Johnson and Johnson (JNJ) Earnings Report: Q2 2015...
Transcript of Johnson and Johnson (JNJ) Earnings Report: Q2 2015...
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
©2014TheStreet,Inc.Al l R ightsReserved Page1of35
JohnsonandJohnson(JNJ)EarningsReport:Q22015ConferenceCallTranscriptThefollowingJohnsonandJohnsonconferencecalltookplaceonJuly14,2015,08:30AMET.Thisisatranscriptofthatearningscall:
CompanyPart icipants
LouiseMehrotra;JohnsonandJohnson;V.P-InvestorRelationsAlexGorsky;JohnsonandJohnson;ChairmanoftheBoardofDirectors,CEOSandyPeterson;JohnsonandJohnson;GroupWorldwideChairmanDominicCaruso;JohnsonandJohsnon;V.PFinance,CFO
OtherPart icipants
GlennNovarro;RBCCapitalMarkets;AnalystKristenStewart;DeutscheBank;AnalystMikeWeinstein;JPMorgan;AnalystLarryBiegelsen;WellsFargo;AnalystJamiRubin;GoldmanSachs;AnalystJoshJennings;CowenandCompany;AnalystVamilDivan;CreditSuisse;AnalystJaysonBedford;RaymondJames;AnalystDavidLewis;MorganStanley;Analyst
MANAGEMENTDISCUSSIONSECTION
Operator :
Goodmorning,andwelcometoJohnson&Johnson'ssecondquarter2015earningsconferencecall.
Allparticipantswillbeabletolistenonlyuntilthequestion-and-answersessionoftheconference.
Thiscallisbeingrecorded.Ifanyonehasanyobjections,youmaydisconnectatthistime.
(OperatorInstructions).
IwouldnowliketoturntheconferencecallovertoJohnson&Johnson.
Youmaybegin.
LouiseMehrotra(V.P-InvestorRelations):
Goodmorningandwelcome.
I'mLouiseMehrotra,VicePresidentofInvestorRelationsforJohnson&Johnsonanditismypleasurethismorningtoreviewourbusinessresultsforthesecondquarterof2015.
JoiningmeonthecalltodayareAlexGorsky,ChairmanoftheBoardofDirectorsandChiefExecutiveOfficer,SandyPeterson,groupworldwideChairmanandDominicCaruso,VicePresidentfinanceandChiefFinancialOfficer.
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
©2014TheStreet,Inc.Al l R ightsReserved Page2of35
Afewlogisticsbeforewegetintothedetails.
ThisreviewisbeingmadeavailableviaWebcastaccessiblethroughtheInvestorRelationssectionoftheJohnson&Johnsonwebsiteatinvestor.J&J.com.
I'llbeginbybrieflyreviewingsecondquarterforthecorporationandforourthreebusinesssegments.
Alexwillprovideadditionalcommentaryonthebusinessandourprogresseswithregardstoourneartermpriorities.
Next,Sandywillprovideanupdateonourconsumerandconsumermedicaldevicebusinesses.
Lastly,Dominicwillreviewtheincomestatementanddiscussguidancefor2015.Wewillthenopenthecalltoyourquestions.
Weexpectthecalltolastapproximately90minutes.
Includedwiththepressreleasethatwasissuedearlierthismorningisascheduleofsalesforkeyproductsand/orbusinessestofacilitateupdatingyourmodels.
TheseschedulesareavailableontheJohnson&Johnsonwebsiteasisthepressrelease.
Pleasenotewewillbeusingapresentationtocomplementtoday'scommentary.
Thepresentationisalsoavailableonourwebsite.
Beforewebegin,letmeremindyouthatsomeofthestatementsmadeduringthisreviewareormaybeconsideredforward-lookingstatements.
The10-Kforthefiscalyear2014andtheCompany'ssubsequentfilingsidentifycertainfactorsthatcouldcausetheCompany'sactualresultstodiffermateriallyfromthoseprojectedinanyforward-lookingstatementsmadetoday.
TheCompanydoesnotundertaketoupdateanyforward-lookingstatementsasaresultofnewinformationorfutureeventsordevelopments.
OurSECfilingsincludingthe10-KareavailablethroughtheCompanyandonourwebsite.
Duringthereview,non-GAAPfinancialmeasuresareusedtoprovideinformationpenth.ShouldnotbeconsideredreplacementsforandshouldbereadtogetherwithGAAPresults.
TablesreconcilingthesemeasurestothemostcomparableGAAPmeasuresareavailableintheschedulesaccompanyingthepressreleaseandontheInvestorRelationssectionoftheJohnson&Johnsonwebsite.
NowIwouldliketoreviewresultsforthesecondquarterof2015.Worldwidesalestocustomerswere$17.8billionforthesecondquarterof2015,down8.8%versussecondquarter2014.Onanoperationalbasis,salesweredown0.9%andcurrencyhadanegativeimpactof7.9%.
IntheUS,salesweredown2.4%.
InregionsoutsidetheUS,ouroperationalgrowthwas0.5%whiletheeffectivecurrencyexchangeratesnegativelyimpactedourreportedresultsby14.8%.
OnanoperationalbasistheAsia-PacificAfricaregiongrewby2.2%,whileEuropegrow1%andtheWesternHemisphereexcludingtheUSdeclined4%.GrowthintheUSandJapanwasnegatively
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
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impactedbyhepatitisCcompetition.
Growthinallregionswasimpactedwhichdivestitures,themostsignificantonebeingOrthoClinicalDiagnostics.
Excludingthenetimpactofacquisitionsanddivestitures,underlyingoperationalgrowthwas1.7%worldwide,0.6%intheUS,and2.7%outsidetheUS.AdditionallyexcludinghepatitisCsales,underlyingoperationalgrowthwas5%.Turningnowtoearnings.
Netearningswere$4.5billionandearningspersharewere$1.61versus$1.51ayearago.
Asreferencedinthetablereconcilingnon-GAAPmeasures,2015secondquarternetearningswereadjustedtoexcludeaftertaxamortizationexpenseof$230million,andachargeof$66millionforaftertaxspecialitems.2014secondquarternetearningswereadjustedtoexcludeachargeof$807million.
Dominicwilldiscussspecialitemsinhisremarks.
Excludingamortizationexpenseandspecialitemsforbothperiods,adjustednetearningsforthecurrentquarterwere$4.8billion,andadjusteddilutedearningspersharewere$1.71,representingdecreasesof6.3%and3.9%respectivelyascomparedtothesameperiodin2014.Currencytranslationsignificantlyimpactednetearnings.
Onanoperationalbasis,adjusteddilutedearningspersharegrew6.7%.
Turningnowtobusinesssegmenthighlights.
Pleasenotepercentagesquotedrepresentoperationalsaleschangeincomparisontothesecondquarterof2014unlessotherwisestated,andthereforeexcludetheimpactofcurrencytranslation.
I'llbeginwiththeconsumersegment.
Worldwideconsumersegmentsalesof$3.5billionincreased2.3%withUSsalesup2.7%,whileoutsidetheUSsalesgrew2.1%.
Excludingthenetimpactofacquisitionsanddivestitures,underlyingoperationalgrowthwas3.1%worldwide,2.9%intheUS,and3.2%outsidetheUS.GrowthwasdrivenbyOTCworldwide.
Women'shealthoutsidetheUSandoralcare.
OTCsalesgrowthwasdrivenbyworldwideanalgesics,intheUSandotherupperrespiratoryproductsoutsidetheUS.Upperrespiratory.
Includedaseasonalinventorybuild.
IntheUS,adultanalgesicmarketsharewasapproximately12%,upfromapproximately11%ayearago,whileUSpediatricsharewasnearly44%upfrom39%ayearago.
NewproductlaunchesandsuccessfulmarketingcampaignsdrovetheresultsforListerineinoralcareandwomen'shealthproductsoutsidetheUS.Movingnowtoourpharmaceuticalsegment.
Worldwidesalesof$7.9billionincreased1%withUSsalesdown1.5%andsalesoutsidetheUSup3.8%.
NewcompetitorsinhepatitisCsignificantlyimpactedsalesresults.
ExcludingsalesofourhepatitisCproducts,O lysioand,aswellastheimpactofacquisitionsand
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
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divestitures,underlyinggrowthworldwideUSandoutsidetheUSwasapproximately9.7%,16.5%,and2.5%respectively.
USresultsincludedapositiveadjustmenttosalesreservesformanagedMedicaidrebatesreflectingfinaldatareceived.
UScomparisonstosecondquarter2014werepositivelyimpactedbyapproximately2%andworldwidebyapproximately1%.ThemostsignificantimpactfromthemanagedMedicaidadjustmentwastocontraceptive.
SignificantcontributorstogrowthwereInvokanaInvokamet,Imbruvica,Xarelto,Zytiga,InvegaSustenna,Concerta,andimmunologyproducts.
StrongmomentuminmarketshareincreasesdroveresultsforInvokanaInvokamet.
IntheUSInvokanaInvokametachievedTRxwithinthedefinedmarketoftype2diabetes.
Upfrom5.1%inthefirstquarterof2015.TRxwithendocrinologistsyougrewto13.2%forthequarterand5.2%inprimarycare.
0.8%respectivelyonasequentialbasis.
InvokanaInvokametremainsacategoryleaderinnewtobrandsharewithendocrinologistsandhasgreaterthan80%preferredaccessacrosscommercialandPartDplans.
StrongpatientuptakewithnewindicationsyouapprovalsanddemonstratedefficacydroveresultsforImbruvicaintheUS.ImbruvicaisaleaderinbothnewandtotalpatientregimentshareinthesecondlineCLLandNCL.
OutsidetheUS,resultsweredrivenprimarilybyEuropewithstrongpatientuptakeparticularlyinGermany,FranceandtheUK.Xareltosaleswereupnearly31%andtotalprescriptionsharefor.
Grewto15.4%.
TRxinprimarycarereached12.4%andincardiology23.7%.
Xareltoisbroadlyreimbursedwithover90%ofcommercialandMedicarePartDpatientscoveredatthelowestbrandedproductcopay.
Stronggrowthofthecombinedresistantprostatecancermarketatnearly12.5%drovetheresultsforZytigaintheUS.Zytigasharewasapproximately28.6%ofthatmarket,downapproximately1.7pointsonasequentialbasisduetoincreasedcompetition.
Asanupdate,duringthequarterwereceivedseveralparagraph4notificationsfromgenericmanufacturersadvisingtheyfiledAbbreviatedNewDrugApplicationwastheFDAseek.
Beforetheexpirationoftherelevantpatentslistedintheorangebook.
ThecompositionofmatterpatentisownedbyourpartnerandexpiresinDecember2016andthemethodoftreatmentpatentisownedby(inaudible)andexpiresinAugust2027.Wearecurrentlyevaluatingthenotices.
OutsidetheUS,ZytigaachievedverystronggrowthinAsiaandLatinAmerica,whichwaspartiallyoffsetbylowersalesinEuropeduetoincreasedcompetition.InvegaSustennaor[zeplion]achievedstrongresultsdueprimarilytoincreasedmarketsharewhileConcertagrowthwasprimarilyduetotherapeuticandreclassificationofgenericcompetitors.
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
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Theresultsforimmunologyweredrivenbystrongdouble-digitmarketgrowthcomplementedbyincreasedmarketshareforStelaraandsomecombinedSimponi,SimponiAria.
GrowthwaspartiallyoffsetbylowerRemicadesalestoourdistributors,reflectingtheweakeningoftheEuroandthelossofexclusivityinEuropeaswellasareductionininventorylevels.
I'llnowreviewthemedicaldevicessegmentresults.Worldwidemedicaldevicessegmentsalesof$6.4billiondecreased4.7%.USsalesdeclined5.8%whilesalesoutsidetheUSdeclined3.9%.
OrthoClinicalDiagnosticswasdivestedmid-year2014.Excludingthenetimpactofacquisitionsanddivestitures,underlyingoperationalgrowthwas1.4%worldwide,withtheUSup1.6%andgrowthof1.4%outsidetheUS.Growthwasdrivenbyspecialtysurgery,cardiovascularcareandorthopedics.
Specialtysurgerygrowthwasdrivenbybiosurgerygrowthofover8%andgrowthofapproximately6%duetomarketgrowth,sharegainsincertainsegmentsandnewproductintroductions.
Cardiovasculargrowthwasdrivenby10%worldwideincreaseinelectrophysiologyduetostrongsalesofthermacoolSmartTouchcatheter.
