Johnson & Johnson · NYSE:JNJ

Johnson & Johnson — Q4 2006 Earnings Presentation

87 slides from Johnson & Johnson's earnings presentation, February 2007

1. Slide 1: This portion audio only

   ype ddl This portion audio only

2. Slide 2: Safe Harbor Statement

   Safe Harbor Statement This presentation may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or unknown risks or uncertainties mater

3. Slide 3: Safe Harbor Statement

   Safe Harbor Statement Risks and uncertainties include general industry conditions and competition; economic conditions, such as interest rate and currency exchange rate fluctuations; technological advances and patents attained by competitors; challenges inherent in new product development, including

4. Slide 4: Safe Harbor Statement

   Safe Harbor Statement A further list and description of these risks, uncertainties and other factors can be found in Exhibit 99 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 2006. Copies of this Form 10-K, as well as subsequent filings, are available online at www.

5. Slide 5: Theme

   Theme

6. Slide 6: Louise Mehrotra

   Louise Mehrotra Vice President Investor Relations

7. Slide 7: Theme

   Theme

8. Slide 8: William C. Weldon

   William C. Weldon Chairman of the Board & Chief Executive Officer

9. Slide 9: Theme

   Theme

10. Slide 10: Today's Agenda

    Today’s Agenda  Strategic Principles – Strength in our Breadth  Financial Highlights - 2006  Business Segments – 2006 Highlights – Future Growth Platforms

11. Slide 11: An Exceptional Business

    ah. il > n Exceptional Business

12. Slide 12: Human Health Care: An Exceptional Business

    Human Health Care: An Exceptional Business  Strong demand  Demographics  Innovation-driven advances  Rapidly evolving science of human health

13. Slide 13: Countervailing Forces

    Countervailing Forces  Virtually insatiable  Pressure on health care demand budgets  Increased interest in – Access and affordability health and well being – Low cost alternatives  Converging technologies  Increasing competition  Thirst for information  Intellectual property challenges

14. Slide 14: Slide 14

15. Slide 15: Strategic Principles

    Strategic Principles  Shared Values Embodied in Our Credo  Broadly Based in Human Health Care  Decentralized Approach  Managed for the Long Term

16. Slide 16: Strength in our Breadth

    Strength in our Breadth

17. Slide 17: Broadly Based – A Strategic Advantage

    Broadly Based – A Strategic Advantage

18. Slide 18: Exceptionally Consistent Performance

    Exceptionally Consistent Performance  74 Consecutive years of Sales increases  23 Consecutive years of Earnings increases(1)  44 Consecutive years of Dividend increases (1) Non GAAP. Excludes In-process R&D charges, taxes on repatriated cash under the AJC Act and other charges and credits. The co

19. Slide 19: Broadly Based – A Strategic Advantage

    Broadly Based – A Strategic Advantage

20. Slide 20: Broadly Based – A Strategic Advantage

    Broadly Based – A Strategic Advantage  Rapidly capitalize on attractive opportunities

21. Slide 21: Rapidly Capitalize on Attractive Opportunities in Human Health

    Rapidly Capitalize on Attractive Opportunities in Human Health  Closeness to customers  Deep knowledge of many market segments  Flexibility to be opportunistic

22. Slide 22: Broadly Based – A Strategic Advantage

    Broadly Based – A Strategic Advantage  Rapidly capitalize on attractive opportunities  Nurture new businesses; Prune where appropriate

23. Slide 23: Nurture New Businesses

    Nurture New Businesses  Nurture small businesses for growth within larger organization

24. Slide 24: Broadly Based – A Strategic Advantage

    Broadly Based – A Strategic Advantage  Rapidly capitalize on attractive opportunities  Nurture new businesses; Prune where appropriate

25. Slide 25: Broadly Based – A Strategic Advantage

    Broadly Based – A Strategic Advantage  Rapidly capitalize on attractive opportunities  Nurture new businesses; Prune where appropriate  Knowledge and capability transfer

