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Johnson and Johnson's Q3 2012 Earnings Presentation
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Louise MehrotraVice President, Investor Relations
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These presentations contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. The viewer is cautioned not to rely on these forward-looking statements. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of Johnson & Johnson. Risks and uncertainties include, but are not limited to, general industry conditions and competition; economic factors, such as interest rate and currency exchange rate fluctuations; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approvals; challenges to patents; significant adverse litigation or government action; impact of business combinations; financial distress and bankruptcies experienced by significant customers and suppliers; changes to governmental laws and regulations and domestic and foreign health care reforms; trends toward health care cost containment; increased scrutiny of the health care industry by government agencies; changes in behavior and spending patterns of purchasers of health care products and services; financial instability of international economies and sovereign risk; disruptions due to natural disasters; manufacturing difficulties or delays; and product efficacy or safety concerns resulting in product recalls or regulatory action. A further list and description of these risks, uncertainties and other factors can be found in Exhibit 99 of Johnson & Johnson’s Annual Report on Form 10-K for the fiscal year ended January 1, 2012. Copies of this Form 10-K, as well as subsequent filings, are available online at www.sec.gov, www.investor.jnj.com or on request from Johnson & Johnson. Johnson & Johnson does not undertake to update any forward-looking statements as a result of new information or future events or developments.)
Note on Forward-looking Statements
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These presentations may refer to certain non-GAAP financial measures. These non-GAAP financial measures should not be considered replacements for, and should be read together with, the most comparable GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the Investor Relations section of the Company’s website at www.investor.jnj.com.
Note on Non-GAAP Financial Measures
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These presentations contain statements about new molecular entities (“NMEs”) and other medicines or line extensions in various stages of development.
These statements are based on the Company’s current knowledge of the status of development of these NMEs, medicines and line extensions and are subject to the challenges and difficulties inherent in product development. The Company assumes no obligation to update any statements regarding these NMEs, medicines or line extensions as a result of new information or future events or developments.
In biopharmaceuticals, there are higher possibilities of encountering infringement claims by competitors with respect to patents or other intellectual property rights. The Company assumes no obligation to update any statements as a result of new information or future events or developments.
New Molecular Entities
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During the course of this morning’s presentations, we will discuss a number of products and compounds developed in collaboration with strategic partners or licensed from other companies. Following is an acknowledgement of those relationships.
Neuroscience: INVEGA® SUSTENNA®/XEPLION® includes technology licensed from Alkermes, Inc.; RISPERDAL®
CONSTA® developed in collaboration with Alkermes, Inc.; Bapineuzumab is being developed through a collaboration between Janssen Alzheimer Immunotherapy and Pfizer Inc.; NUCYNTA® co-developed with Grünenthal GMBH
Cardiovascular/Metabolism: XARELTO® co-developed with Bayer HealthCare; Canagliflozin licensed from Mitsubishi Tanabe Pharma Corporation; Aciphex ® /PARIET ® licensed from Eisai Co. Ltd.
Immunology: REMICADE® and SIMPONI® marketing partners are Schering-Plough (Ireland) Company, a subsidiary of Merck & Co., Inc. and Mitsubishi Tanabe Pharma Corporation; Sirukumab developed in collaboration with GlaxoSmithKline; ASP015K licensed from Astellas Pharma Inc.
Infectious Diseases & Virology: Simeprevir (TMC 435) developed in collaboration with Medivir AB; INCIVO®
developed by Janssen in collaboration with Vertex Pharmaceuticals and Mitsubishi Tanabe Pharma Corporation
Oncology: VELCADE® developed in collaboration with Millennium: The Takeda Oncology Company; Ibrutinib (PCI-32765) developed in collaboration with Pharmacyclics, Inc.; Daratumumab licensed from Genmab A/S; ZYTIGA®
licensed from BTG International Ltd.