OrthopaedicsalesgrowthwasdrivenbykneesandhipaswellasOrthoviscand[monovisc]insportsmedicine.Thegrowthwaspartiallyoffsetbylowersalesintraumaandspineduetopricingpressurecoupledwiththetimingoftenderbusinessandcompetitivechallengesinspine.
Kneesworldwideincreased4%withtheUSup5%andsalesoutsidetheUSup2%drivenbystrongsalesof[atune],partiallyoffsetbypricingpressure.
Hipsgrowthof2%worldwidewasdrivenby4%growthintheUS,withstrongvolumegrowthpartiallyoffsetbycontinuedpricingpressure.Primarystemplatformsaleswereamajorcontributortotheresults.
OutsidetheUS,saleswereflatwithstronggrowthinChinaandIndia,offsetbylowersalesintheMiddleEast,duetothetimingoftenderbusiness.
Foryourreference,thereweresomenotabledevelopmentsinthesecondquarterwhichwehavesummarizedonthisslidetoassistyouasyoudevelopyourmodels.
ThatconcludesthesegmenthighlightsforJohnson&Johnson'ssecondquarterof2015.ItisnowmypleasuretoturnthecallovertoAlexGorsky.
Alex?
AlexGorsky(ChairmanoftheBoardofDirectors,CEO):
Thankyou,Louiseandgoodmorningeveryone.
Ireallyappreciateyoutakingthetimetojoinourcalltodayandsincewe'reatthemidpointoftheyearI'mexcitedtosharetheprogresswe'vemadeagainstourneartermpriorities.
I'llalsousethetimetodaytogivesomeperspectiveontheenvironmentthatwe'reoperatinginandsomeofthemacrolevelissueswe'reseeingandalsodiscusswhywebelievewithourinnovationmodelandbreadthaandscaleofourbusinessthatJohnson&Johnsonisstronglypositionedtodrivecontinuedgrowthinshareholdervalue.
SoI'llstartthediscussionthoughwhereIalwaysdo,withourcredo.
OurcredoservesasthemoralcompassforourCompanyandexpressesasetofvaluesthatbondourassociatesworldwidewithasharedcommitmenttomeetandreallyexceedtheexpectationsofthemore
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
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than1billionpeopleadaythatrelyonourproducts.
Aswellastosupportourfellowcolleagues,thecommunitiesinwhichweliveandworkandgeneratesolidreturntoourshareholders.
BackinJanuaryIlaidoutourneartermprioritiesforthebusinessandI'mpleasedwithourprogresstowardsthem.
Acrosstheenterprise,we'reveryfocusedondeliveringourfinancialandqualitycommitments.
First,ourcommitmenttoensuringourproductsmeetthehighestqualitystandardsisofcoursenonnegotiableandastoourfinancialcommitments,thusfarintheyearwegeneratedsalesof$35.2billionreflectingthestrongunderlyingoperationalgrowthacrosstheenterpriseofabout6%,whenweadjustfortheimpactofhepatitisCsalesandacquisitionsanddivestitures.
Andforthefirstsixmonthswedeliveredadjustednetearningsof$9.2billionandadjustedEPSof$3.27.OnanoperationalbasiswedeliveredadjustedEPSof$3.59,growingat5.3%.
Aswe'vehighlightedpreviously,weknewthatouryear-over-yearcomparisonstoourcurrentresultswouldbechallengingbecauseoftremendouscontributionsofO lysiolastyearaswellastheimpactofdivestitureswemadeandalsothesignificantdevaluationofmajorforeigncurrenciesagainsttheUSdollar.
Nowdespitetheseheadwinds,ourbroadbaseofinnovativeofferings,scaleandglobalfootprintaredrivingourstrongcoreperformance.
Inpharmaceuticals,wereportedsalesof$15.7billion,reflectingstrongunderlyingoperationalgrowthwhenexcludingtheimpactofhepatitisCanddivestituresofover11%forthefirsthalfof2015,ledbyournewandcoreproductsincludingInvokana,Imbruvica,StelaraandZytiga.
OurfocusedR&Dstrategyandcommitmenttodrivinglaunchexcellencetoensurebroadaccessandreimbursementhasreallycometogethertomakeadifferenceforpatientsandhasuswellpositionedtocontinuetodriveaboveindustrycompoundannualgrowthoverthenextseveralyears.
Fueledbysevenofourrecentlylaunch.
Edproductsthatweexpectwilleachexceed$1billioninsalesthisyearandthemorethan10newproductsweplantofileby2019thateachhave$1billionpluspotentialoftheirownbasedontheirtransformationalpotentialtotreatsignificantunmetmedicalneedsworldwide.
Andjustlastweekourpartner,announcedthatwehavecompletedtheFDAsubmissionfordaratumumab,apromisingnewbreakthroughtreatmentoptionforpeoplewithmultiplemyeloma.
Collectivelydonegreatworktogeneratestrongclinicalevidenceinthedevelopmentprocesswhichisenablingourreimbursementteamstogaintherightcoveragelevelsinordertocreatebroadaccessanddrivethestrongperformanceofourproductsdespitethepricingpressuresthatexistinthemarketplace.
Now,IalsowanttomakeacommenthereonourpositionregardingbiosimilarcompetitionforRemicadewhichIknowmanyofyouarethinkingabout.
Remember,biosimilarsarenotgenericsandweexpectthebiosimilarmarkettobehavequitedifferentlythanthemarkettypicallyhas.
Also,morethan2.2millionpeoplehavebeentreatedwithRemicadeandabout70%ofthecurrentpatientsarereceivingsustainedandeffectivetreatmentsowebelievetheirdoctorsareveryunlikelyto
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
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switchthemoffwiththatlevelofsuccess.
AndwealsohaveapatentfortheRemicadeantibodythatdoesn'texpireuntilSeptember2018,thatyoucanbesurewe'llcontinuetovigorouslydefend.
Look,weknowcompetitionintheimmunologyspaceisfierceandtoensurewemaintaintheleadershipposition,webuiltanestablishedportfolioofbilliondollarplusmedicinesthatincludeStelaraandSimponi,andhavepotentialbilliondollarplusproductsinourLateStageDevelopmentlike,forrheumatoidarthritisandforpsoriasisthatweexpecttointroduceinthenearterm.
We'realsomakingverysignificantinvestmentsindisruptiveresearchareaslikethemicrobio,whichholdsthepotentialtointerceptthediseaseandpreventitentirelythatwillhaveapplicationsinimmunologyandreallyacrossallourdiseaseareas.
Now,turningtomedicaldevices.
Youknowwe'renumberoneornumbertwointhemajorityofthecategoriesinwhichwecompeteandhave10$1billionplusplatforms.Year-to-date,wereportedglobalmedicaldevicesalesof$12.6billion,whichisanoperationaldeclineof4.6%duetotheimpactofthesaleofOrthoClinicalDiagnosticswhichwecompletedayearagoandwhenweadjustforthatourunderlyingoperationalgrowthinmedicaldevicesisup1.4%.
I'vebeenparticularlypleasedwiththeperformanceinseveralareasofthisbusinesswherenewinnovationsaredrivinggrowthincludingourBiosenseWebsterbusinesswhichhasgrownnearly11%operationallythroughthefirstsixmonthsoftheyear.
Ourendocutterbusinesshasgrown15.5%andourbiosurgerybusinesswithcontinuedstronggrowthof7.5%.
Indiabetes,ourproductsandstronginmarketexecutionarehelpingtorevitalizethatbusinesswhileourvisioncarebusinessisontracktoreturntogrowthlaterintheyearwhenwe'llanniversarytheimpactofthe2014pricereset.
Inorthopedics,thebusinessgrew1.5%operationallythisyearwithgoodgrowthinthereconstructionandsportsmedicinesegment,particularlyinthesecondquarterhereintheUS,wheredespitethepricingdynamicsinthemarketwesawover5%growthinkneesandapproximately4%inhips.
Ourspineandtraumabusinesses,however,havelaggedmarketgrowthtodateandweareabsolutelycommittedtoturningthemaroundandwehavenewproductslaunchingthisyearthatwillhelpusdojustthat.
Aswelookatthismarket,theongoingconsolidationamonghealthsystemsandwithintheinsuranceindustryiscontinuingtocreatepressureonpricing.
We'vebeenencouraged,though,bydatashowingthathealthcareutilizationtrendsintheUShavecontinuedtoimproveforthefourthconsecutivequarterwithgrowthinbothhospitaladmissionsandhospitalsurgicalproceduresandweremainoptimisticaboutincreasedglobalhealthcareutilizationaswell.
Soweareabsolutelycommittedtoacceleratingourgrowthinmedicaldevicesthroughinnovationandthroughourresearchanddevelopmentwhichhasbeenproductiveastheteamshavealreadysubmittedmorethanhalfofthe30majorfilingswepreviouslyannouncedweplantofilebytheendof2016.
Andtheworkwe'redoingwithGoogleillustrateshowwe'reaimingtopioneertheoperatingroomofthe
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
©2014TheStreet,Inc.Al l R ightsReserved Page8of35
futurewithroboticsurgerytoolsthatwillincreasethesurgeon'sprecisionandminimizetraumafortheirpatientswhilealsoreducingcostsforthesystems.
We'realsotransformingourgo-to-marketmodelsofullyleveragethebreadthandscaleofourcapabilitiesandwe'vetakensignificantmeasurestostrengthenourcorebusinessesandeffectivelypositionourselvestoleadoverthelongterm.
WejustrecentlyintegratedourglobalorthopedicsandglobalsurgerybusinessesundertheleadershipofGary,whichwillenableustohaveamuchmoreholisticapproachtothewaywedobusiness.
Andthegoalhereisverystraightforward.
Let'senhanceourpartnershipswiththehospitalsystemsandidentifywaystoimproveoutcomesbyleveragingourcomprehensiveportfolio.
Wealreadyhavenumerousexamplesofco-promotions,broadcontractingagreements,andserviceandsolutionofferingsinplacethatwecanlooktoexpandandbybetterworkinginthisnewalignmentmodelwewillbebetterpositionedtocreatemoreofthemtodrivefuturegrowth.
GarywillbeonthethirdquartercallinOctobertotellyoumoreaboutthisapproach.
Andnowontheconsumerbusiness.
SandyPetersonandherteamwireincludesournewseasonedleaderwho'sbeenwithussincetheendoflastyeararedoingtremendousworkinbuildingandexecutingastrategythathaseffectivelyaddressedthepastchallengesinour.
We'repositionedtoexpandourmarketleadershipinkeysegmentsmovingforward.
Year-to-date,wegenerated$6.9billioninsalesandreportedoperationalgrowthofnearly4%,excludingacquisitionsanddivestitures,drivenbyourmarketleadingOTCandoralcarebusinesses.
Andourstrategytofocustheportfolioaroundthekeyconsumerneedstatesandbrandsthatarebackedwithstrongclinicalscienceanprofessionalendorsementsishavingastrongimpact.
TheUnitedStatesOTCmedicinesaresharplyup13%fortheyear,ledbythestrongcampaignswe'releadinginsupportandtherelaunchofkeybrandslikeTylenol,Motrinand.
Andourmomentumherecouldnothavebeenachievedwithouttheeffortsofourcolleaguestocompletethecomplexworkrequiredaroundtheconsentdecree.
Globally,weseestrongoperationalgrowthinemergingmarkets,particularlyinArgentina,Brazil,India,Russia,andVenezuela.
Weare,however,experiencingmarketpressuresinChinawhereourvolumeshaveslowedduetolowerdemandthatisbeingcompoundedbyshiftsinconsumerbehaviorsandtheemergenceofnewretailchannelsinthecountry.
Inafewminutes,Sandywilltakeyouthroughthestrategyandapproachforhowourconsumerfacingbusinessesareleveragingouruniqueconsumerinsightsandintegratingscienceanddifferentformsoftechnologytobettermeettheneedsofconsumersanddrivegrowth.
Beforewedothat,Iwanttoreiteratehowwe'renavigatingtheenvironmentalchangesbeforeusandhowwe'vestronglypositionedJohnson&Johnsontodelivercontinuedgrowth.
Asyouwellknow,everythingstartswithinnovationandaddJohnson&Johnsonwe'redoingthaton
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
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multiplefrontsandwe'recommittedtoworkingwithresearchersaroundtheworldtoensurewecontinuetooperatetheleadingedgeofscience,medicineandtechnology.
ThatapproachdrivesourenterpriseR&Dandthesignificantinvestmentswearemakingtobenefitpatientsandstakeholders.
Wehaveagoodbalanceofinternalandexternallysourcedinnovationsandacquisitionversusaccountedforjustunderhalfofoursalesgrowth.
We'realwaysactivelylookingfornewvaluecreatingacquisitionsanddealstocontinuethatsuccess.
