthritis-structuralArthritis-structural damagedamage (US(US 8/06)8/06) (EU(EU 11/07)11/07) •• DOXILDOXIL®® inin combinationcombination withwith VELCADEVELCADE®® forfor InjectionInjection -- Multiple Multiple MyelomaMyeloma (US(US 5/07)5/07) (EU(EU 12/07)12/07) •• RISPERDALRISPERDAL ®® –– Pediatric Pediatric ExclusivityExclusivity (US(US 2/07),2/07), PediatricPediatric indicationindication (US(US 8/07)8/07) •• LEVAQUINLEVAQUIN ®® TabsTabs andand IV–IV– Pediatric Pediatric ExclusivityExclusivity (US(US 3/07),3/07), AcuteAcute PyelonephritisPyelonephritis (US(US 9/07)9/07) •• INVEGA™INVEGA™ (paliperidone)(paliperidone) Extended-ReleaseExtended-Release TabletsTablets –– a a once-dailyonce-daily oraloral medicationmedication forfor thethe treatmenttreatment ofof schizophreniaschizophrenia (12/06(12/06 US)US) (6/07(6/07 EU)EU) •• PREZISTA™PREZISTA™ (darunavir)(darunavir) –– protease protease inhibitorinhibitor forfor treatment-experiencedtreatment-experienced patientspatients withwith HIVHIV (6/06(6/06 US)US) (2/07(2/07 EU)EU) 4Q4Q 20072007 ResultsResults 4Q4Q 20072007 HighlightsHighlights
GrowthGrowth %% TotalTotal OperationsOperations CurrencyCurrency •• SalesSales –– WorldwideWorldwide 16.6%16.6% 11.9% 11.9% (1)(1) 4.7%4.7% –– U.S.U.S. 9.1%9.1% –– InternationalInternational 25.8% 25.8% 15.3% 15.3% 10.5% 10.5% •• NetNet EarningsEarnings 9.5%9.5% •• EPSEPS 10.8%10.8% •• AdjustedAdjusted NetNet EarningsEarnings(2)(2) 6.8%6.8%
•• AdjustedAdjusted EPSEPS(2)(2) 8.6%8.6%
(1) On a pro-forma basis, including the net impact of the acquisition of Pfizer Consumer Healthcare in both 2007 and 2006, worldwide sales increased 4.6% on an operational basis.basis Please see Appendix B for reconciliation. (2) 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. Please see Appendix A for reconciliation. 4Q4Q 20072007 SalesSales GrowthGrowth byby SegmentSegment
TotalTotal OperationsOperations CurrencyCurrency ConsumerConsumer 48.5% 48.5% 42.5%*42.5%* 6.0% 6.0%
MedMed DeviceDevice && DiagnosticsDiagnostics11.3% 11.3% 6.2% 6.2% 5.1% 5.1%
PharmaceuticalPharmaceutical 7.5% 7.5% 3.7%3.7% 3.8%3.8%
TotalTotal CompanyCompany 16.6%16.6% 11.9%11.9% 44.7%.7%
*On a pro-forma basis, including the net impact of the acquisition of Pfizer Consumer Healthcare in both 2007 and 2006, sales in the Consumer segment increased 4.0% on an operational basis. Please see Appendix B for reconciliation. 4Q4Q 20072007 ConsumerConsumer SalesSales (+42.5%)(+42.5%) GrowthGrowth Drivers:Drivers: •• SkinSkin CareCare (+9%)(+9%) –– JohnsonsJohnsons AdultAdult ,, AVEENO,AVEENO, CLEANCLEAN && CLEAR,CLEAR, VENDOME,VENDOME, andand NEUTROGENANEUTROGENA product product lines,lines, additionaddition ofof PfizerPfizer productsproducts •• BabyBaby && KidsKids CareCare (+8%)(+8%) –– Wipes,Wipes, HaircareHaircare and and BabycenterBabycenter dot.com dot.com •• OTC/NutritionalsOTC/Nutritionals (+83%)(+83%) –– AdditionAddition ofof PfizerPfizer producproducts;ts; adultadult analgesicsanalgesics andand SPLENDASPLENDA sugarsugar substitutesubstitute
•• OralOral CareCare (new(new category)category) –– LISTERINELISTERINE antisepticantiseptic mouthrinsemouthrinse andand whiteningwhitening stripsstrips