Strategic Partnerships, Collaborations and Licensing Arrangements
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Dominic CarusoVice President, FinanceChief Financial Officer
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Joaquin DuatoWorldwide Chairman, Pharmaceuticals
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Transforming Our Business to Transform the Lives of Patients
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Source: IMS Global Market Prognosis, September 2012
• Pharmaceuticals is an attractive market– 2011: $950 Billion global market– 2016: approximately $1.2 Trillion
• ~5.2% CAGR
• Executing well against our strategic priorities – Launched 8 new products since 2009– Leveraging a revitalized, industry-leading portfolio
• Focusing on innovation and transforming patients’ lives globally
Johnson & Johnson Growth Drivers
• Creating Value through Innovation
• Global Reach/Local Focus
• Excellence in Execution
• Leading with Purpose
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* Q4’09 and Q4’10 change adjusted for dynamics of 53rd week
Q1’09 Q3’09 Q1’10
Q3’10 Q1’11 Q3’11 Q1’12 Q3’12
11.3%
Creating Value through Innovation
WW Pharmaceuticals: Operational Sales Change vs. Prior Year*
Transforming Our Business
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41%
7%
52%
2011 2016
Core growth productsNew products launched from 2009 and onwardsMature/regional products
26%
40%
34%18%
82%
2006
Internal data
Creating Value through InnovationTransforming Our Product Portfolio
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2011 2012
Creating Value through InnovationKey Products Driving Therapeutic Area Growth
Immunology Long-Acting Antipsychotics
HIVOncology
+19% +18% +28%+29%
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$5.9
$5.0
2011 2012
$1.6$1.4
2011 2012
$1.4
$1.1
2011 2012
$1.8
$1.5
WW 2012 YTD NTS Sales in Billions; Operational Growth
Internal data
Creating Value through InnovationREMICADE®: Solid market position, sustaining growth
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• 16 indications and counting– EU pediatric ulcerative colitis, approved Q1 2012
• 1.7 million+ patients treated worldwide– 1 million US patients treated; milestone reached in October
• Solid market position: 75% share of the US market for IV immunology products*
• Sustaining growth– 8.5% YTD in the US (not including export sales)– 25% QTD** in the reacquired territories
• Exclusivity: 2018 in US; 2015*** in EU
* Source: IMS Health** Only includes territories reacquired in Q3’11
*** Filed for 6 month extension that would extend our exclusivity to 2/12/15 in majority of EU countries
YTDTOTAL SALES
OPERATIONAL GROWTH
$4.6 Billion 15.1%
Creating Value through InnovationSTELARA®: Game-changing therapy, gaining share
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• Game-changing therapy for the treatment of moderate to severe plaque psoriasis– Awarded International Prix Galien, October 2012
• Gaining share in US Dermatology: 25.5%, up +3 points vs. 3Q11; G5 share is 24%,up +6 points from 2Q11
• 5-year efficacy and safety data• Phase 3 programs in psoriatic arthritis and Crohn’s
disease
YTDTOTAL SALES
OPERATIONAL GROWTH
$756 Million 46%
Source: IMS Health, DDD
Creating Value through InnovationSIMPONI®: Building momentum, expanding indications
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• Launched in 2009 for RA, psoriatic arthritis and ankylosing spondylitis
• Approvals in 57 countries and growing; recently launched in Japan
• Ulcerative colitis submitted in US and EU; PDUFA date: May 2013
• Intravenous formulation in RA submitted in US and EU; PDUFA date: July 2013
YTDTOTAL SALES
OPERATIONAL GROWTH
$426 Million 50%
Creating Value through InnovationINVEGA SUSTENNA®/XEPLION®: Accelerating Our long-acting antipsychotics franchise
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• Launched INVEGA® SUSTENNA® in the US in 2009; available in 37 countries OUS as XEPLION®
• Accelerating the growth of the Long-Acting antipsychotics franchise to 18%
• Significant expansion of prescriber and patient base, many of whom are new to Long-Acting category
• Ongoing clinical development of 3-month formulation for INVEGA® SUSTENNA®
YTDTOTAL SALES
OPERATIONAL GROWTH
$568 Million 136%
Creating Value through InnovationZYTIGA®: Most successful oral oncology launch
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• #1 Global oral oncology launch• Approved in more than 50 countries for post-chemo