Wealsoinvestedabout11.5%ofournettradesalesor$8.5billioninR&Dlastyearacrosstheenterprisetodiscover,inlicenseanddevelopinnovativenewproductsandyoucanseetheimpactreflectedinourportfolioandrobustdevelopmentpipelinewhichincludes25activeLateStageDevelopmentprograms,160plusearlystageprograms,andover70ventureinvestments.
Andinjusttwoyearsthere'salready90startupsworkinginourJlabswhichcreatestremendousaccesstonewideasandpotentialdownstreampartnershipsforthefuture.
Now,whenitcomestomakingsignificantR&Dinvestments,wemustalsofocusonmanagingthroughtheinherentcomplexitiesintheglobalregulatoryenvironmentinordertoensureourproductsareultimatelyabletoreachconsumers.
We'reencouragedbythestepsgovernmentsaretakingtoincreaseaccesstoqualityhealthcarefortheirpeopleandtoalsocreateandsupportamoreinnovationfriendlyenvironmentthroughdesignationsthatspeedthereviewandapprovaloftransformationalproducts.
We'vebenefitedfromthatwithImbruvicaandtodaywehavetwoothercandidatesinourpharmapipelinealreadydesignatedasbreakthroughtherapiesbytheFDA.
Atthesametime,wecanallagreethatgovernmentsaroundtheworldmustdomoretoprotectintellectualpropertyandensurefair,transparentandconsistentenforcementofregulationsgoverningthetradeofinnovativeproductsandwe'llcontinuetowatchandengageintheseissuesinthemorethan65countriesinwhichwedobusiness.
Globally,abouthalfourtotalyear-to-datesalescomefromcountriesoutsidetheUnitedStates.
Withstrongnationalandregionalmodelslikethosewe'veinstalledinChinaandSoutheastAsia,we'rebetterabletomaximizethebreadthofourportfolio,interactmoreeffectivelywithgovernmentsanddevelopcontractingstrategiesandgainconsumerinsightsthatareshapingourinternationalportfoliosandinformingR&Dandultimatelydrivinggrowth.
Andbyexecutingwithexcellenceinallthatwedo,we'veintroducedastrongcadenceofnewproductlaunchesoverthepastfiveyearsthattodayaccountforabout25%ofouroverallsalesandwe'retakingstepstoensurewe'reevenmoreeffectiveandefficientacrosstheenterprisebyinvestingingreaterusesoftechnologyandstreamliningourbackofficeprocesseswhichweexpectwillhelptofreeupabout$1billionthatwecaninvestbackintothebusinessby2018.We'realsocontinuingtomakestrategicdecisionsabouttheareaswe'regoingtoparticipateinormoveonfrom.
Aswestatedbefore,ourfocusisonareaswhereweareorwecanbenumberoneornumbertwoinaparticularareaaswellasonthoseproductsorbusinessesthatwillbedirectlycomplementary.
Ifwehaveanassetorabusinessthatdoesn'tmeetthosecriteria,we'vedemonstratedthatwewilldivestitandredirectourresourcestoaccelerateexistingprogramsortoacquirenewonesthatwethinkare
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
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ultimatelygoingtohelpmorepatientsandalsoaddmorevaluetoourenterprise.
Wealsoseethatourbroadbaseacrossthehealthcarespectrumisacompetitiveadvantagewhenthestrategieswecreateconsiderandwhereappropriateincorporateinsightsandinnovationsfromeveryaspectofouroperationstoattackdiseaseandimprovehealthoutcomes.
TheworkwearedoingwithIBMandAppledoesthisbycuttingacrosstheenterpriseandleveragingourscience,technologyandconsumerinsightstoempowerpatientsandcaregiverstohelpspeedthepostsurgicalrecoveryprocess.
Executingourstrategyultimatelycomesdowntopeopleandbyfocusingonthemandemphasizingourcredobasedpurpose,wedevelopedadeepbenchofextraordinarytalentwhoareaccountablefordrivingtheirbusinessesandwhoalsoensurewearetakingleadingroleswithintheindustryandworldmedicalcommunitytocombatglobalpublichealthissueslikeEbolaandHIV.
Now,justtosummarize.
Johnson&JohnsonisaCompanythat'sbuiltaremarkablelegacyandhasaveryexcitingfuture.
Healthcare,though,remainsoneofeverysociety'sgreatestchallengesandnothingaffectspeoplemorepersonallyoraffectscommunitiesandnationsmoredirectly.
Ourbusinessisstrongandyoucanseethatwe'recontinuingtomakeconsiderableinvestmentsininnovationandhavearobustpipelineoftrulytransformativeproductstoultimatelybenefitpatientsandthatwe'retakingactionstostrengthenourleadershippositionsinareasinwhichwecompete.
Withourtransparentandconsistentcapitalallocationstrategyweextendedourtrackrecordofdividendincreasesto53consecutiveyearsinAprilwhenwedeclareda7.1%increasetakingourquarterlypayoutupto$0.75pershareandhavereturnedabout70%ofourfreecashflowoverthepastdecadetoinvestors,outpacingtheS&P500in2014,aswellasoverthelastthree,10and20years.
Withthat,it'snowmydistinctpleasuretoturnthecallovertoSandyPeterson.
SandyjoinedJohnson&Johnsonjustovertwoand-a-halfyearsagoandisleadingasignificanttransformationacrossmajorcomponentsofourenterprise,includingourconsumerfacingbusinesses,enterprisesupplychain,qualityandIT,andshe'sbeenatremendousleaderheresincedayone.
Iwanttothankherandherteamforwhatthey'vealreadyaccomplishedforourbusinessandmoreimportantly,forwhattheywillcontinuetodotohelppatientsandconsumersworldwide.
Withthat,I'mpleasedtoturnthemeetingnowovertoSandy,andwe'llrejoinyouabitlatertotakeyourquestions.
SandyPeterson (GroupWorldwideChairman):
Goodmorning.
I'mhappytohavetheopportunitytotalkaboutourprogressinourconsumerfacingbusinesses,consumerdiabetessolutionsandvisioncare.
I'llalsodiscusstheevolutioninourapproachtotechnologyacrosstheenterprise.
Increasingly,asweleadthroughthedisruptionsandopportunitiesinglobalhealthcare,wearefusingthepoweroftechnologywiththepowerofsciencetodeliverimprovedoutcomesforpatients,consumersandcustomers.
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
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First,ourthreeconsumerfacingbusinesses.AsAlexsaidearlier,thefutureofthesebusinesseslookspromising.
Whiletheyareatdifferentstagesoftransformation,webelievethatthey'reallwellpositionedinattractive,growingglobalmarketsandwearedrivingscaleandgrowthineach.
Letmestartwithconsumer.OuriconicconsumerbrandsareJ&J'sfacetotheworld.They'rehowweareknownbymillionsaroundtheglobe.
Theyarefirstpointofentryintoemergingmarketssotheyreallyareveryimportanttotheoverallenterprise.
TheyareandwillincreasinglybeimportantcontributorstoJ&J'sfinancialperformance.
Demographictrendsandchangesinthewayconsumersmakehealthcaredecisionsarecreatingnewopportunitiesforourconsumerbusiness.
Ourconsumerexpertiseandinsightarehighlyvaluabletopayersandproviderswhichdifferentiatesusfromourcompetitors.
WeviewahealthyconsumerbusinessasagrowthannuityforJ&Jwithlessvolatilitythanothermarkets.
Asmanyofyouknow,welaunchedournewconsumerstrategyin2013.Wefocusedonstabilizingandrevitalizingthebusiness,remediatingqualityissuesinUSOTC,andbeingclearaboutwhereandhowtocompeteandwinaroundtheworld.
Weareexecutingsuccessfullyagainstthatstrategy.We'repleasedtosaythatwehaveremediatedandrelaunchedourUSOTCbusiness.Over80%ofourbrandshavereturnedtothemarket.Tylenolarthritiswilllaunchsoon.
We'vemadesignificantprogressinmeetingconsentdecreerequirements.
TheFDAhascertifiedourmanufacturingfacilitiesinPuertoRicoandLancaster,Pennsylvania.
WerecentlyhadasuccessfulFDAinspectioninfortWashingtonandareawaitingfinalnotification.
OurOTCbrandscontinuetobelovedbyconsumers,andwehaveregainedthetrustofourcustomers.
MostofourOTCproductsareendorsedasnumberoneintheircategoriesbyhealthcareprofessionals.
Tylenolremainsthenumberonedoctorrecommendedbrandforpainreliefandthebrandmostusedbyhospitals.Zyrtec,Children'sTylenolandchildren'sMotrinarealsonumberonerecommendedbrands.
LastyearourOTCportfoliogrewfourtimesthecategoryintheUS.Thatstrengthhascontinuedthisyear,with13%growthinthefirsthalfand16%inthelatestquarter.
Morebroadlyacrosstheconsumerbusiness,we'vemadesignificantprogressincreatingaworldclassbrandbuildingandmarketingorganization.
We'veglobalizedthemanagementof12megabrandsandarefocusedon11consumerneedsstates.
We'veexpandedthesebrandsintoyounewmarketsandareseeingstrongsharegainsinoralcare,beautyandOTCs.
Wearegrowing11%year-to-dateandgainingshareinfeminineprotection.Forexample,inplaceslike
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
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India,Germany,SouthAfrica,andPoland.Andwe'verevitalizedouriconicBand-Aidbrand.
IntheUS,Band-Aidconsumptiongrew6.3%andwegained2sharepointsthankstodecoratedBand-Aidsandcommercialinnovation.
Asweinvestinourglobalbrandsandourtopregionalbrandsandinourprioritymarkets,we'rebuildingnewmarketingcapabilitiessuchasdigital.Wedoubledourdigitalmediainvestmentanddigitalchannelswithemphasisonsocialandmobile.
Today,40%ofourdigitaladspendingisviamobile,andmorethan90%ofourFacebookadsareserveduponeithersmartphonesortablets.Thisglobalcentrallyledmarketingapproachisbringingourbelovedbrandstotheirfullpotential.
YoumayhaveseentheresultsofthenewmodelcometolifeintheJohnson'sBabySoMuchMorecampaign,thefirstglobalcampaignforouriconicbabyequity.ThecampaignlaunchedinsevenleadmarketsinFebruaryandisrolledouttomorethan20markets.
Bythethirdquarterofthisyear,allmajormarketswilllaunch.Earlyresultsshowsequentialconsumptiongrowthandshareimprovement.
IntheUSalone,throughMay,Johnson'shasgrown2.4sharepointssincethelaunch.Ourproductpipelineinconsumerisalsoquiterobust.Wearefocusedondevelopingsciencebased,clinicallyvalidatedproducts,groundedindeepconsumerinsightsandmostimportantlyendorsedbyprofessionals.
Wehave20keyproductlaunchesthisyear.
Forexample,Neutrogenahydroboost,MotrinliquidgelsandthelaunchofthenewListerinewhiteningformulainEurope,theMiddleEast,AfricaandLatinAmerica.
ImprovingoursupplychainhasalsobeenanothercriticalfocusintheconsumerbusinesswithastrongemphasisontheUSOTCconsentdecree.
Acrosstheenterprise,wehavemaderemarkableprogressintransformingoursupplychaintoensurewedeliverquality,customerreliability,andbenchmarkprofitability.
WecontinuetoseethebenefitsofintegratingoursupplychainorganizationtodriveperformanceimprovementsineveryJ&Jsegment.
Aswelookaheadinconsumer,wewillcontinuetorebuildourcompetitiveedge.
Theunderlyingenvironmentaldrivers,demographics,thedevelopingmy.Growingconsumerneedforourproductsandincreasedopportunitytohelpmorepeoplewithhealthier,morevibrantlives.
Acrossthebusiness,wearefocusedondeliveringabovemarketgrowthandbenchmarkprofitability.
ConsumerIBTmarginbeforespecialitemsandintangibleamortizationexpensehasincreasedfrom14.1%in2013to15.4%in2014andwe'llcontinuetoimproveprofitabilityuntilweachievebenchmarklevels.
Ourorganicsalesadjustedforcurrencyandexcludingacquisitionsanddivestituresgrewapproximately4%inthefirsthalf.
Sincemid-2013,wehavegrownorganicsalessteadily.
Lastyearwegrewshareforthefirsttimeinanumberofyearsandwe'recommittedtocontinuingthattrend.
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
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Wemanageourconsumerbrandportfolioactivelywithaneyetowardstargetedexpansionandkeygeographiesinneedstatesthroughfocusacquisitionsandlicensingagreements.