26. Slide 26: Knowledge & Capability Transfer

    Knowledge & Capability Transfer Across segments and within segments  Ability to transfer – Strong leadership – Technology – Knowledge  Centers of expertise – Capability focus – Science & technology focus

27. Slide 27: Broadly Based – A Strategic Advantage

    Broadly Based – A Strategic Advantage  Rapidly capitalize on attractive opportunities  Nurture new businesses; Prune where appropriate  Knowledge and capability transfer  Development of converging technologies

28. Slide 28: Converging Technologies

    Converging Technologies Optimize key technologies to provide breakthrough innovation or pioneer new or adjacent markets Medical Devices Consumer & Diagnostics Pharmaceuticals

29. Slide 29: PREZISTA

    gi 4 PREZISTA = ASP-30-— 2.15 A o\e = ¥ tibotec virco

30. Slide 30: Treating Retinal Degeneration

    Treating Retinal Degeneration

31. Slide 31: Broadly Based – A Strategic Advantage

    Broadly Based – A Strategic Advantage  Rapidly capitalize on attractive opportunities  Nurture new businesses; Prune where appropriate  Knowledge and capability transfer  Development of converging technologies  Accelerating growth through geographic breadth

32. Slide 32: Broadly Based – A Strategic Advantage

    Broadly Based – A Strategic Advantage  Rapidly capitalize on attractive opportunities  Nurture new businesses; Prune where appropriate  Knowledge and capability transfer  Development of converging technologies  Accelerating growth through geographic breadth  Leveraging scale

33. Slide 33: Health and Well-being of Patients and Our Customers

    Health and Well-being = of Patients and Our Customers

34. Slide 34: Financial Highlights

    Financial Highlights

35. Slide 35: Investing in Sustainable Growth

    Investing in Sustainable Growth

36. Slide 36: 2006 – Significant Progress on Multiple Fronts

    2006 – Significant Progress on Multiple Fronts  Solidified our position as the premier consumer health care company  Advanced our pharmaceutical portfolio  Strengthened several key Medical Devices & Diagnostics franchises  Continued focus on optimizing our infrastructure

37. Slide 37: Johnson & Johnson 2006 vs. 2005

    Johnson & Johnson 2006 vs. 2005 % Change Total Company 2006 2005 Total Ops Sales $53.3B $50.5B 5.6% 5.3% Earnings* $11.1B $10.2B 9.2% EPS* $3.76 $ 3.39 10.9% *Proforma excluding In-process R&D charges, net taxes on repatriated cash under the AJC Act, Guidant Acquisition Agreement Termination Fee.

38. Slide 38: Historical Performance

    Historical Performance Reported Operational Adjusted Net Year Sales Growth Sales Growth Earnings Growth(1) 100 +10.4 +10.8% +10.5% 50 +11.0 +11.5 +14.0 20 +10.7 +10.7 +14.8 10 +9.6 +10.1 +14.2 5 +10.5 +8.7 +14.6 1 +5.6 +5.3 +9.2 (1) Non GAAP. Excludes In-process R&D, taxes on repatriated cash under

39. Slide 39: Cash Flow - 2006

    Cash Flow - 2006 Operating Cash Flow $14.2B Free Cash Flow* $11.6B Net Cash/(Debt) Position ($2.5)B One of Only 5 Industrial Companies With Triple A Credit Rating *Non-GAAP financial measure: defined as operating cash flow less capital spending

40. Slide 40: Balanced Portfolio Segment Operating Profit

    Balanced Portfolio Segment Operating Profit* 2001 Operating Profit: 2006 Operating Profit: $7.5 Billion* $14.3 Billion* $5.7B $1.9B $1.7B $0.9B $4.7B $6.9B Consumer Pharmaceuticals MD&D *Excluding IPR&D The company has adopted SFAS No. 123(R) Shared Based Payment, applying the modified retrospective

41. Slide 41: Business Highlights

    Business Highlights

42. Slide 42: Consumer

    Jobs lalate Consumer

43. Slide 43: Consumer 2006 Business Highlights

    Consumer 2006 Business Highlights  Continued growth – operational growth 6.4%  Launched more than 400 new products  Completed Pfizer Consumer Healthcare acquisition