metastatic castration-resistant prostate cancer (mCRPC)
• Penetration in the US chemo refractory setting has grown to 75% from 40% at the time of ZYTIGA® launch
• Estimated patient share in the chemo refractory market in the US is ~67% in 3Q12; G5 is ~81% in 2Q12
• US and EU regulatory filings pending for chemo-naïve indication; PDUFA date: mid-December 2012– Chemo-naïve mCRPC market is 3X the size of post-chemo
YTDTOTAL SALES
OPERATIONAL GROWTH
$697 Million 372%
Source: IMS Health, DDD
Creating Value through InnovationVELCADE®: Launching subcutaneous formulation
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• First-in-class proteasome inhibitor for multiple myeloma• Subcutaneous administration approved 2012 in EU and
Canada• Pursuing additional indications: Mantle Cell Lymphoma
YTDTOTAL SALES
OPERATIONAL GROWTH
$998 Million 16%
Creating Value through InnovationPREZISTA®: A leading Protease Inhibitor with robust growth
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• First approved in 2006 for treatment-naïve and experienced HIV patients
• Leading protease inhibitor in Europe and #2 in US• Awaiting approval for single 800mg tablet
YTDTOTAL SALES
OPERATIONAL GROWTH
$1.1 Billion 24%
Source: IMS Health, NPA and DDD Database
CONTRIBUTED 3.3% TO YTD OUS PHARMACEUTICAL OPERATIONAL
GROWTH
Creating Value through InnovationINCIVO®: Regaining traction following strong initial uptake
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• Approved by the European Medicine Agency in 2011• Achieved reimbursement more than 100 days faster than
the European benchmark (141 vs. 252 days)• Sales trends show strong initial uptake in
“urgent to treat”/“warehoused” patients• Seasonality pattern of slowing Q1 to Q3 sales,
with pick-up seen in September• With 67% share, continuing to maintain a strong lead vs.
boceprevir across Europe
Source: IMS
Creating Value through InnovationXARELTO®: Broadest profile, new indications pending
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• Broadest indication profile of any of the newer oral anticoagulants
• Positive gains in access:– 93% coverage on commercial formularies– 90% of Medicare Part D lives
• # 1 preferred brand among Cardiologists for AF and among Orthopedic Surgeons for Orthopedic use*
• Additional indications in DVT / PE and ACS pending with FDA
• Capturing 53% NBRx of novel oral anticoagulants in AF**
CONTRIBUTED 1.6% TO YTD US PHARMACEUTICAL GROWTH
* September 2012 proprietary ATU survey ** Source: IMS
Johnson & Johnson Growth Drivers
• Creating Value through Innovation
• Global Reach/Local Focus
• Excellence in Execution
• Leading with Purpose
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49%51%65%
35%
Global Reach/Local Focus
US vs. OUS Overview: Sales as % of Total Pharmaceuticals
Broadening Geographic Presence
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2006 2011
US
OUS
Global Reach/Local Focus
Sales as % of Total Pharmaceuticals
Growing in Emerging Markets
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DevelopedEmerging
86%
14%
93%
7%
2006 2011
Johnson & Johnson Growth Drivers
• Creating Value through Innovation
• Global Reach/Local Focus
• Excellence in Execution
• Leading with Purpose
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Source: IMS National Sales Perspectives, Jun 2012, Rx only
Excellence in Execution
Sales from 2009-Q2 2012, Product Launches through June 2012
US Pharmaceutical Sales Generated from 2009-2012 Product Launches
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RANK COMPANY ($MM)1 JOHNSON & JOHNSON $3,388 2 PFIZER $2,187 3 SANOFI $2,143 4 NOVARTIS $1,883 5 TAKEDA $1,782 6 VERTEX PHARMA $1,602 7 BRISTOL-MYERS SQB. $1,491 8 NOVO NORDISK $1,261 9 BOEHRINGER INGEL $1,222
10 AMGEN $964 11 TEVA $786 12 LILLY $730 13 MERCK & CO $728 14 GLAXOSMITHKLINE $658 15 UCB $550
Excellence in Execution
Janssen Is the Fastest Growing Top 20 Company in EMEAEMEA top 20 pharmaceutical companies growth rate (%) YTD June 2012 vs. PY
Market Performance: EMEA (Europe, Middle East and Africa)
-15-13
-8-6
-5-4
-3-2-2-2
-1-1
12
33
45
711
1
LillyAstraZeneca
TakedaPfizer
GlaxoSmithKlineSanofi
Merck KGAANovartis
BayerServierRoche
MenariniMerck & Co
TevaAbbott
Boehringer IngelBristol-Myers Squibb
Novo NordiskGilead
JanssenEMEA
Janssen 2Q12 EMEA sales rank is 7 and quarter growth ranked at 1 in the top 20 companies and has an Evolution Index of 110. Source: IMS MIDAS.