ArecentexampleincludestheacquisitioninIndiaofORSO.
Theintersectionofchangesinthehealthcarelandscape,disruptionsintheretailenvironment,andchangesinconsumerexpectationsandbehaviorscreatesanopportunityJ&J'sconsumerbusinessiswellsuitedtocapitalizeon.Now,letmeturntoourdiabetessolutionsbusiness.
Diabetesisthefourthlargesthealthcarecategoryintheworld.
Globally,thetherapiesanddevicesmarketisgrowingat5%.50%ofpatientswithdiabetesareunfortunatelyundiagnosedornotincontrol,whichcreatesanopportunityforustogrowandanimportantopportunitytoimpactpatients'lives.
Giventhepowerofouronetouchbrand,ahighlyinnovativepipeline,strongcommercialexecution,andoperationalefficiency,wearewellpositionedtodeliverprofitablegrowthindiabetes,despitenegativeindustrypricingdynamics.
Inbloodglucosemonitoringweholdthenumberonevalueandvolumepositionsinourninetopmarkets.
Thisyear'sonetouchplatformlaunchisourmostsuccessfullaunchinthelasttwodecades.
IntheUSalone,volumesharegrew3points.
Wehavestrongpenetrationinemergingmarketswheretype2diabetesisgrowingandwehavesimplifiedourportfoliodramatically.
Reducingthenumberofstripplatformsfromfivetotwo,andmodulemeterofferingsfrom14tothree.
Wehavereducedourfacilityfootprint,slashedthenumberofSKUsbymorethan55%andtakensignificantcostsoutofthebusiness.
Ininsulindelivery,wearegrowingatmarketleadingrates,upoperationally32%year-to-dateworldwide,drivenby.In2015,wetookoverthenumbertwoshareposition.
Inaddition,we'remakingexcellentprogressinpreparingforthelaunchof.Anewproductwhichwillcreateanentirelynewcategory.
Isawearabledisposableinsulindeliverypatchthatmeetstype2patient'sneedfordiscretion,convenienceandcontrol.
Wearebeginningtheclinicaloutcomestudyandanticipateenteringthemarketnextyear.
Lookingforward,wearedevelopinginsightdriven,marketappropriateinnovationsacrosstheBGMandinsulindeliveryplatformsinareassuchasdigitalsolutions,continuousglucosemonitoring,andautomatedinsulindelivery.
Wewillcontinuetoleverageenterprisecapabilitiesandexpandtargetedstrategicpartnerships.
Greatexamplesofthisincludeourcollaborationwithbiomedicalandhospitalsystemsanddeckscomwithcontinuousglucosemonitoringpumps.
Weareparticularlyenthusiasticaboutthepotentialtoimprovetobetterselfmanagewhilecreatingvalueforhealthcareprovidersandhealthcaresystems.Now,letmeturntovisioncare.
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
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Eyehealthremainsoneofthelargest,fastestgrowingandmostunderservedsegmentsinhealthcare.Visioncorrectionrepresentsmorethanhalfofthatmarketwithcontactlensesrepresentinga$7billionsegment.Themarketsareespeciallyunderserved.
Johnson&Johnson'svisioncarehasalonghistoryasaglobalmarketleaderincontactlenses.
Oursuccesswasbuiltoncategoryleadinginnovation,strongrelationshipswiththeeyecareprofessional,andthemostrecognizedbrandequityinthecategory.
It'snosecret,however,thatwefacecapacityandportfolioissuesinvisioncarein2012and2013.Atthesametime,competitionintensifiedandconsumerpreferencesshifted.
Themarketstructurehasevolvedinresponse,drivingincreasedemphasisone-commerceandincreasedpricecompetitionbetweenchannels.
Thesedevelopmentshavereducedengagementforeyecareprofessionalswhoareanimportantingredientinstrongcategoryhealth.
Despitethis,wecontinuetoleadthecategorygloballyby11points.Wecontinuetogrowatdoubledigitsinourleademergingmarkets.
BRICmarketoperationalsalesareupdouble-digit,drivenbycontinuedstrongperformanceofRussia,Brazil,andChina.
Lastyearweinstitutedaone-timepriceresettobringmorevaluetoconsumersinclosepartnershipwitheyecareprofessionalsinthetradeintheUSandJapan.
WewillanniversarythiseventinQ3asAlexsaidearlier,andshouldseerevenuemomentuminthesecondhalf.
ShareisstabilizedintheUSforfiveconsecutivemonths.
Weareoutperformingthemarketinvolumeinourtoptwostrategicbrands,[accueviewowe].Andourequitymeasureswitheyecareprofessionalsimproved.
InQ2alonewegrew15%operationallyinJapandrivenbystrongperformanceby.Andtherecentlaunchofonedaydefineaswellasfavorablecomps.
OurR&Dstrategyleveragesconsumerexpertiseandsciencebasedclinicallysupportedmanufacturingenabledinnovationandwehavebuiltarobustmultigenerationalpipeline.
Wearelaunchingourfirstmajorinnovationsinfiveyearswithonedaydefine,onedaymultifocal,andovernight.
Youwillseeusaccelerateinnovationinhighgrowspecialtysegmentssuchasbeauty,andastigmatism.Wewillsustaininnovationinourlargestcoreplatforms,sphericalreusableandspheredailydisposable.
Weanticipateatleastonemajorproductlaunchineachofthenextthreeyears,includinginnovationswiththepotentialtodisruptthecategory.
Visioncareusedthenewmarketingprocessdevelopedinconsumertorelaunchtheiconicbrand.
Thenewglobalcampaignwhichwentlivelastweekisdesignedtodriveconsumerengagementandcategorygrowthandensurethedifferentiatedpositionwitheyecareprofessionals.
Ourworldclasssupplychainisacompetitiveadvantageinvisioncare.
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
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Ourmanufacturingteamproducedapproximately4billionlensesin2014.Wearecontinuingtoinvestincapacityexpansionwhileoperatingwith99.6%customerservicelevels.
Thoughwearestilltheythethroesofrejuvenatingoureyecarebusiness,wehavemadeconsiderableprogresswhichwillcontinuethisyearandintothenext,aswebringourcorecontactlensbusinessbacktomarketleadinggrowth,wewillalsopursueouraspirationsinthebroadereyehealthmarket.
AlexstartedthismorningbytalkingaboutthepowerofJohnson&Johnson'sbroadbaseinhealthcare.
Ourconsumerfacingbusinessesareacriticalcontributortothatbroadbase.
Whileconsumer,diabetessolutionsandvisioncareareatdifferentstagesintheirtransformationsandrepresentuniqueopportunities,wearedrivingscaleandgrowthinallofthem.
BeforeIturnitovertoDominic,I'dliketosharesomeperspectiveonhowJohnson&Johnsoniscapitalizingonthewaytechnologyisreshapingtheentirehealthcarelandscape.
Theconsumerizationofhealthcare,wearablesandmobileappsaregivingpatientsunprecedentedaccesstohealthinformation.
Physicians,regulatorsandpayersareleveragingbigdata,analyticsandrealworldevidencetopersonalizecare,understandproductsafetyandefficacy,anddriveimprovedoutcomes.
Artificialintelligence,machinelearningandadvancedsensorsarecreatingnewopportunitiestotakeadvantageofthebestclinicalandwellnessexpertise.
Weareatatippingpointwheretechnologyisbecomingthemediumthroughwhichhealthcarecanbecomeamoreeffectiveandefficientsystem.TheopportunitiesthiscreatesforJohnson&Johnsontobecomeahealthcaretechnologyinnovatorareimmense.
Wehaveidentifiedkeytechnologyareasthatwillaccelerategrowthandareactivelypursuingprogramsandpartnershipsinthoseareas.
TherelationshipswithGoogleandwithIBMandApplethatAlexmentionedaregreatexamples.Thereareothersintheworksandmoretocome.WeareworkingwithandtalkingtonearlyeverymajortechnologyCompanyandmanyearlystagecompanies.
WearecollaboratingwithretailerslikeWalgreensandCVSwherecareisincreasinglydelivered.
HealthplanslikeAetnaandKaiserPermanenteandhealthsystemssuchasJeffersonhealthandpremier,toleveragetechnology,digitaltools,andourhealthandwellnessexpertise.
WefindthatJohnson&Johnsonismostoftenthepartnerofchoicefortechnologyproviders.
Wehavethepatientandconsumerinsight,theclinicalandbehaviormodificationexpertise,andtheregulatoryexperiencethatcancombinewithtechnologytotransformthecontinuumofcare.
ThisisparticularlyexcitingwhenyouthinkabouttheworkthatwearedoingwithpayersandproviderasinourworkwithIBMandApple.
WearecreatinganecosystemembeddedinhospitalnetworkswhichgivesustheabilitytointegratetherightpatientdatawiththerightrecordandtherightclinicaloutcomeinthehealthcareITinfrastructure.
I'vebeeninhealthcarelongenoughtohaveheardoverandoveragainthattechnologywasgoingtodisrupttheindustrybeyondrecognition.
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
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Buttoday,maturingtechnology,scientificadvancesandglobalhealthcarereformarecombiningtomakedisruptionareality.
Today,technologyisintrinsictothebusiness.
Astheworld'smostbroadlybasedhealthcareCompany,weareuniquelypositionedtobetheCompanythatconnectsthefragmentedworldofhealthcare.
Nowletmesummarize.Ourconsumerfacingbusinessesareexecutingwellagainstfocusedstrategies.Theyaredemonstratingresults,improvingprofitabilityandgrowing.
Theyhavestrongpresenceintheworld'sfastestgrowingmarketsandarebuildinginsightledinnovationpipelines.
Eachbusinessisstrengtheningitsbrandbuildingcapabilities,activelymanagingitsportfolio,andleveragingtechnologiesinwaysthatincreaseefficiencyandcreatecompetitiveadvantage.
AcrossJ&J,weareusingtechnologytounlockthepoweroftheenterprise,toimprovepatientandfinancialoutcomes,inwaysthatwillcreatevalueforourcustomersandultimatelyforourshareholders.
AndwearebuildingwhatIfirmlybelieveisthebestteamofleadersintheindustry.
Withthat,I'llturnitovertoDominicandIlookforwardtoansweringyourquestions.
DominicCaruso (V.PFinance,CFO):
Thanks,Sandyandgoodmorningeveryone.
Asyou'veheardonthecall,we'recertainlypleasedwiththeprogresswecontinuetomakeintheexecutionagainstourprioritieswhichisreflectedinthesolidunderlyingfinancialresultswehaveachievedthusfarin2015.AndasAlexandSandydiscussed,wearewellpositionedforcontinuedgrowthinthisdynamichealthcareenvironment.
I'lltakethenextfewminutestoreviewourfinancialperformanceinthesecondquarterandwillalsothenprovideguidanceforyoutoconsiderinrefiningyourmodelsforthebalanceoftheyear.
Turningtothenextslide.
Youcanseeourcondensedconsolidatedstatementofearningsforthesecondquarterof2015.Asweexpected,andasmanyofyouonthesellsidealsoreflectedinyourupdatedmodels,directcomparisontossstooursecondquarterof2014arechallengingduetotheexceptionaluptakeofO lysiothatwerecordedlastyearaswellascurrencyheadwindsandtheimpactofnothavingOrthoClinicalDiagnosticsinourresultsfor2015.Oursalesresultsforthesecondquarterof2015wereessentiallyinlinewithanalystestimatesasreflectedinFirstCall.
Onanoperationalbasis,excludingtheimpactofacquisitionsanddivestitures,andexcludingtheimpactofHepCproductssaleswereup5%forthequarter.
Pleasenowdirectyourattentiontotheboxsectionoftheschedulewherewehaveprovidedearningsadjustedtoexcludespecialitemsandintangibleaamortizationexpense.
Adjustednetearningsof$4.8billioninthequarteraredown6%comparedtoQ22014,andadjustedearningspershareof$1.71versus$1.78ayearagoaredownapproximately4%.However,theadjustedEPSresultsexceededthemeanoftheanalystestimatesaspublishedbyFirstCall.
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
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Andexcludingthenetimpactofcurrencytranslation,ouroperationalearningspersharewas$1.90orup6.7%.
Therewerenosignificantnon-GAAPadjustmentsinthe2015secondquarterotherthantheexclusionoftheexpenseforamortizationofintangibleassets.
Nowlet'stakeafewmomentstotalkabouttheotheritemsonthestatementofearnings.
Aswehavesaidbefore,wewoulduseanygainfromdivestituresin2015tooffsetthelowerearningsimpactofnothavingtheOlysiosalesuptakewehadin2014,andtoprovidesomeoffsettocurrencyheadwindswhilealsoallowingcontinuedinvestmentforfuturegrowth.Thisquarter'sresultsreflectjustthat.