44. Slide 44: Scientifically Based & Professionally Endorsed Brands

    Consumer scientifically Based & Professionally Endorsed Brands

45. Slide 45: Major Franchise Sales & Operational Growth Rates

    Major Franchise Sales & Operational Growth Rates 2006 Sales - $9.8 Billion 2006 Ops Growth Rate – 6.4% $ U.S. Billions McNeil OTC & Nutritionals $2.7 Skin & +2% Hair Care Other $1.1 $2.6 +11% +9% $1.7 +5% $1.7 +10% Women's Health Baby & Kids * Operational Growth

46. Slide 46: Pfizer Consumer Healthcare Acquisition: Value Enhancing for Shareholders

    Pfizer Consumer Healthcare Acquisition: Value Enhancing for Shareholders

47. Slide 47: Pfizer Consumer Healthcare Expands Current Portfolio

    Pfizer Consumer Healthcare Expands Current Portfolio

48. Slide 48: Pfizer Consumer Healthcare Complements Current Portfolio

    Pfizer Consumer Healthcare Complements Current Portfolio Skin Care Wound Care Baby Care

49. Slide 49: Pfizer Consumer Healthcare Acquisition: Value Enhancing for Shareholders

    Pfizer Consumer Healthcare Acquisition: Value Enhancing for Shareholders  Complementary product and geographies  Attractive growth opportunity in Consumer – U.S. leadership in 9 additional categories  Transforms OTC business – Doubles in size  Builds on our oral health care business  Entry into

50. Slide 50: Addition of Pfizer Consumer Healthcare - Proforma 2006 Sales

    Addition of Pfizer Consumer Healthcare - Proforma 2006 Sales J&J Stand-Alone J&J including PCH* $53 Billion $57 Billion $20B $20B $10B $14B $23B $23B MD&D Consumer Pharmaceuticals * Assumes annualized sales

51. Slide 51: Pfizer Consumer Healthcare

    Pfizer’ Pfizer Consumer Healthcare We dedicate ourselves te providing consumers around the world with innovative self-care products that improve health ard well-being Search Tetsue a A A Find a Solution Select a canuition cr symriom, [Setec's Conationsymetom 1 Go Select a Brand Use the menu below to

52. Slide 52: Major Franchise Sales & Operational Growth Rates

    Major Franchise Sales & Operational Growth Rates 2006 Sales - $9.8 Billion 2006 Ops Growth Rate – 6.4% $ U.S. Billions McNeil OTC & Nutritionals $2.7 Skin & +2% Hair Care Other $1.1 $2.6 +11% +9% $1.7 +5% $1.7 +10% Women's Health Baby & Kids * Operational Growth

53. Slide 53: McNeil OTC & Nutritionals

    McNeil OTC Bringing Science & Nutritionals to the Art of Healthy Living Sales 2006 5 Yr. Market 2006 Growth* CGR* Position OTC & $2.7B 2% 7% #1 Nutritionals Growth Drivers  Portfolio of Pfizer Consumer Healthcare brands  Potential ZYRTEC® OTC switch  Leverage TYLENOL® Brand / Upper respiratory pr

54. Slide 54: Skin Care

    Bringing Science Skin Care to the Art of Healthy Living Sales 2006 5 Yr. Market 2006 Growth* CGR* Position Skin Care $2.6B 9% 11% #4 Growth Drivers  Lubriderm brand from Pfizer Consumer Healthcare  Expansion of products with natural ingredients  New products with Helioplex technology  Groupe Ven

55. Slide 55: Baby & Kids Care

    Bringing Science Baby & Kids Care to the Art of Healthy Living Sales 2006 5 Yr. Market 2006 Growth* CGR* Position Baby & Kids Care $1.7B 10% 7% #1 Growth Drivers  Continued penetration of emerging markets  U.S. & International roll-out of new Soothing NaturalsTM platform  Product innovation and n