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-10-3
-3-2
-2-1-1
00
12
333
455
79
917
2
Excellence in Execution
Janssen Is the Fastest Growing Top 25 Company in JapanJapan top 25 pharmaceutical companies growth rate (%) YTD June 2012 vs. PY
Market Performance: Japan
Janssen 2Q12 Japan sales rank is 22 and quarter growth ranked at 1 in the top 25 companies and has an Evolution Index of 122. Source: IMS MIDAS.
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Transforming Our Business to Transform the Lives of Patients
• Leveraging a revitalized and industry-leading portfolio
• Driving growth from core brands
• Achieving strong growth from new products launched in 2009-2012
• Broadening geographic reach
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In Summary
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Paul Stoffels, M.D.Chief Scientific Officer
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An Enterprise Approach to Innovation
• Adopting an end-to-end strategy
• Accessing the best science – internal or external
• Ensuring operational excellence
• Deploying world class expertise and talent
• Leveraging capabilities across sectors for impact on healthcare
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Creating Value Through InnovationPharmaceuticals: End-to-End Strategy Focused on Five Therapeutic Areas
NEUROSCIENCE
Alzheimer’s diseaseMood disordersSchizophrenia Chronic pain
CARDIOVASCULAR& METABOLISM
Cardiovascular disease Diabetes
Heart failure
IMMUNOLOGY
Inflammatory bowel disease
Rheumatoid arthritis Psoriasis
Pulmonary
ONCOLOGY
ProstateLung
B-cell malignancies Breast
INFECTIOUS DISEASES
& VACCINES
HIV HCV
InfluenzaVaccines
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Launched in 2011
Creating Value Through InnovationLeading Portfolio of New, Differentiated Medicines
NEUROSCIENCE CARDIOVASCULAR& METABOLISM
IMMUNOLOGY ONCOLOGYINFECTIOUS
DISEASES & VACCINES
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Creating Value Through InnovationExciting Late Stage Pipeline of New, Differentiated Medicines
NEUROSCIENCE CARDIOVASCULAR& METABOLISM
IMMUNOLOGY ONCOLOGYINFECTIOUS
DISEASES & VACCINES
• XARELTO®:VTE, ACS
• Canagliflozin: Type 2 diabetes, fixed dose combination with Metformin
• SIMPONI®: RA (IV), UC & JIA
• STELARA®: PsA, CD & RA
• Sirukumab:(CNTO 136); RA
• CNTO 1959:PsO, RA
• ASP015K: (JAK inhibitor);RA
• INVEGA®
SUSTENNA®: (3 month formulation)Schizophrenia
• Fulranumab1,2: Pain
• ZYTIGA®:Chemo-naïve mCPRC, metastatic breast
• Siltuximab:Castleman’s Disease
• Ibrutinib:(PCI-32765);B-Cell malignancies
• Intetumumab: (CNTO 95); Melanoma
• Daratumumab:Multiple Myeloma
• Simeprevir:(TMC435); Hepatitis C
• Bedaquiline:MDR TB
• Flucell: Influenza
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1. Phase 2 studies in cancer pain ongoing2. Discussions with FDA in progress regarding phase 3 studies for other pain indications
Creating Value Through InnovationExciting Late Stage Pipeline of New, Differentiated Medicines
NEUROSCIENCE CARDIOVASCULAR& METABOLISM
IMMUNOLOGY ONCOLOGYINFECTIOUS
DISEASES & VACCINES
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1. Phase 2 studies in cancer pain ongoing2. Discussions with FDA in progress regarding phase 3 studies for other pain indications
• XARELTO®:VTE, ACS
• Canagliflozin: Type 2 diabetes, fixed dose combination with Metformin
• INVEGA®
SUSTENNA®: (3 month formulation)Schizophrenia
• Fulranumab1,2: Pain
• ZYTIGA®:Chemo-naïve mCPRC, metastatic breast
• Siltuximab:Castleman’s Disease