Costofgoodssoldwas90basispointslowerthanthesameperiodlastyear,mainlyduetofavorableproductmix,somewhatoffsetbycurrencyimpacts.
Selling,marketingandadministrativeexpenseswere30.3%ofsalesor220basispointshigherascomparedtothesecondquarterof2014.Weareinvestinginaresponsiblemannerandtheaabsolutespendingleveliscomparabletotheprioryear,mainlyduetotheimpactofcurrencyaswecontinueinvestmentspendingbehindourkeybrandsonaglobalbasis.
TheprioryearpercenttosaleslevelwasartificiallylowersincetherewasverylittlespendinginrelationtoOlysiosales.
Ourinvestmentinresearchanddevelopmentasapercentofsaleswas12%,and170basispointshigherthantheprioryearaswecontinuetomakeimportantinvestmentsinourpipelineforfuturegrowth.
Interestexpense,netofinterestincome,wassimilartolastyear.
Otherincomeandexpensewasanetgainof$900millioninthequarter,comparedtoanetchargeof$200millioninthesameperiodlastyear.
Excludingspecialitemsthatarereflectedinthislineitem,otherpincomeandexpensewasanetgainofapproximately$1.1billioncomparedtoanetgainof$300millionintheprioryearperiod.
Thisquarterwerecordedthegainonthepreviouslyannounceddivestitureofthenewproduct.
Excludingspecialitemsandintangibleamortizationexpense,theeffectivetaxrateforthesixmonthperiodwas22.3%,comparedto21.1%inthesameperiodlastyear.
AsInotedduringourcallinApril,theeffectivetaxratethisquarterisagainhigherthanourguidancefortheyearasitdoesnotyetreflectthebenefitoftheR&Dtaxcreditasthatlegislationhasnotyetbeenpassed,althoughweexpectthatitwillbe.Theeffectivetaxrateishigherin2015ascomparedto2014asaresultofthemixofearningsbeinghigherintheUnitedStatesthisyear.
NowI'llprovidesomeguidanceforyoutoconsiderasyourefineyourmodelsfor2015.BeforeIdiscusssalesandearnings,Iwillfirstgivesomeguidanceonitemsweknowaredifficultforyoutoforecast,beginningwithcashandinterestincomeandexpense.
Attheendofthequarterwehadapproximately$15billionofnetcash,whichconsistsofapproximately$34billionofcashandmarketablesecurities,andapproximately$19billionofdebt.
IaampleasedtoreportthatwecompletedoursharerepurchaseprogramtohelpoffsettheongoingimpactoftheOCDdivestiture.
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
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Forpurposesofyourmodels,andassumingnomajoracquisitionsorothermajorusesofcash,I'dsuggestyouconsidermodelingnetinterestexpenseofbetween$450millionand$550million.
Thisisunchangedfromourpriorguidance.
Regardingotherincomeandexpense,asareminder,thisistheaccountwherewerecordroyaltyincomeaswellasgainsandlossesarisingfromsuchitemsaslitigation,investmentsbyourdevelopmentcorporationaswellasdivestitures,assetsalesandwrite-offs.
Wewouldbecomfortablewithyourmodelsfor2015reflectingnetotherincomeandexpenseexcludingspecialitemsaasagain,rangingfromapproximately$2.2billionto$2.3billion.
Thisisslightlyhigherthanourpreviousguidance.
Asareminder,thisincludesthegainfromthedivestitureoftheUSrightstopainmedicineaswellastheanticipatedgainonthependingdivestitureoftheCordisbusinesstoCardinalHealthwhichweexpectwillclosetowardtheendof2015,subjecttoregulatoryclearancesandothercustomaryclosingconditions.
Wehavealsorefinedourestimatesfortheitemsinthisaccountnowthatwearehalfwaythroughtheyear.
AsIalsonotedinApril,theguidanceforotherincomeandexpensewillflowthroughtoincreasedoperationalearningsasweexpecttousethisotherincometocompensateforthedecreasedincomefromOlysioin2015ascomparedto2014,aswellastohelpmitigatesomeoftheimpactofstrongforeigncurrencyheadwindsthisyearwhilewealsocontinuetoinvestinourcorebusinessandopportunitiesforfuturegrowth.
Andnowawordontaxes.
Ourguidancefor2015anticipatesthattheR&DtaxcreditwillberenewedbyCongress,althoughthathasnotyetoccurred.
Wewouldthereforebecomfortablewithyourmodelsreflectinganeffectivetaxratefor2015excludingspecialitemsofapproximately21%to22%,consistentwithourpreviousguidance.
IftheR&Dtaxcreditisnotapproved,thatwouldnegativelyimpactthetaxratebyapproximatelyhalfapercentfor2015.Nowturningtoguidanceonsalesandearnings.
Consistentwithourpreviousguidanceforsales,ourassumptionforProcritisthattherewillnotbebiosimilarcompetitionin2015.WealsodonotanticipategenericcompetitionthisyearforRisperdalConstaorInvegaSustennabutweareexpectingageneric.
AsexpectedwehaveseenadditionalbiosimilarcompetitionforRemicadeinEurope,followingthepatentexpirationinmanycountriesinFebruaryofthisyear.
Aswe'vedoneforseveralyears,ourguidancewillbebasedfirstonaconstantcurrencybasisreflectingourresultsfromoperations.
Thisisthewaywemanageourbusiness,andwebelievethisprovidesagoodunderstandingoftheunderlyingperformanceofourbusiness.
WewillalsoprovideanestimateofoursalesandadjustedEPSresultsfor2015withtheimpactthatcurrentexchangeratescouldhaveonthetranslationofthoseresults.
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Consistentwithourpreviousguidance,wewouldbecomfortablewithyourmodelsreflectinganoperationalsalesincreaseonaconstantcurrencybasisofbetween1%and2%fortheyear.
Thiswouldresultinsalesfor2015onaconstantcurrencybasisofapproximately$75billionto$76billion.
Additionally,bywayofcomparisontohowwe'vedescribedoursalesresultsin2014,ouroperationalsalesgrowthfor2015excludingtheimpactofallacquisitionsanddivestitureaswellastheimpactofhepatitisCproductswouldbeapproximately6%,ahigherlevelofgrowththanthecomparable5%for2014.Justtonote,wearemonitoringthesituationinGreeceasthecountryconsidersitspathforwardeconomically.
Wedonotanticipateanysignificantnegativeimpacttooursalesresultsfor2015nortoourearningsfor2015unlessthereisasignificantchangeinthecurrentexpectedresolution.
Asoflastweek,theEurowaslowerbyapproximately17%ascomparedto2014averagelevelsandthedollarhasstrengthenedrecentlyversusvirtuallyallmajorcurrencies.
Andthoughwearenotpredictingtheimpactofcurrencymovementstogiveyoutheideaofpotentialimpactonsalesifcurrencyexchangeratesweretoremainwheretheywereasoflastweekforthebalanceoftheyear,oursalesgrowthratewoulddecreasebynearly7%,reflectingtheweakeningoftheyearrowandothermajor.
Underthisscenario,wewouldexpectreportedsalestoreflectthechangeintherangebetweennegative5andnegative6%fortotalexpectedlevelofreportedsalesofbetweenapproximately$70billionto$71billion.
Thisisconsistentwithourpreviousguidance.
Andnowturningtoearnings.Asignificantfactorimpactingourearningsguidancefor2015istheimpactofcurrencymovementsontransactions.
Andalsotheyarehedged,itisstillsomewhatnegativelyincrementalversustheprioryear.
Weexpecttransactioncurrencyimpactstobenegativetoourgrossprofitbyapproximately60basispointsin2015ascomparedto2014.WewouldbecomfortablewithadjustedEPSguidanceinarangebetween$6.70to$6.80pershareonaconstantcurrencybasis,reflectingoperationalorconstantcurrencygrowthrateof5%to6%.
Thisishigherthanourpreviousguidanceaswehaveincreasedthelowerendoftherangereflectingsomeoperationalimprovementsinthebusinessandourconfidenceatthispointintheyear.
Again,we'renotpredictingtheimpactofcurrencymovementsbuttogiveyouanideaofthepotentialimpactonearningspershare,ifcurrencyexchangeratesforallof2015weretoremainwheretheywereasoflastweek,thenourreportedadjustedEPSwouldbenegativelyimpactedbyapproximately$0.60persharewhichisconsistentwithourpreviousguidance.
Therefore,ourreportedadjustedEPSwouldrangebetween$6.10to$6.20pershare.
Atthisstageintheyear,wewouldbecomfortablewithyourmodelsreflectingthemidpointofthisrangewhichishigherthanourpreviousguidance.
Soinsummary,asyouupdateyourmodelsfortheguidancethatIjustprovided,Iwouldliketomakeafewkeypoints.
Althoughoperationalsalesgrowthisexpectedtorangebetween1%and2%,wearepleasedtonotethatwhenexcludingtheimpactofacquisitionsanddivestituresandhepatitisCproducts,ouroperational
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
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salesgrowthatthemid-pointofourguidanceisasolid6%forthefullyear2015ascomparedto5%for2014.
Withregardtoearnings,onaconstantcurrencybasisourguidanceonoperationalEPSgrowthisstrongandintherangeofbetween5%and6%.Finally,asweexecuteonourgrowthplans,we'recontinuingtomakeportfoliochoicesandinvestmentsinourbusiness,particularlyinresearchanddevelopment,aswecontinuetobuildourpipelinesacrosstheenterprisewhichwillpositionusforsustainedfuturegrowth.
AndnowI'dliketoturnthingsbacktoLouisefortheQ&Aportionofthemeeting.
Louise.
LouiseMehrotra(V.P-InvestorRelations):
Thankyou,Dominic.
Holly,canyoupleasegivetheinstructionsfortheQ&Asession.
QUESTIONS&ANSWERS
Operator :
(OperatorInstructions).
YourfirstquestioncomesfromGlennNovarrowithRBCCapitalMarkets.
GlennNovarro (Analyst-RBCCapitalMarkets):
Goodmorning.
QuestionforAlex.
Inyourfirstcoupleyears,Alex,you'vepaintspentalotoftimewithdivestitures,divestingcardiodevising.
Consumerbrands.Asyoulookattheenterprisenow,doyouthinkwearefinishedwithdivestitures,questionone.
Andquestiontwo,dowenowenteraperiodwheretheCompany'smorefocusedonacquisitions?
Thankyou.
AlexGorsky(ChairmanoftheBoardofDirectors,CEO):
Goodmorning,Glenn.
Alexhere.Thankyouverymuchforyourquestion.
Threeyearsagowhenwestartedlookingatourstrategiesgoingforward,wetriedtooutlineaveryclearpathaheadthatwouldreallyconsistofmultiplecomponents.
Oneisobviouslycontinuingtoinvestinourorganicbusinesses,bothinsalesandmarketingandresearchanddevelopment,andIthinkwedemonstratedthatinspiteofalotofdifferentputsandtagsthattakesthatwecontinuetodothatinaresponsibleway.
AsDominicoutlinedearlierwhenhewastakingyouthroughtheP&L.
Anareawherewedidhavealotoffocuswasonmakingsurethatourbusinesseswerecompetitiveandof
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coursewetriedtobeveryclearinourcriteriatherethat,look,wewanttobenumberoneornumbertwointhemarketplace.
Wewanttohaveaclearinnovationortechnologypathtoreallyhelpingpatientsorconsumers.
Orveryimportantly,wewantedthebusinesstobecomplementarytosomethingelsethatwe'redoinginanotherareaoftheenterpriseandofcoursefundamentallybeastrongbusiness.
Andiftheydidn'tmeetthosecriteriathenofcoursewe'dconsiderotheroptionswheretheymaybebetterservedinsomeoneelse'shands.
Asyou'venotedwe'vedemonstratedthatwe'rewillingtodothataswell.Wethinkthat'sanongoingprocessinthebusiness.
Wewouldexpectinabusinessoursizeinexcessof$70billion,involvedinnumerousplatforms,thatthat'ssomethingthatyou'llseeaspartofournaturalcadenceandflowgoingforward.
Butclearly,we'realwaysalsointerestedingrowthopportunities.
Andwhenweseestronginnovationsthatreallymakeadifferenceforpatientsthatalsowherewefeelitoffersagreatcomplementtooneofourexistingfranchisesorfranklyaplatformforsignificantgrowthintothefuture,we'vegotthebalancesheet.We'vegotthewherewithaltomakethoseinvestments.That'salwaysapriorityforusandwillremainsointothefuture.