56. Slide 56: Strong, Consistent Growth With Iconic Brands

    Strong, Consistent Growth With Iconic Brands

57. Slide 57: Medical Devices & Diagnostics

    Medical Devices & Diagnostics

58. Slide 58: Setting the Standard of Care

    Setting the Standard of Care  Innovation-driven leadership  40% of sales coming from products launched in last 5 years  80% of sales coming from #1 or #2 market position  Key strategic acquisitions

59. Slide 59: Major Franchise Sales & Operational Growth Rates

    Major Franchise Sales & Operational Growth Rates 2006 Sales - $20.3 Billion 2006 Ops Growth Rate – 6.4% $ U.S. Billions Vision Care OCD LifeScan $1.9 $1.5 $2.1 +12% +8% +6% Cordis EES $4.1 $3.4 +3% +9% $3.2 $4.1 +4% +7% Ethicon DePuy * Operational Growth

60. Slide 60: Major Franchise Sales & Operational Growth Rates

    Major Franchise Sales & Operational Growth Rates $1.9 +12% $1.9 $1.5 $2.1 +12% +8% +6% $4.1 $3.4 +3% +9% $3.2 +4% $4.1 +7%

61. Slide 61: Major Franchise Sales & Operational Growth Rates

    Major Franchise Sales & Operational Growth Rates $1.5 +6% $1.9 $1.5 $2.1 +12% +8% +6% $4.1 $3.4 +3% +9% $3.2 +4% $4.1 +7%

62. Slide 62: Major Franchise Sales & Operational Growth Rates

    Major Franchise Sales & Operational Growth Rates $1.9 $1.5 $2.1 +12% +8% +6% $3.4 $3.2 $4.1 +3% +9% +4% $3.2 +4% $4.1 +7%

63. Slide 63: Major Franchise Sales & Operational Growth Rates

    Major Franchise Sales & Operational Growth Rates $2.1 +8% +12% $2.1 $1.9 $1.5 +8% +6% $4.1 $3.4 +3% +9% $3.2 +4% $4.1 +7%

64. Slide 64: Setting The Standard of Care: DePuy Growth Drivers

    Setting The Standard of Care Sales 2006 5 Yr. Market 2006 Growth* CGR* Position DePuy $4.1B 7% 11% #1 Growth Drivers  Joint reconstruction focus  Dynamic fusion  Sports medicine  Critical mass in trauma *Operational

65. Slide 65: Setting The Standard of Care: Cordis

    Setting The Standard of Care Sales 2006 5 Yr. Market 2006 Growth* CGR* Position Cordis $4.1B 3% 23% #2 Growth Drivers  New products and expanded leadership – Atrial fibrillation market development – Biosense Webster – Advanced peripheral therapies - Cordis Endovascular  Next generation drug elutin

66. Slide 66: Setting The Standard of Care: EES

    Setting The Standard of Care Sales 2006 5 Yr. Market 2006 Growth* CGR* Position EES $3.4B 9% 9% #1 Growth Drivers  Expansion of obesity line  Harmonic energy platform development  Focus on novel adjacencies *Operational

67. Slide 67: Medical Devices & Diagnostics Well Positioned for Growth

    Medical Devices & Diagnostics Well Positioned for Growth  Largest and most globally diverse medical technology company  #1 or #2 in most franchises  Substantial R&D investment  Geographic diversification

68. Slide 68: Medical Devices & Diagnostics Segment Vision

    Medical Devices & Diagnostics Segment Vision

69. Slide 69: Pharmaceuticals

    Jobs lalate Pharmaceuticals

70. Slide 70: 2006 Business Highlights Pharmaceuticals

    2006 Business Highlights Pharmaceuticals  Strong growth in key products  Increased regulatory filings and approvals  Robust R&D pipeline  Key licensing & strategic partnerships  Alignment of infrastructure with assets

71. Slide 71: Planned Filings/Approvals 2006-2009

    Planned Filings/Approvals 2006-2009 CNS Pain I.M.I.D. Oncology Virology INVEGA™ IONSYS® CNTO 1275 YONDELIS® PREZISTA™ Paliperidone Tapentadol Palmitate CNTO 148 ZARNESTRA® TMC125 (R331333) US Carisbamate JURNISTA™ DACOGEN™ Telaprevir (RWJ333369) EU (VX-950) EU Women’s Health/ Anti-Bacterials Cardiov