All growth %’s noted are operational growth 4Q4Q 20072007 MedicalMedical DevicesDevices && DiagnosticsDiagnostics SalesSales (+6.2%)(+6.2%) GrowthGrowth DriversDrivers •• VisionVision CareCare (+16%)(+16%) –– ACUVUEACUVUE ®® OASYS™OASYS™ withwith HYDRACLEAR™HYDRACLEAR™ PLUS;PLUS; 1-DAY1-DAY ACUVUEACUVUE ®® MoistMoist ™™ ;; ACUVUE®ACUVUE® ADVANCE™ADVANCE™ forfor ASTIGMATISMASTIGMATISM,, andand 1-DAY1-DAY ACUVUEACUVUE ®® DEFINE™DEFINE™ •• EthiconEthicon EndoEndo SurgerySurgery (+13%)(+13%) –– Endocutters,Endocutters, HARMONICHARMONIC SCAPELSCAPEL®®,, AdvancedAdvanced SterilizationSterilization ProductsProducts •• LifeScanLifeScan (+13%) (+13%) –– ULTRAMINIULTRAMINI®® bloodblood glucoseglucose meter,meter, ULTRAULTRA®® bloodblood glucoseglucose strips,strips, andand AnimasAnimas insulininsulin pumppump productsproducts
All growth %’s noted are operational growth 4Q4Q 20072007 MedicalMedical DevicesDevices && DiagnosticsDiagnostics SalesSales (6.2%)(6.2%) GrowthGrowth DriversDrivers •• DePuyDePuy (+9%) (+9%) –– HipHip andand kneeknee reconstructionreconstruction productsproducts andand Mitek’sMitek’s sportssports medicinemedicine productsproducts •• OrthoOrtho ClinicalClinical DiagnosticsDiagnostics (+8%)(+8%) –– ImmunodiagnosticsImmunodiagnostics productsproducts andand ChagasChagas screeningscreening assayassay •• EthiconEthicon (+7%)(+7%) –– Biosurgicals,Biosurgicals, drains,drains, meshes,meshes, hemostasishemostasis products,products, andand GynecareGynecare women’swomen’s healthhealth productsproducts
All growth %’s noted are operational growth 4Q4Q 20072007 PharmaceuticalPharmaceutical SalesSales (+3.7%)(+3.7%)
KeyKey ProductsProducts %% ChangeChange •• TOPAMAXTOPAMAX®® +21%+21% •• REMICADEREMICADE®® +16%+16% •• Anti-PsychoticsAnti-Psychotics (RISPERDAL(RISPERDAL®®// RISPERDALRISPERDAL®® CONSTACONSTA®® /INVEGA/INVEGA®® )) +11%+11% •• CONCERTACONCERTA®® +10%+10% •• ACIPHEXACIPHEX®®/PARIET/PARIET®® +3%+3% •• LEVAQUINLEVAQUIN®/®/FLOXINFLOXIN®® -2%-2% •• HormonalHormonal ContraceptivesContraceptives -15%-15% •• DURAGESICDURAGESIC®® -16%-16% •• EPREXEPREX®®/PROCRIT/PROCRIT®® -25%-25%
AllAll growthgrowth %’s%’s notednoted areare operationaloperational growthgrowth SUMMARYSUMMARY JohnsonJohnson && Johnson:Johnson: TheThe MostMost BroadlyBroadly BasedBased HealthHealth CareCare CompanyCompany ••Exceptional Exceptional tracktrack recordrecord ofof superiorsuperior growthgrowth overover thethe longlong termterm ••Guided Guided byby fourfour strategicstrategic principlesprinciples ••Excellent Excellent financialfinancial strengthstrength ••Innovative Innovative productsproducts ••Robust Robust pharmaceuticalpharmaceutical R&DR&D pipelinepipeline ••Largest Largest andand mostmost globallyglobally diversediverse medicalmedical devicesdevices andand diagnosticsdiagnostics companycompany ••Premier Premier consumerconsumer healthhealth carecare companycompany AppendixAppendix AA –– ReconciliationReconciliation ofof NonNon--GAAPGAAP Measures:Measures: Q4’07Q4’07 vs.vs. Q4’06Q4’06
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. AppendixAppendix BB –– ReconciliationReconciliation ofof AsAs ReportedReported andand ProPro--FormaForma NetNet TradeTrade Sales:Sales: Q4’07Q4’07 vs.vs. Q4’06Q4’06
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