GlennNovarro (Analyst-RBCCapitalMarkets):
Justasafollow-uptothat,ifyoulookatthepipelineofM&Apotential,numberone,wouldyoucallthepipelinemeaningful?
Inotherwords,there'salotofrichtargetsoutthere.Andthenasyoulookatthesetargets,whatdoyouseeintermsofthevaluationofthesetargets?
Arethesetargetsgettingstretchedandisthatmaybeoneofthereasonswhyyouhaven'tdoneasmuchM&Ahereinhadthelastfewyears?Thankyou.
Unidentif iedCompanyRepresentative :
No,Glenn.Thankyou.
WedofeelthatthereareseveralsignificantopportunitiesreallyacrosseachoneofoursegmentsthatofferpotentialforgrowthandthatareconsistentwiththestrategicoutlinethatImentionedearlier.
Atthesametime,Ithinkwedemonstratedthatwewanttobethoughtfulanddisciplinedaboutourapproachandweintendtocontinuethatpathgoingforward.
Unidentif iedCompanyRepresentative :
Thankyou.
Nextquestion,please.
Operator :
YournextquestioncomesfromthelineofKristenStewartwithDeutscheBank.
KristenStewart (Analyst-DeutscheBank):
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
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Goodmorning,everybody.
Iwasjustwondering,comeMickifyoucouldwalkusthroughwiththedispositionofCordiskindofwhatyou'reassumingintermsoftimingofthesaleofthebusinessandthenthedilution,howweshouldthinkaboutthatshouldwethinkaboutthatsimilarwiththeOCDbusinesstheytermsoftheuseoftheproceedsperhapswithanotherroundofrepurchasetooffsetdilutionagainorjustkindofhowwe'rethinkingstillaboutcardiovascular.
Unidentif iedCompanyRepresentative :
Sure,Kristen.
Well,weexpectthattheCordisdivestiturewillcloseinthelatterpartoftheyear.
Westillhavesomeregulatoryapprovalsandcustomaryclosingconditions,sowewouldexpectthattowardtheendoftheyearthat'sbeenconsistentwithourpreviousdiscussion.
Nothing'schangedthere.ThedilutionofnothavingCordisaspartofthebusinessisnotthatsignificant,quitefrankly,notasmuchasitwasforOCD.
Asyouknow,thatbusinessafterweexitedthedrug-elutingextentbusiness,arelativelysmallportionofourbusiness,andthenwithrespecttouseofproceeds,aswedotypicallywhenwedodivestitureswewaitafterthetransactionsarecomplete,lookatotheropportunitieswehavefortheuseofcashandthenmakeourdecisionsthenasweprepareourplansforthecomingyear.
Soasofnow,Ireallycan'tcommentonwhatwemightdowithanyoftheproceeds.
AlexGorsky(ChairmanoftheBoardofDirectors,CEO):
Kristen,thisisAlex.
Ijustmightalsoaddthatcardiovascularremainsanareaofstrategicimportanceforus.WehaveaverystrongBiosenseWebsterbusiness.
Ifyoulookatthequarterlyperformanceforthesecondquarter,onceagaindouble-digit.
Ithinkthisreflectsalmostthreeorfouryearsnowofconsecutiveimprovementsinthatperformanceandaverysimilarlevel,agreatflowofnewtechnologiesthat'sreallymakingadifferenceforpatients.
Wealsothinkcardiovascular,look,itstillremainsaglobalhealthcareissuewithalotofinnovations.Soit'sanareawhereweremaininterestedandwestillfeelwehaveverysolidfootingwithourBiosenseWebsterEPbusiness.
KristenStewart (Analyst-DeutscheBank):
GotitandthenjustmaybeifyoucouldgiveusalittlemorecolorjustonRemicade.
Iknowthat'sobviouslybeenakeyconcernofinvestors,justwhatyou'reseeinginthequarterandkindofexpectationsaheadjustwithrespecttobusinessoverinEuropewithbiosimilars.
Unidentif iedCompanyRepresentative :
Sointhequarter,Kristen,wehadintheexportsales,weactuallyhadaninventorychangethatnegativelyimpactedthereportedresultsthereforthepharmaceuticalgroupbyabout2%.Whatwe'reseeinginEuropeisasexpected.
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
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SoforthecountriesthatwentoffpatentinFebruary2015,we'reseeingaboutamarketshareforthebiosimilarsinthemid-singledigits,soasexpected.
KristenStewart (Analyst-DeutscheBank):
Perfect.Thankyou.
Operator :
YournextquestioncomesfromthelineofMikeWeinsteinwithJPMorgan.
MikeWeinstein (Analyst-JPMorgan):
Hi.Goodmorning.
Letmeturntothepharmasideforaminute.IthinktwoproductsthatpeoplearefocusedoninthefirsthalfoftheyearforimpactofcompetitionwereStelaraandInvokana.
Invokanalookslikemomentumhascontinuedandcontinuestolookfantastic.Stelaralookslikeitslowedthisquarter.Socouldyoujustcommentonboth?
AlexGorsky(ChairmanoftheBoardofDirectors,CEO):
Yeah,Mike.Alex.WestillseeStelaragrowthatover15%.
StronggrowthintheUSandparticularlystronggrowthoutsidetheUnitedStatesatalmost27%.
Therewasaslightsequentialdecreaseinsharewe'reprojectingbutoverallifwelookatthecompetitiveprofileoftheproduct,howwe'redoing,combinedfranklywithouroverallfranchisepresencethatweseeinthisarea,weremainreallyconfidentinit.
MikeWeinstein (Analyst-JPMorgan):
AndanycommentsonInvokana?
AlexGorsky(ChairmanoftheBoardofDirectors,CEO):
Invokanathesame.Ithink,look,we'vecontinuedtohighlighttheprofile.We'vegotgreatreimbursement,wellinexcessof50%to60%inbothcommercialaswellastheMedicaresideofthebusiness.
We'vecontinuedtoseestrongTRxtrends,bothinprimarycareaswellasendocrinology.
Sooverall,we'reseeingstronguptakeandwethinkit'sabigopportunity,Mike.
MikeWeinstein (Analyst-JPMorgan):
Okay.Alex,whileI'vegotyouhere,it'sbeenthreeyearssinceyouguysclosedtheSynthesacquisition.
I'msureasyoucommentedyou'renotthrilledbythefirsthalfperformanceintraumaandinspine.Socanyoujusttalkalittleabouthowyou'refeelingaboutthatdealandwhatitwilltaketogetitbackontrack.Thanks.
AlexGorsky(ChairmanoftheBoardofDirectors,CEO):
Sure,Mike.Thanksforthequestion.
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Look,overallweabsolutelybelieveitwastherightmovetobringSynthesinandcreatethelargestandmostdiversifiedorthopedicsCompanyandwhenwereflectback,therehadbeenchangesthathavetakenplaceinthemarket.
Oneisjustthemarketgrowthacrossallthesesegments.Ifyourememberbackin2008,2009,2010,wesawhighsingledigitgrowthreallyforhips,knees,trauma,aswellasspine.
Thathaschangedsignificantly.We'renowseeingthatinthe3%to4%range.Iampleasedwiththeperformanceoverallthatwe'veseenthroughtheintegration.
Wheneveryoubringtwolargeorganizationstogether,there'salwaysalotofmovingpiecesbutIthinkoverthelastthreeyearsifyoutakealookattheoveralldisruptionandthewaythatwe'vebeenabletomanageit,Ithinktheteamhasdoneaverygoodjobandnowwe'rereallyfocusedonwhatdowedotoensurethatwe'rebestpositionedforthefuture.
Andfrankly,we'redoingitatatimewhenalotofourcompetitorsarejustgettingreadytogothroughasignificantamountofintegrationandtransition.
Andthisiswherewe'reexcited.AndIthinkitstartswithinnovation.We'vehadanicecadenceofinnovation.
Infact,we'reinthemidst--wejustlaunchedtheTFNA,thetransfemoralmillintrauma.
Wethinkwillbea--thatpartofthebusiness.
IntheUSwewereencouragedbytheperformancethatwesawinkneesandhipsandgrowthrespectivelyforthequarter.
AndalsogoingforwardIthinkwe'realsoquiteexcitedabouttheopportunitytoworkwithcustomersinnew,uniqueanddifferentwaysacrossthatportfolio.
AndIalsothinkit'sfairtosaythatallthoseareaswe'regoingtocontinuetolookforwaystodrivethatbusinessthroughinnovationbutalsothroughincreasingoureffectivenessandefficienciesacrossallareasaswell.
SoIthinkwe'repleased.
We'renotsatisfied.
There'smoreworkthatweneedtodoandthat'swherewe'refocusedrightnow.
MikeWeinstein (Analyst-JPMorgan):
Thanks,Alex.
LouiseMehrotra(V.P-InvestorRelations):
Nextquestion,please.
Operator :
YournextquestioncomesfromthelineofLarryBiegelsenwithWellsFargo.
LarryBiegelsen (Analyst-WellsFargo):
Goodmorning.Thanksfortakingthequestions.
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Twoclarifications.Ontheutilizationcommentsaboutthefourthconsecutivequarterofimprovingutilizations,isthatthroughQ1orQ2?
Andthensecond,onRemicadeoutsidetheUS,byourmathwehadtotalinternationalandexportsalesgrowthinQ2downabout18%constantcurrency.
Louise,youtalkedaboutthat2%impactfromtheinventoryreduction.
Wasthattothat18orsopercent?WasthatjustRemicadeoutsidetheUS.Ifyoucouldhelpclarifythosetwopointsthatwouldbegreat.
Ihadonefollow-upforAlexafterthat.
LouiseMehrotra(V.P-InvestorRelations):
That2%isontotalpharmaceuticalsales.Soitwasalargereductionintheinventories.
LarryBiegelsen (Analyst-WellsFargo):
Totalworldwidepharma?
LouiseMehrotra(V.P-InvestorRelations):
Yes,yes.
LarryBiegelsen (Analyst-WellsFargo):
Okay.Andthenontheutilization,wasthatthroughQ1orQ2?
AlexGorsky(ChairmanoftheBoardofDirectors,CEO):
Larry,Alexhere.
ThatwasthroughQ2.Again,youknowthisdataaswellaswedoandwe'retryingtotriangulatefrommultipledifferentsources.
Butwhatweseeis,forexample,around4%growthinhospitaladmissions,ifyoutake.Probablybetween2.5%and3%.Ifwelookatoveralloutpatientproceduregrowth,probablyaround3%.Soit'sstillpositive.
Insomecasesit'sflat,perhapsaslightdecreaseversuswhatwesawinQ1,butwethinkoverallthetrendsarerelativelyconstant,whatwe'veseenthusfar.
LarryBiegelsen (Analyst-WellsFargo):
That'shelpful.
AndIappreciateyourcommentsearlieronM&AandtheM&Aenvironment,butdoyouhave$15billioninnetcashwhichisobviouslynotearningmuch?IknowyourfirstpriorityforcashisthedifficultconditioneddividendandthenM&A.
Atwhatpointdoyouconsiderusingyourcashtorepurchaseshares,Alex?Thanksfortakingthequestion.
AlexGorsky(ChairmanoftheBoardofDirectors,CEO):
Sure,Larry.
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Look,overall,ultimatelywewanttocreatemorevalueforshareholdersandaswelookatourcapitalallocationstrategy,youjustiterated,wehaveastrongcommitmenttodividends.We'vedonethatforalongtime.Youknowourstatisticsandourtrackrecordthere.
RegardingM&A,it'salsoanotherareaobviouslythatwekeepoureyeon.Imentionedearlierinthediscussionthatwe'realwayslookingfortherightopportunityandwetrytodothatinabalancedapproach.
Ofcoursewewantinnovation.OfcoursewewantcomplementarythingstoaddtoourportfolioandgrowthopportunitiesbutwealsowanttoensurethatwemaintainthedisciplineandtheperspectiveofourapproachIthinkhasserveduswelloveralotofyears.
EvenifyoulookattheinternalversusexternalinvestmentinCompany,Ithinkifyoulookovera20,a10orevenaneartermperiod,about45%ofourgrowthcomesfromwhatI'dcallorganicorganicinvestmentinourresearchanddevelopmentversusslightlyoverhalfthroughM&A.
Andsothatwillcontinuetobeourapproach.
DominicCaruso (V.PFinance,CFO):
Also,Larry,Iwouldsaythatifyoulookatitoverlongperiodsoftime,Ithinkwe'reveryproudofthefactthatoveradecadewe'vereturnedabout70%ofourfreecashflowtoshareholders.SoIthinkit'simportanttokeepthatinmind.