• Ibrutinib:(PCI-32765);B-Cell malignancies
• Intetumumab: (CNTO 95); Melanoma
• Daratumumab:Multiple Myeloma
• Simeprevir:(TMC435); Hepatitis C
• Bedaquiline:MDR TB
• Flucell: Influenza
• SIMPONI®: RA (IV), UC & JIA
• STELARA®: PsA, CD & RA
• Sirukumab:(CNTO 136); RA
• CNTO 1959:PsO, RA
• ASP015K: (JAK inhibitor);RA
Canagliflozin
• Oral, once-daily • Shown in studies to lower glucose and contribute to weight loss • Potential first choice for add-on therapy to metformin
Development Timeline:• Phase 3 program enrolled over 10,300 patients across a spectrum
of patients with type 2 diabetes– CANVAS
• Prospective cardiovascular safety study evaluating over 4,300 patients
• Insulin sub-study presented at the European Association for the Study of Diabetes (EASD)
• Ongoing post approval cardiovascular safety analysis• US filing, May 31, 2012; EU filing, June 26, 2012
– 5 additional filings submitted worldwide through Q3
• Additional Indication: Fixed dose combination with metformin
A Novel SGLT2 Inhibitor for Type 2 Diabetes
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Simeprevir (TMC435)
• One pill once daily dosing• Co-development with Medivir• Significantly improved viral cure rates in phase 2b studies
– Treatment-naïve and treatment-failure patients
Development Timeline:• Global phase 3 studies ongoing
– 2 in naïve patients and 1 in relapsing patients– 1 in non-responder population– Phase 3 studies also ongoing in Japan
• WW rights except the Nordics • Interferon free combination regimens being studied
– 2 studies in phase 2: in combination with GS7977 and BMS790052• Targeted filing 1H 2013 US, EU and Japan
Potential Best-in-Class Protease Inhibitor for Chronic Hepatitis C
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Ibrutinib (PCI-32765)
• Collaboration with Pharmacyclics, Inc.– Co-development and co-commercialization
• New form of oral therapy for patients with B-Cell malignancies
• Multiple potential indications: Mantle Cell Lymphoma, Chronic Lymphocytic Leukemia, Follicular Lymphoma, Diffuse Large B-Cell Lymphoma, Multiple Myeloma
Development Timeline: • Multiple studies enrolling now
– Phase 2 study in MCL– Two phase 3 studies for relapsed and refractory CLL
First-in-Class Bruton’s tyrosine kinase (Btk) Inhibitor for B-Cell Malignancies
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Creating Value Through InnovationSignificant Line Extensions: Pipelines in a Product
NEUROSCIENCE CARDIOVASCULAR& METABOLISM
IMMUNOLOGY ONCOLOGYINFECTIOUS
DISEASES & VACCINES
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1. Phase 2 studies in cancer pain ongoing2. Discussions with FDA in progress regarding phase 3 studies for other pain indications
• XARELTO®:VTE, ACS
• Canagliflozin: Type 2 diabetes, fixed dose combination with Metformin
• INVEGA®
SUSTENNA®: (3 month formulation)Schizophrenia
• Fulranumab1,2: Pain
• ZYTIGA®:Chemo-naïve mCPRC, metastatic breast
• Siltuximab:Castleman’s Disease
• Ibrutinib:(PCI-32765);B-Cell malignancies
• Intetumumab: (CNTO 95); Melanoma
• Daratumumab:Multiple Myeloma
• Simeprevir:(TMC435); Hepatitis C
• Bedaquiline:MDR TB
• Flucell: Influenza
• SIMPONI®: RA (IV), UC & JIA
• STELARA®: PsA, CD & RA
• Sirukumab:(CNTO 136); RA
• CNTO 1959:PsO, RA
• ASP015K: (JAK inhibitor);RA
Creating Value Through InnovationSignificant Line Extensions: Pipelines in a Product
NEUROSCIENCE CARDIOVASCULAR& METABOLISM
IMMUNOLOGY ONCOLOGYINFECTIOUS
DISEASES & VACCINES
