Annual Report March 2021 To Our Shareholders At the start of 2020, no one could have imagined just how dramatically our world was about to change due to a virus that has impacted billions of people in every nation. By any measure, it was a year dominated by uncertainty—yet the pandemic helped to clarify our priorities and reinforce our values. And while the familiar yard signs may be faded now, their message is more resonant than ever: We’re all in this together. Because of COVID-19, we all have a profound new appreciation and gratitude for the doctors, nurses, and hospital staff serving on the front lines of care, and for the everyday heroism of the essential workers who show up 24/7 to keep the world’s critical healthcare infrastructure up and running. Expectations that companies must drive positive change on behalf of everyone—no matter who you are, or where you live—are higher than ever. And Alex Gorsky we were all served an important reminder about Chairman and Chief Executive Officer just how central good health is to our collective prosperity, our security, and our society at the most fundamental level. As the world’s largest and most Nothing is more essential to every person, every family, every town, and every nation on earth than broadly-based healthcare company, health. Whether COVID-19 touched you directly or we have both a unique perspective indirectly, no individual’s life was left unchanged by on global health and a profound the pandemic—and together we gained a shared understanding of a universal truth: No one is safe responsibility to lead when called. until everyone is safe. As soon as the DNA sequencing of the COVID-19 virus was made We Were Built for Times Like These In early January 2020, it was impossible to guess available, our role was clear even exactly how the nascent pandemic would unfold. though success was anything but But Johnson & Johnson has been investing in and guaranteed: We at Johnson & applying the best science to take on the most serious public health threats for more than a Johnson would do everything in our century—and there was never any question that power to develop a safe, effective, we would contribute the full breadth and depth of and efficient vaccine for the largest our company’s expertise to global efforts to combat COVID-19. number of people around the world. Chairman’s Letter 1 With this ambitious, urgent goal driving us forward, Excellence in Execution we set out to follow the science and to make our The confidence placed in us by patients, physicians, potential vaccine available on a not-for-profit basis customers, and consumers today is the result of for pandemic emergency use. superb, sustained delivery on the commitments we make—and 2020 was no exception. This work was done around the clock, through innovative models of public–private partnerships Ŷ While the development of our COVID-19 vaccine and new heights of purpose-driven collaboration. in just 12 months is an incredible triumph of In the face of both successes and challenges, we science, it was not our only significant continually affirmed our commitment to safety, achievement. Our Pharmaceutical business scientific integrity, and transparency. And exactly continued to outperform the industry across one year after we officially began the development therapeutic areas and regions. And 2020 process, we were able to share positive top-line marked the 9th consecutive year of above- results from our Phase 3 ENSEMBLE clinical trial market adjusted operational growth—all while for our company’s single-dose COVID-19 vaccine. keeping our pipeline submissions and approvals Shortly after, based on the totality of scientific on track, as well as achieving greater patient evidence, we received Emergency Use Authorization enrollment in clinical trials compared to 2019. from the U.S. Food and Drug Administration for our We received approval for a subcutaneous single-dose COVID-19 vaccine and immediately formulation of multiple myeloma drug DARZALEX® began shipping doses in the U.S. (daratumumab) in 2020—ahead of our scheduled U.S. PDUFA date. This new formulation took This monumental achievement will be an enduring a multi-hour intravenous treatment down to a point of pride for us for decades to come. Perhaps subcutaneous delivery that is executed in just most remarkable of all: The successful development minutes. We focused on educating healthcare of our COVID-19 vaccine was only one of the many practitioners and successfully launched the incredible accomplishments that made 2020 a year product in a virtual environment—reaffirming like no other for our company. our strong commercial capabilities. Thanks to the resilience, dedication, Ŷ Our Consumer Health business didn’t just meet but exceeded goals for the year, being agile and resourcefulness of my colleagues enough to recognize and quickly adapt to fulfilling all around the world, Johnson & increased demand for products like TYLENOL® ® Johnson didn’t just survive 2020— and LISTERINE in millions of homes worldwide