72. Slide 72: Strategic Focus Areas

    Strategic Focus Areas  Sustainable leadership in current markets – CNS – Immune-Mediated Inflammatory Diseases (I.M.I.D.) – Pain management – Anemia  New global growth platforms – Virology – Anti-Bacterials – Oncology – Cardiovascular Disease – Metabolics

73. Slide 73: Pharmaceutical Segment Sales – Major Products & Operational Growth Rates

    Pharmaceutical Segment Sales – Major Products & Operational Growth Rates 2006 Sales - $23.3 Billion 2006 Ops Growth Rate – 3.9% $ U.S. Billions ACIPHEX/ Hormonal PARIET DURAGESIC Anti-Infectives Contraceptives CONCERTA $1.2 $1.3 $1.0 $1.5 TOPAMAX $0.9 (11%) + 5% (18%) + 3% +20% $2.0 + 21% $5.0 $3.0

74. Slide 74: CNS: Better Medicines for Unmet Needs

    Better Medicines CNS for Unmet Needs Sales 2006 5 Yr. Market 2006 Growth* CGR* Position RISPERDAL® $4.2B 18% 16% #2 TOPAMAX® $2.0B 21% 32% #2 CONCERTA® $0.9B 20% 24% #2 Growth Drivers  Approval of INVEGA® for schizophrenia  Expanded RISPERDAL® indication  New indications for RISPERDAL® CONSTA® 

75. Slide 75: I.M.I.D.: Better Medicines for Unmet Needs

    Better Medicines I.M.I.D. for Unmet Needs Sales 2006 5 Yr. Market 2006 Growth* CGR* Position REMICADE® $3.0B 19% 33% #2 Growth Drivers  REMICADE® – Expanded Label and New Indications  CNTO 148 – Phase 3  CNTO 1275 – Phase 3 *Operational

76. Slide 76: Virology: Better Medicines for Unmet Needs

    Better Medicines for Unmet Needs Virology Growth Drivers  PREZISTATM – Approved and Launched  US, Canada, Argentina, Russia, Switzerland – Positive CHMP Opinion  TMC125 – Phase 3  TMC278 – Phase 2b  Telaprevir (VX–950)* – Phase 2 * Telaprevir (VX-950) - Licensing agreement with Vertex Pharmaceu

77. Slide 77: Oncology: Better Medicines for Unmet Needs

    Better Medicines Oncology for Unmet Needs Growth Drivers  VELCADE® – Obtained US co-promotion rights – Approved in Japan for relapsed and refractory multiple myeloma – New indications in development  YONDELIS® – Phase 3 for Ovarian Cancer  ZARNESTRA™ – Phase 3  DACOGEN™ INJECTION – Phase 3  DOX

78. Slide 78: Pharmaceuticals Well Positioned for Growth

    Pharmaceuticals Well Positioned for Growth Maintaining Leadership in Current Markets… Building Leadership in New Markets  Robust near-term pipeline – Anticipate 8 new product filings/approvals by end of 2007 – Significant near-term Line Extensions  Long term growth – Organic development – Aggressi

79. Slide 79: Johnson & Johnson: The Most Broadly Based Health Care Company

    Johnson & Johnson: The Most Broadly Based Health Care Company We Are Committed to Capital Efficient Profitable Growth  Participating in the fastest growing segments of the health care industry  Building and sustaining leadership positions based on superior science and innovation  Achieving superi

80. Slide 80: Theme

    Theme

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84. Slide 84: Dominic J. Caruso

    Dominic J. Caruso Vice President, Finance & Chief Financial Officer

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    Theme

86. Slide 86: Save the Date June 7, 2007

    Save the Date June 7, 2007 Johnson & Johnson Consumer and Pharmaceutical Analyst Day

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Johnson & Johnson — Q4 2006 Earnings Presentation on 6ix