Althoughwemaybeevaluatingopportunitiesallthetime,we'realwaysmindfulofthefactofappropriatereturntoshareholders,consistentlyoverlongperiodsoftime.
AlexGorsky(ChairmanoftheBoardofDirectors,CEO):
AndIthinkevenrecentlythroughsomeoftheannouncementsthatwe'vemadeaboutsharerepurchases,we'vedemonstratedthatthat'spartofourmixandwillcontinuetobesogoingforward.
LarryBiegelsen (Analyst-WellsFargo):
Thanksfortakingthequestions.
LouiseMehrotra(V.P-InvestorRelations):
Nextquestion,please.
Operator :
YournextquestioncomesfromthelineofJamiRubinwithGoldmanSachs.
JamiRubin (Analyst-GoldmanSachs):
Goodmorning,everyone.Justacoupleoffollow-upquestionsonsomeofthemajorthemesoftheearningscall.Alex,Iappreciateyourtakingthetimetobeonthecall.
Justifyoulookatthe[mvabusiness,themva]hasunderperformeditspeersforatleastthelastfourtofiveyearsandmaybelonger,I'mnotsure.ButIcan'timagineyouarepleasedwiththatperformance.
AndI'mjustwonderingwhatisyourinterestlevelinmovingupthetechnologycurveoutofwhatyou'rein,whicharemostlycommoditybusinesses.
WhenIlookacrosswherethemajorgrowthopportunitiesareinmedtech,youguysaren'tthere,robotics,
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
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transcatheterheartvalves,etcetera.
IappreciatevaluationsarehighandyouwanttobedisciplinedbutatthesametimeJ&J'sMD&Dbusinesscontinuestounderperform.Ifyoucouldcommentonthat,please.
Secondlytoyou,Dominic,youarebookingabout$2billioninnonoperatingincomein2015,largelyrelatedtodivestitures.
Howdoyourepeatthatperformancein2016withoutcreating,again,averydifficultcomparison?
Thanksverymuch.
AlexGorsky(ChairmanoftheBoardofDirectors,CEO):
Jami,thankyouforthequestion.
Look,firstofall,asIsaidregardingourmedicaldevicebusinesses,wethinkthisisanimportantbusinessandremainsaverysolidgrowthopportunitygoingforward.And,look,asyoulookacrossthatentirebusiness,wehaveanumberofveryexcitingareas,frankly,thataredoingquitewell.
Wehighlightedsomeofthemearlier,whetherit'sBiosenseWebster,whetherit'swhatwe'reseeinginareaslikebiosurgicals,energy,ourendocutterbusiness.
We'restartingtoseetheturnaroundinareassuchasvisioncare.Andwedon'tthinkthosearecommoditybusinesses.Wethinkthosearedrivenbyinnovation,technology,andthey'vebeenasteadystream.
Now,arethereotherareaswherewe'reinterested?Well,youknowthatwemadeaninvestmentintheroboticspace.We'veannouncedanexcitingopportunitywithGoogle.It'sstillearlydays.Werecognizethat.
Butwethinkthatthere'salotofopportunitythere,givenourexpertiseandgeneralsurgeryoverallandcombiningitwithsomeoftheexpertisethatthosenewtechnologypartnerscanadd.
We'realsointerestedinotherareasbeyondthat,andwe'vedemonstratedtheabilityinthepastthatwhenweseethem,wewillparticipateandacquirethem.
AndIthinkwe'vealsodemonstratedoverthepastfewyearsthatinareaswherewedon'tseethatpathforward,thatwe'llbeactiveonthedivestiturefrontaswell.
Sowethinkthatthereisroomforimprovement.Weknowthatwe'vegotbusinesseslikediabetescareforexamplethathadasignificantimpactfrompricingafewyearsago.
Visioncare,that'sstillinthemidstofaturnaround.Butwethinkthatwe'vegotthestrategies,theinnovationinplacetoturnthosearoundandthesecanbeverysolidandstrongpermperformersgoingforward.
DominicCaruso (V.PFinance,CFO):
Withrespecttotheotherincomeandexpenses,$2billionroughlythatyouquoted,Ithinkwewereveryclearearlyintheyearthatweweregoingtousethosedivestituregainstooffsetsomeprettysignificantheadwindsandinparticularthemajorheadwindofcurrencythisyear.
Goingforward,Idon'tbelievewe'llhavethesamelevelofdivestitureincomebutwewillstillhavesome.
AsAlexmentionedearlier,we'recontinuouslyreviewingourportfolioandmakingdecisionsofwherewe
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
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wanttoparticipateandwherewethinktheassetswouldbebetteroffinsomeoneelse'shands,wherewecouldgetvalueforourshareholdersbysellingtheassets.
SoIthinkfor2016,wewouldstillseesomelevelofdivestitureincomebutagain,in2016versus2015,wewon'thave--wedon'tbelievewe'llhavethesignificantheadwindsofcurrencyyouthatwejustexperiencedin2015,norwillwehavethetoughcomparisonsofnothavingOlysio.
SoIthinkyou'llcontinuetoseeitaspartofourstrategytore-evaluateourportfolioanddeploythosegainsagainsthighergrowthopportunities.
Unidentif iedCompanyRepresentative :
Thankyou.
LouiseMehrotra(V.P-InvestorRelations):
AndIjustwanttoclarifysomethingontheinventoryforthepharmaceutical.The2%negativeimpactincludesalsosomeinventoryreductionsforO lysio,soifyoujustlookedattheRemicadeexporttotalUSimpactwouldbeabout1%,abouthalfofthat.
Okay.Thankyou.Nextquestion,please?
Operator :
YournextquestionwillcomefromthelineofJoshJenningswithCowen&Company.
JoshJennings (Analyst-CowenandCompany):
Goodmorning.Thankssomuchfortakingthequestion.
FirstoneforDominic,aswelookinto2016andbeyondofO lysioandotherheadwindsexperiencedin2015,howshouldwebethinkingaboutleveragingtheP&LdrivingahigherlevelofEPSgrowthrelativetorevenuegrowth?ShouldwebeanticipatingconsistentconstantcurrencyEPSgrowth100,200basispointrange?
Orcouldthatspreadimproveasyouexperienceoperatingimprovementsinconsumeranddevicefranchisesandcontinuedstrengthinthepharmaunit?
DominicCaruso (V.PFinance,CFO):
Thank,Josh.
Aswe'vesaidmanytimes,wealwaysplanourbusinesstogrowourtoplineataratefasterthanthecompetitivesetandthentogrowthebottomlineatarateofgrowththat'sslightlyfasterthanthetoplinegrowth.
Thatdependseachyearonwhatinvestmentswewanttomaketocontinuethegrowthtrajectoryofthebusiness.
SoIcan'tgiveyouaformulatothinkaboutbutIthinkyouhaveseenusbeveryconsistentinourabilitytocontinuetogrowearningsataratethat'sappropriatelyatalevelfasterthansales.
Again,dependingonwhatthemarket'sdoingandthendependingonwhatparticularinvestmentswehave.
Wedoseeincreasedprofitabilityintheconsumerbusiness,becauseyoumentioneditinyourcomments
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
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andSandyhadreferredtoitearliernowthatwe'rethroughmanyoftheissuesintheconsentdecree.
Wesawtheincreaseintheprofitabilitylastyearandweexpectthatbusinesswillcontinuetocontributemoreprofitabilityinthefuture.
JoshJennings (Analyst-CowenandCompany):
Thanks.Andjustafollow-uponthepharmaproductspecificquestion,there'ssomerecent[AandDA]filersfor[Itega].
CanyoutalkaboutanyinherentriskofagenericcomingtotheU.S.marketpriorto2016,andjustanupdateonyourpatentpositioningforthatasset.Thanksalot.
LouiseMehrotra(V.P-InvestorRelations):
SojusttorepeatwhatIsaidinthepreparedremarks,thecompositionofmatterpatentexpiresinDecember2016.Andthemethodoftreating[popping]expiresinAugustof2027.Wewouldnotspeculateonanyapprovaltimingoroutcomeofanylitigation.
However,ifwedecidetofilealawsuit,the30monthstaywouldbeginApril2016attheearliest,andthelengthofwhichwouldbeofcoursesubjecttoanyoutcomeofanylitigation.
Thankyou.
Andnextquestion?
Operator :
YournextquestionwillcomeinthelineofVamilDivanwithCreditSuisse.
VamilDivan (Analyst-CreditSuisse):
Hi,goodmorning,everyone.Thankssomuchfortakingthequestions.JusttwohereifIcould.
One,youtalkedalittleaboutInvokanaearlier.IknowMikeaskedaboutthisaswell.JustabouthalfwaythroughthequarterwedidhavetheFDAcommentaround[qsdoses].
Andjustcurious,obviouslyperformanceseemsfinethisquarter,onaqualitativebasisifyou'resensingsortofquestionsorchangesinprescribinghabitsasaresultofwhattheFDAhasstatedatthispoint.
Andthensecond,appreciateyourcommentsonGreece.IwasjustcuriousalsoregardingPuertoRico,justsomeofthekindofmacroissuesthataregoingonthere,Iknowyouguyshavesomemanufacturingdownthere.
Doyousenseanysortofriskorconcernstheredependinghowthatsortofplaysoutoverthenextfewweeksormonthshere?
LouiseMehrotra(V.P-InvestorRelations):
I'lltakefirstthequestiononthe[DKA].It'searlyonbutourPhaseIIItrialsactuallyincludedabout10,000patientsandwesawveryfewcasesofit.
Unidentif iedCompanyRepresentative :
AndwithrespecttoPuertoRico,you'reright,wehaveasignificantmanufacturingpresencethereandsignificantemploymentontheislandofcourseasaresult.
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
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ButIdon'tseethatasamajorfactorinourabilitytocontinueprogressingwithourplans.
Soit'snotonourradarscreenasamajorissuetocontendwith.
VamilDivan (Analyst-CreditSuisse):
Okay.
LouiseMehrotra(V.P-InvestorRelations):
Nextquestion,please.
Operator :
YournextquestioncomesfromthelineofJaysonBedfordwithRaymondJames.
JaysonBedford (Analyst-RaymondJames):
Goodmorningandthanksfortakingthequestions.
IthinkIheardAlexmention$1billionincostsavingsby2018.Ijustwantedalittleclarity.IsthatanewprogramoristhattheprogramthatIthoughtyouintroducedacoupleofyearsago.
DominicCaruso (V.PFinance,CFO):
ThisisDominic,Jayson.
It'stheprogramthatweintroducedacoupleyearsago.We'reacoupleofyearsintoitnow,andsowe'realreadyseeingsomeofthosecostbenefits.AndAlexisdescribingthesameprogramwherewelookedatby2018ifyoucomparedittoabaseyearof2013,theoverallcostreductionwouldbeintheaggregate$1billion.
JaysonBedford (Analyst-RaymondJames):
Howfaralongareyou?Areyou50,60%?
DominicCaruso (V.PFinance,CFO):
Wekickeditoffin2013.Wedidalotofplanningofcoursein2014.Sowe'rejuststartingtorampitupthisyearintothenextcoupleyears.
JaysonBedford (Analyst-RaymondJames):
Okay.
AndthenmaybeaquestionforSandyontheconsumerside.You'veaddedinvestmentoverthelastfewyearstosupporttherelaunchoftheOTCproducts,butmarginsseemtohaveimprovednicelyoverthelastfewquarters.Doestheaddedinvestmentwinddowntogeneratebettermarginsordoesthegrowthpickuptoimprovemargins?
SandyPeterson (GroupWorldwideChairman):
Thanksforthequestion.
Thewayinwhichwe'relookingatthisisaswe'resunsettingtheconsentdecreeitenablesustoimprovetheproductivityofourmanufacturingfootprint.
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SoalargepartofwhereyouwillseecontinuedimprovementintheprofitabilityofthebusinessisbyimprovingourCOGSandourgrossmarginsforthebusiness.Sothat'soneaspectofit.
Theotheraspectofitisweare--wehaveundertakenoverthelastcoupleyearsanapproachtoglobalizeourbrandsandglobalizehowwemanagethem,whichdrivesincreasedefficiencyineverysinglemarketingdollar.
Soourperspectiveonthisisweneedtocontinuetoinvestbehindthesebrands,boththeUSOTCportfolioaswellastheglobalportfolio.
Soyou'llnotseeusreduceourinvestmentsbehindourbrandbuildingofallofourcorebrandsbutwhatyouwillseeisimprovedleverageinourmanufacturingfootprintandactuallyhowwe'respendingthosedollarstodriveimprovedprofitabilityacrossthesector.
