Slide 1: Slide 1
Slide 2: Content Overview
Content Overview • Operating Principles • Historical Performance • Segment Overview • Second Quarter 2004 Results • Outlook
Slide 3: Operating Principles
OPERATING PRINCIPLES
Slide 4: Operating Principles
Operating Principles • Broadly based in human health care • Decentralized management • Leadership in growth markets • Leadership based on superior innovation
Slide 5: World's Most Comprehensive and Broadly Based Health Care Company
World’s Most Comprehensive and Broadly Based Health Care Company • 2003 Sales of $41.9 Billion • Over 200 operating companies in 57 countries around the world • Leadership positions in ethical and OTC pharmaceuticals, medical/surgical supplies, diagnostics and a variety of consumer products • Except
Slide 6: Leadership in Growth Markets
Leadership in Growth Markets Approximately 70% of sales come from products where we hold #1 or #2 market share
Slide 7: Leadership in Growth Markets (selected examples)
Leadership in Growth Markets (selected examples) Anti-Anemia #1 Blood Glucose Monitoring #2 Antipsychotics #2 Blood Screening & Typing #1 Contraception #1 Disposable Contact Lenses #1 Quinolone Anti-Infectives # 2 OTC Pharmaceuticals #1 Coronary Stents #1 Sanitary Protection #2 Minimally Invasive Su
Slide 8: Superior Innovation
Superior Innovation • Aggressive Investment in Research & Development • Extensive Business Alliances/Collaborations • Selective Acquisitions
Slide 9: Total Research Expense
Total Research Expense $U.S. Billions $4.7 $2.5 $1.3 1993 1998 2003 9.3% Percent to Sales 11.2%
Slide 10: Partner of Choice
Partner of Choice • Over 100 new third party relationships annually • In house venture capital (JJDC) – Over $400 million invested as of 2003 in a broad array of companies • Focus on early stage product development
Slide 11: Mergers & Acquisitions
Mergers & Acquisitions Strategic moves to enhance our growth rate and create value for our shareholders Typically modest in size: 58 in the last decade • Egea Biosciences (5/04): Acquired Egea’s novel and proprietary technology platform to strengthen our position as a leader in biomedicines and prot
Slide 12: Mergers & Acquisitions
Mergers & Acquisitions Occasionally Substantial • DePuy (11/98 - $3.7B) - Combined with existing Orthopaedics business established J&J as leader in third largest medical device category • Centocor (10/99 - $4.9B) - Leader in monoclonal antibody technology, acute vascular care and immunology products
Slide 13: Historical Performance
HISTORICAL PERFORMANCE
Slide 14: Worldwide Net Trade Sales
Worldwide Net Trade Sales By Geographic Area 2003 23% 23% 60% 60% 5% 5% 12% 12% $41.9 Billion U.S. U.S. W. W. Hem Hem (ex. (ex. US) US) Asia Asia Pacific Pacific & & Europe Europe Africa Africa
Slide 15: Sales by Segment
Sales by Segment MD&D $14.9 Billion Consumer $7.4 Billion 35.6% 17.8% 46.6% Pharmaceutical $19.5 Billion 2003
Slide 16: Historical Performance
Historical Performance • 71 Consecutive years of Sales increases • 19 Consecutive years of double digit Earnings increases • 42 Consecutive years of Dividend increases Reported Reported Operational Operational Net Net Year Year Sales Sales Growth Growth Sales Sales Growth Growth Income Income Growth
Slide 17: Shareholder Return Thru 12/31/03
Shareholder Return Thru 12/31/03 Years 1 3 5 10 % % % % S&P S&P 500 500 Index Index 28.7 28.7 (4.0) (4.0) (0.6) (0.6) 11.1 11.1 S&P S&P Pharmaceutical Pharmaceutical Index Index 8.8 8.8 (9.4) (9.4) (2.3) (2.3) 16.9 16.9 S&P S&P Healthcare Healthcare Equip Equip Index Index 32.0 32.0 3.1 3.1 8.2 8.2
Slide 18: 1993-2003 Sales Per Employee
1993-2003 Sales Per Employee $U. S. Thousands 400 $378.4 350 300 $247.8 $247.8 250 200 $166.8 $166.8 150 100 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Slide 19: Selling General & Administrative
Selling General & Administrative 1993-2003 % to Sales 45.0% 40.0% 38.7% 38.2% 37.5% 36.7% 36.3% 36.8% 35.8% 36.0% 34.8% 35.0% 33.7% 33.7% 30.0% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Slide 20: Segment Overview
SEGMENT OVERVIEW
Slide 21: Consumer Segment Overview