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1. Phase 2 studies in cancer pain ongoing2. Discussions with FDA in progress regarding phase 3 studies for other pain indications
• XARELTO®:VTE, ACS
• Canagliflozin: Type 2 diabetes, fixed dose combination with Metformin
• INVEGA®
SUSTENNA®: (3 month formulation)Schizophrenia
• Fulranumab1,2: Pain
• ZYTIGA®:Chemo-naïve mCPRC, metastatic breast
• Siltuximab:Castleman’s Disease
• Ibrutinib:(PCI-32765);B-Cell malignancies
• Intetumumab: (CNTO 95); Melanoma
• Daratumumab:Multiple Myeloma
• Simeprevir:(TMC435); Hepatitis C
• Bedaquiline:MDR TB
• Flucell: Influenza
• SIMPONI®: RA (IV), UC & JIA
• STELARA®: PsA, CD & RA
• Sirukumab:(CNTO 136); RA
• CNTO 1959:PsO, RA
• ASP015K: (JAK inhibitor);RA
Creating Value Through InnovationMultiple New Partnership Models to Access External Innovation
NEUROSCIENCE
NEUROSCIENCE CARDIOVASCULAR& METABOLISM IMMUNOLOGY
ONCOLOGY INFECTIOUS DISEASES & VACCINES
PLATFORMS and DIAGNOSTICS
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Creating Value Through InnovationMultiple New Partnership Models to Access External Innovation
NEUROSCIENCE
45
NEUROSCIENCE CARDIOVASCULAR& METABOLISM IMMUNOLOGY
ONCOLOGY INFECTIOUS DISEASES & VACCINES
PLATFORMS and DIAGNOSTICS
Extending Global Reach with Local FocusAccessing External Innovation Through J&J Innovation Centers
Innovation center
Located at world’s leading innovation hot spots
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• Scientific expertise• Deal making capabilities• Business expertise
• Academia• Small Biotech• Consortia• VC’s
Extending Global Reach with Local FocusAccessing External Innovation Through J&J Innovation Centers
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San Francisco
BostonLondon
Shanghai
Excellence in Execution
• World class development capabilities– Successful execution of multiple large clinical programs– Industry-leading benchmark timelines for filings and submissions
• Ability to develop, file and launch drugs simultaneously across the globe
• Accelerating pipelines in China and Japan
• Excellence in safety surveillance– Leveraging of global footprint to deliver around-the-clock
pharmacovigilance – Assuring pan-lifecycle, global safety risk management for every product
• Industry leading NME success rates with fastest cycle time*
Leveraging Global Operational Excellence
* Proprietary research
Result: Lower cost/NME vs. industry median*
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Leading with Purpose
• Health: the basis of our business
• Years of lives saved and quality of life improved– Enhancing broad and global access to medicines– Facilitating developing world access to HIV therapies– Significant donor of de-worming medications for children in the
developing world
• Bringing the power of science for global health– Bedaquiline (TMC207): TB drug dev with TB Alliance – TMC120: Vaginal Microbicide, royalty-free license to (IPM)– EDURANT™ (TMC278) LA: Collaboration with Gates Foundation– Vaccines
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Our Strategy Is Delivering
• Industry-leading portfolio
• Driving growth from core brands, and achieving strong growth from new products
• Deep expertise and world class capabilities
• Operational excellence to deliver globallyand competitively
• Creating value for society
• Bringing business back to growth
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Questions and Answers
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Dominic CarusoVice President, Finance and Chief Financial Officer
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