AlexGorsky(ChairmanoftheBoardofDirectors,CEO):
Jayson,thisisAlex.
IfIcouldjustaddIreallywanttocommendSandyand[Jorge]andtheirteamsonthejobthey'redoingontheserelaunches.Ithinkwhenwewerehavingthesecallsseveralyearsago,therewasprobablyafairamountofskepticismonourabilitytorelaunchagainstprivatelabel,makingsurethatwecouldworkourwaythroughtheconsentdecreerequirements.
Andifyoulookattheprogressthat'sbeenmadeoverthepastfewyears,obviouslyitstartswithgreatproducts.Ithinknowwehaveover80%ofourbrandsreturntotheshelf,alotofnewrecentlaunches,particularlyalongtheTylenolline.
Ifyoucombinethatwiththewayweachievedalltheconsentdegreerequirements,Ithinkweworkcloselywiththeagency.We'vedonethat.Infact,Ithinkwe'llbe--ifnotthe,oneoftheonlylargeover-the-countercompaniestoeverbeabletodothatsuccessfully.
Andthereallygoodnewsisthatwhenyoulookaswerelaunchthesebrandstheshareuptakeisstrong.Ithinkwe'rebackupto60%ofthesharethatweachievedinareaslikepain.
Sowe'rebuildingourwaybackup.Andwhenyoucombinethatwithsomeofthenewinnovationthat'swehave,wedefinitelyseeanicegrowthopportunityinthatpartofthebusiness.
LouiseMehrotra(V.P-InvestorRelations):
Sowithrespecttoeveryone'stimewe'lltaketwomorequestions.
Nextquestion,please.
Operator :
YournextquestioncomesfromthelineofDavidLewiswithMorganStanley.
DavidLewis (Analyst-MorganStanley):
Goodmorning.Thanks,Louise,forsqueezingmein.
MaybejustaquestionforAlexandSandyandaquickfollow-upforDominic.
Theconsumerbusinessisclearlyrecovering.That'sthebigmessage,Ithink,ofthiscall,andIthinkthecommentaryIthinkyou'vemadepubliclytheselastfewmonthsseemstobeforM&Aconsumerit'sgoingtocentermoreonbrandsandnotescompanies.
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YouseemmorewillinginconsumeratleastfourestimationtoruleoutlargeM&A.AmIreadingthatright?Andwhyisthatthecase?
SandyPeterson (GroupWorldwideChairman):
Soour--thewayinwhichwe'rethinkingboutsacquisitionsinconsumersisacombinationofthings.
We'regoingtoclearlystayfocusedonourpriorityconsumerneedstatesandgeographies.
Sothewaywelookatitisacombination,aretherebrandsthatareappropriatetotuckintoourinfrastructuretodrivegrowthincertainparmarketsorincertainareasoftheconsumerneedstate,butwealsowilllookattechnologiesthatwecanlicenseinlikewe'vedoneinotherpartsofJ&Jandlastly,wedolookatcompaniestoacquire,whetherthey'remid-sizedcompaniesorwhetherthey'relargercompanies.Andwearehighlydisciplinedaboutlookingatthoseandunderstandingthebenefitofdoingthosekindoflargeracquisitionsversusmid-sizeorsmalleracquisitions.
Sowehaven'truledoutanyparticularpartofthemarketplace.
We'relookingatavarietyofdifferentopportunitiesgiventhatthebusinessisnowstabledandgrowingagain,webelievewe'resortofinapositionwherewecanlookatthesethingsalittlebitmoreonanongoingbasis.
AlexGorsky(ChairmanoftheBoardofDirectors,CEO):
David,IwouldjustaddontothatthattheconsumerarearemainsoneofstrongstrategicimportanceforJohnson&Johnson.
Whenyouthinkabouttheroleofconsumersandhealthcareutilizationgoingforward,whenyouthinkaboutthewaythatyou'reabletodriveinnovation,andfranklywhenyouthinkaboutthereachthatitgivesyou,particularlyintheemergingmarketsandthefastgrowingmarkets,andbytheway,forJohnson&Johnsonitnotonlyoperatesthatwaytodrivegrowthinconsumerbutitactsalsoasawaytoincreaseouruptakeinourotherbusinesses,particularlyinthosegrowthmarkets.
Wethinkthere'salotofopportunities.AndIthinkmissiononeoverthepastfewyearshasbeengettingitontherighttrack.Asyoumentionedyourself,wethinkwemadealotofprogressthere.
We'refeelingmuch,muchbetter.Andnowwe'reobviouslylookingforways,howdoweexpandthat,howdowetakeittothenextlevel.
DavidLewis (Analyst-MorganStanley):
Okay.Veryhelpful.Thankyouforthatcolor.
Dominic,justaquickquestion,thinkingaboutinternationalgrowth,thisquarterwasalittleslower.Iwasjustwonderingifyoucouldgiveusanupdateonwhatyou'reseeingmacroin,mergingmarkets,maybespecificallyChina,justgiventheeventsofthelastmonth.Haveyouseenanyacuteslowdownorisitrelativelystable?Thankyou.
DominicCaruso (V.PFinance,CFO):
WehaveseeninChinasomeslowdown.Iwouldn'tcallitacute.There'ssomedynamicsofcourseofgenericcompetitioninChinaandoverallslowergrowthineconomicgrowth.Soweareseeingthat.
ButIthinkwe'rewellpositioned.We'vebeeninChinaformany,manyyears.Wehaveagoodfootprintthere.
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
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Weobviouslymanufacturethereaswell.Andourbrandscontinuetogetgooduptickthereandofcoursewe'renotinthegenericpartofthepharmaceuticalbusinessinChinabecausewe'refocusedmoreoninnovationinthatmarket.
SoIwouldn'tcallitacutePresidentIwouldsaywe'veseensomeslowdownintheoverallmarketgrowthinChina.
DavidLewis (Analyst-MorganStanley):
Thankyouverymuch.
LouiseMehrotra(V.P-InvestorRelations):
Lastquestion,please.
Operator :
Andyournextquestionwillcomefromthelineof[RickWise]withStifel.
Unidentif iedPart icipant :
Thankssomuchfortakingthequestions.Goodmorning,everybody.
Alex,maybejustaquestionforyouandthenoneforSandy.Youtalkedagain,youhighlightedyourfocusontheORofthefutureandtalkingabouttheGoogleJVandrobotics.
Couldyoumaybegiveusalittlemoreconcretecolor?Isthereagrandplan?Doesitrequireacquisitions?Arewegoingtoseesometangibleproductsorlaunchesthataregoingimpactsalesandearningsoverthenextsix,12months?Howdoyouwantustothinkaboutit?
AlexGorsky(ChairmanoftheBoardofDirectors,CEO):
[Rick],wewantyoutothinkaboutthisasarealstrategicinvestmentinthefutureforroboticsurgery.
Asweseethesurgicalsuitecontinuetodevelop,intoday'senvironmentIwouldsaythere'saprettyclearlineofdemarcationbetweenwhatyouwouldsayisstandardsurgeryandroboticsurgery.
Andwethinkastechnologydevelopsinthefuture,whetherit'sreal-timedatacollection,whetherit'svisualization,whetherit'sincorporatingsomeofthenewtechnologiesinareassuchasenergyandmemowstats,combiningtheseinnewanduniqueapproacheswethinkoffersarealsignificantopportunitytoimprovepatientoutcomesandultimatelytogrowthebusiness.
Wealsothinkthere'ssomeinherentlimitationstotoday'sroughroboticsurgeryenvironment.
Existinginnovationandifyoulookatwhat'shappenedwithothertechnologyplatformsastheyhavebecomesmaller,moreflexible,moremobileandfranklyhaveabetterabilitytointegratevariousactivitiesaroundtheOR,that'swherewethinkwecanreallymakeadifference.
Werealize,ofcourse,thatwebringcertaincapabilitiestothetablebutwealsothinkworkingwithpartnerslikeGoogleandothersitexpandsourcapabilitiessignificantlyandsolook,weseethisasreallynotsomethingtohaveanimpactI'dsayoverthenextsixto12months.
Thisislikelymoreoveratwotothreeyearplustimeframebutthisissomethingthatwearequitecommittedto,thatourpartnersarecommittedtoandthatweseeasarealopportunitytofundamentallychangethewaywethinkaboutsurgeryandroboticsinthefuture.
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
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Unidentif iedPart icipant :
Ireallyappreciatethat.
Justlastquickly,Sandy,seemsclearthatisofftoastrongstart.IthinkyoulauncheditintheUSlatelastyear.
Maybejusttalkifyoucouldgiveusalittlemorecolorontherollout,whereareyou,areyoufullyrolledout?AreyouconvertingyourownpatientstoVibeorareyougainingnewaccounts?
Andmaybewhat'snextbeyondVibe.Thankssomuch.
SandyPeterson (GroupWorldwideChairman):
Thanks.
Asyou--ininsulindeliveryintotalwhatwehavedoneis,asyouknow,wehadlaunchedtheproductinEuropeandalsoinCanadaoverthelastcoupleofyearsandbothinEuropeandinCanadaitalsohasapediatricindicationwhichclearlygivesitsomeuniquedifferentiationinthemarketplace.
WeeffectivelylauncheditintheUnitedStatesreallyatthebeginningofthisyear,sowe'veseensignificantpositivegrowthanduptakeoftheproductintheUS,whichisacombinationofexistingpatientsupgradingtothenewproductaswellasgainingnew--basicallynewtotherapyinsulinpumperaswellaswe'veseenalotofconversionfromotherpumpplatformstoourplatform.
WeinthesecondquarteralsofiledforthepediatricindicationfortheUSproductandsoobviouslytheFDAwillgothroughitsreviewprocess,butwe'rehopefulthatbeforetheendofthisyearweshouldhaveapediatricendpindicationwhichwillbeafurtheruptickinthebusinessintheUSandbeveryhelpfultousintheUS.AsIalsomentionedearlier,there'stwootherthingsininsulindeliverythatwe'reveryfocusedon.Actuallythree.
Buttwoofthemareworkinginpartnershipwith[deckscn]onanextgenerationpumpthatreallybringsthebestofwhatwe'velearnedofhowtomakethismuchmoreuserfriendlyandeffectivewithapatient,aswellasensuringthatwe'vegottherightalgorithminthepumpforinsulindelivery.
Combiningthatwiththenextgenerationofsensor,wecurrently--ourcurrentpumphasthatwith[deckscom].
Andthenwe'realsoandhavedonealotofworknotjustintheinsulinsidebutalsointhe[BJM]sideofreallycreatingamuchbetterecosystemforthepatienttohaveinformationanddatathathelpsthemmanagetheirconditionmuchmoreeffectively.
Sowe'reusinginformationtechnologyinasmarterwaygoingforwardandwe'reseeingverypositiveimpactofthat,notjustintheinsulindeliverysidebutinourcoreBGMbusiness.
Sothat'sanotherplacethatwe'llseeanumberofdifferentthingsthatwe'regoingtobedoinginthisbusiness.
Lastbutnotleast,Imentionedthatthepatchpumpisanothergreatgrowthplatformwebelieveforusbecauseit'sreallyauniquetothemarketplacewaytohelptype2diebetdiabeticswhoare.Therearealotofthingsintheworks.There'salotofthingsinourpipelineininsulindelivery.
Unidentif iedPart icipant :
Appreciateit.
CompanyName:Johnson&JohnsonCompanyTicker:JNJSector:HealthCareIndustry:Drugs
EventDescription:Q22015EarningsCallMarketCapasofEventDate:276.00BPriceasofEventDate:99.5
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Unidentif iedCompanyRepresentative :
Thanks.
LouiseMehrotra(V.P-InvestorRelations):
We'llhavesomeclosingremarksbyAlex.
AlexGorsky(ChairmanoftheBoardofDirectors,CEO):
Thankyoueveryone.Inclosing,Iwanttoagainextendourappreciationtoallofyouforjoiningtoday'smeeting.
We'repleasedwiththesolidresultswereportedthismorning,andwhichaswediscussedtodayreallydoreflectthestrongunderlyinggrowthwe'reseeingacrosstheenterprise.
Whenyoucombinethiswiththeactionswe'vetakentoevenfurtherstrengthenourcorebusinessesandadvanceourpipelines,Johnson&Johnsoniswellpositionedtocontinuetodrivegrowthoverthelongterm.
Iwisheveryoneagreatday.Andthankyouverymuch.
Operator :
Thankyou.
Thisconcludestoday'sJohnson&Johnsonsecondquarter2015earningsconferencecall.
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