Consumer Segment Overview • Worldwide annual sales in 2003 of $7.4 billion • Worldwide 2Q04 sales of $2.0 billion, +10.0% vs 2Q03 (+7.5% operational growth and 2.5% currency) • Principal products in Personal Care and Hygiene, Over-the-Counter Pharmaceuticals and Nutritionals which include: Adult Ski
Slide 22: Medical Devices & Diagnostics Segment Overview
Medical Devices & Diagnostics Segment Overview • Worldwide annual sales in 2003 of $14.9 billion • 2Q04 sales $4.1 billion, +11.8% vs 2Q03 (+8.3% operational growth and 3.5% currency) • Largest medical device company in the world • Global presence in medical, surgical and diagnostic categories • 7 l
Slide 23: 2003 Sales Growth – Medical Device & Diagnostic Segment
2003 Sales Growth – Medical Device & Diagnostic Segment Largest Medical Device Company in the World 2003 2003 Sales Ops Growth Cordis $2.7B 59% DePuy $3.0B 14% Ethicon $2.6B 6%* Ethicon Endo $2.6B 12%* LifeScan $1.4B 3%* OCD $1.2B 2% Vistakon $1.3B 5% *Including GWC, Ethicon growth would have been 3
Slide 24: Pharmaceutical Segment Overview
Pharmaceutical Segment Overview • Worldwide annual sales in 2003 of $19.5 billion • 2Q04 sales of $5.4 billion, +11.1% vs 2Q03 (+9.1% operational growth and 2.0% currency) • Contributes 55%-60% of operating profit • Over 100 drugs marketed in approximately 125 countries • 34 drugs greater than $50 m
Slide 25: Pharmaceutical Pipeline
Pharmaceutical Pipeline Late Drug Early Full Discovery Development Development 2Q’2003 127 70 16 13 52 NME NME LE NME LE 2Q’2004 157 67 13 15 59 NME NME LE NME LE Change + 30 -3 -3 +2 +7 NME NME LE NME LE
Slide 26: Recent Pharmaceutical Approvals
Recent Pharmaceutical Approvals • PROCRIT – 1x week dosing for anemia associated with cancer chemotherapy • VELCADE – OUS approval for Multiple Myeloma for patients who have received two prior therapies • ORTHO TRI-CYCLEN – Pediatric extension • TOPAMAX – Epilepsy recommended daily dose change from
Slide 27: 2Q 2004 Results
ota hla 2Q 2004 Results
Slide 28: 2Q 2004 Highlights
2Q 2004 Highlights Total Operations Currency • Sales Growth – Worldwide 11.1% 8.5% 2.6% – U.S. 9.1% – Int’l 14.1% 7.8% 6.3% • Net Earnings* 16.5% • EPS Growth* 17.1% *Excluding IPR&D in Q2’03
Slide 29: 2Q 2004 Sales Growth by Segment
2Q 2004 Sales Growth by Segment Total Operations Currency Consumer 10.0% 7.5% 2.5% Med Device & Diagnostics 11.8% 8.3% 3.5% Pharmaceutical 11.1% 9.1% 2.0% Total Company 11.1% 8.5% 2.6%
Slide 30: 2Q 2004 Consumer Sales (+7.5%)
2Q 2004 Consumer Sales (+7.5%) Growth Drivers: • McNeil Consumer Pharmaceuticals and Nutritionals (+17%) – McNeil Europe acquisition – Nutritional Products (SPLENDA) • Adult Skin & Hair Care (+10%) – AVEENO, NEUTROGENA, RoC & CLEAN & CARE products • Baby & Kids Care (+5%) – MILK LOTION, BALMEX diape
Slide 31: 2Q 2004 Medical Devices & Diagnostics Sales (+8.3%)
2Q 2004 Medical Devices & Diagnostics Sales (+8.3%) Growth Drivers • LifeScan (+24%) – ONE TOUCH ULTRA • Vision Care (+14%) – ACUVUE ADVANCE with HYDRACLEAR in the US; 1-Day ACUVUE and 1-DAY ACUVUE COLOURS in Japan • DePuy (+9%) – Joint and Spinal Reconstruction products and Mitek Sports medicine pr
Slide 32: 2Q 2004 Pharmaceutical Sales +9.1%
2Q 2004 Pharmaceutical Sales +9.1% Key Products: % Change • ACIPHEX/PARIET (+13%) • DURAGESIC (+43%) • EPREX/PROCRIT (-16%) • FLOXIN/LEVAQUIN (-1%) • HORMONAL CONTRACEPTIVES (+27%)* • REMICADE (+28%) • RISPERDAL (+8%) • SPORANOX (+4%) • TOPAMAX (+26%) *Adjusted for rebate reserve in Q2’04, operation
Slide 33: Outlook
Jota obi OUTLOOK
Slide 34: The Future for Health Care is Bright
The Future for Health Care is Bright • Demographics support growing demand • Strong market demand for products which prolong and improve the quality of life • Pharmaceuticals and innovative medical devices are key to reducing health care costs
Slide 35: Uniquely Positioned to Capitalize on Growing Demand
Uniquely Positioned to Capitalize on Growing Demand • Broadly based leadership positions • Superior financial strength • Geographic reach; ability to rapidly introduce new products in markets around the world • Decentralized management structure enables timely decisions • Proven track record in driv
Slide 36: Slide 36