and recording approximately 55% year-over-year our company pivoted with great growth in e-commerce. Our Consumer Health agility and delivered notable team also refused to let the challenges of 2020 financial performance during a deter them from launching their ambitious Healthy Lives Mission. This holistic approach to health tumultuous year while continuing to and wellness—advancing sustainable innovation invest in sustainable, transformative and packaging, providing enhanced transparency innovation for the long-term. to the ingredients used in our products, supporting proactive self-care, and encouraging new consumer behavior—has been a welcome As we have during so many periods of upheaval since reminder of what our company can accomplish our founding in 1886, our broad base of diversified when we tackle the widest range of unmet healthcare solutions created stability for investors as health needs. we increased the shareholder dividend for the 58th consecutive year. Ŷ Perhaps the most striking testament to the power of world-class execution can be seen in the The core strengths that powered our performance rebound across our Medical Devices business last year are the same ones that have served our after the COVID-19 pandemic caused many stakeholders well in every market environment: individuals to delay healthcare treatment—from an unwavering focus on execution, innovation, routine exams to important elective surgeries and people. to emergency room visits. Our Medical Devices business continued prioritizing patient and customer needs, maintaining product reliability, 2 Chairman’s Letter and advancing innovation. We quickly identified (selexipag) injection for intravenous use to treat urgent needs and focused efforts on supporting pulmonary arterial hypertension and DARZALEX patients by training more than 6 million healthcare FASPRO™ for the treatment of newly diagnosed professionals on our virtual platforms, conducting patients with light chain for amyloidosis. We also live and remote case support, securing and hope to receive approval this year for ponesimod providing personal protective equipment (PPE), for multiple sclerosis, and PP6M for the treatment bringing together industry partners, and of schizophrenia. These developments will expanding coverage to emerging sites of care. potentially change the lives of patients and their Through these efforts we’ve developed new families in the years to come. capabilities that strengthened our customer relationships and set us up for even greater Ŷ Our Medical Devices business made strong performance in 2021 and beyond. progress achieving, and even accelerating, key pipeline milestones throughout the year. Ŷ We focus our sustainability efforts in areas where We continued to invest in innovation and we believe we can make the greatest impact to advance critical programs across each franchise advance health for humanity. As a healthcare throughout 2020, including: further expansion company, Johnson & Johnson understands that of our Hip and Knee portfolios into high-growth climate health can affect human health. This is market segments, enhancements to our industry- why we have a long-standing commitment to leading TECNIS™ family of intraocular lenses, environmental health and set new climate goals the introduction of ECHELON ENDOPATH™ in 2020 that we will track over the next 10 years. Staple Line Reinforcement, and the launch of To this end, we are honored to have, once again, CERENOVUS STROKE SOLUTIONS™. We remain been recognized as a global corporate leader in incredibly excited about the great potential of climate action and water security and awarded the end-to-end digital surgery ecosystem and are two ‘A-List’ ratings from the Carbon Disclosure simultaneously developing three differentiated Project—the third year in a row for tackling robotic programs and recently achieved a climate change and the second year in a row for significant milestone with the FDA clearance for our work on water security. our VELYS™ Robotic-Assisted Solution designed for use with the ATTUNE® Total Knee System. Life-Enhancing Innovation Our industry is just starting to unlock the full One thing that I think speaks volumes about both potential and benefits of these robotic and digital our performance and our prospects as a company technologies—and it seems only fitting that was our 2020 investment in innovation. In the midst the same company that helped pioneer sterile of all the year’s uncertainty, Johnson & Johnson surgery 135 years ago is now poised to lead the invested an all-time high of $12.2 billion in research way in bringing differentiated, cutting-edge new and development (up $800 million from 2019) and solutions to the 21st-century operating room. more than $7 billion in acquisitions, as we continued to fortify our pipeline and ensure we will be able to Ŷ In Consumer Health, we displayed great agility continue changing the trajectory of human health in finding ways to ensure we could supply long after this pandemic is over.