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WMAC 2023-Johnson and Johnson

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F500-2023-040-Johnson-and-Johnson

The health care company is best known for household items like baby shampoo and Tylenol, but pharmaceuticals and medical technology are its big revenue drivers, bringing in $52.5 billion and $27.4 billion respectively, compared to $14.9 billion in the consumer health segment. 
<ul> 
 	<li>Revenue inched up 1.2% to $94.9 billion in 2022, but profits fell 14.1% to $17.9 billion.</li> 
 	<li>The U.S. government phased out Johnson &amp; Johnson’s one-shot COVID vaccine, hurting the company’s pharmaceutical division.</li> 
 	<li>In April 2023, the company settled a decade-long legal dispute in which consumers accused J&amp;J’s iconic baby powder of causing cancer. The company agreed to pay $8.9 billion to tens of thousands of plaintiffs but has not admitted wrongdoing. Before the settlement is final, a court must accept a controversial bankruptcy filing by a subsidiary that Johnson &amp; Johnson created to shield its corporate assets from litigation. A court rejected an earlier bankruptcy filing aimed at reaching a settlement, which allowed thousands of related cases against J&amp;J to go ahead.</li> 
</ul>

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WMAC-2022-17-Johnson and Johnson

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WMAC 2021-15-Johnson & Johnson

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G500-2021-094-Johnson & Johnson

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G500-2020-104-JJ

The sprawling 134-year-old health conglomerate eked out 0.6% sales growth in 2019 thanks to the strong performance of its pharmaceutical business, and particularly its immunology and oncology drugs. J&amp;J’s consumer business—with a portfolio that includes Neutrogena, Tylenol, and Listerine—was boosted by the acquisition of Zarbee’s, a purveyor of naturally based over-the-counter remedies. The company continued its push into the robotic surgery market in an effort to revive its struggling medical device business. J&amp;J is also mired in litigation surrounding its opioid and baby powder products. (In May, it announced it would stop selling talc-based baby powder.) While COVID-19 has dinged sales of some of its products—like contact lenses and artificial knees and hips—the company is one of the frontrunners in the race for a vaccine; J&amp;J has said it hopes to begin late-stage human trials by the end of September.

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F500-2020-035-Johnson and Johnson

The sprawling 134-year-old health conglomerate eked out 0.6% sales growth in 2019 thanks to the strong performance of its pharmaceutical business, and particularly its immunology and oncology drugs. J&amp;J’s consumer business—with a portfolio that includes Neutrogena, Tylenol, and Listerine—was boosted by the acquisition of Zarbee’s, a purveyor of naturally based over-the-counter remedies. The company continued its push into the robotic surgery market in an effort to revive its struggling medical device business. J&amp;J is also mired in litigation surrounding its opioid and baby powder products. No surprise, the company has been impacted by COVID-19 in various ways; while its pharma division is racing to develop a vaccine, sales of products like artificial knees and hips are down due to the cancellation of elective surgeries during the pandemic.

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Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Johnson &amp; Johnson, founded in 1886, is among the world’s largest and most influential health care companies. It is involved in the research, development, manufacture, and distribution of innovative medicines and medical technologies. The company’s innovative medicine business operates in areas including oncology, immunology, neuroscience, and cardiopulmonary treatment. In medtech, the company is focused on developing and delivering cardiovascular, orthopedics, surgery, and vision solutions.

Q2 2026

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Q4 2025

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Q4 2024

Johnson & Johnson (JNJ): Company Profile, Stock Price, News, Rankings

legacy

Johnson & Johnson

johnson & johnson

Good morning, and welcome to Johnson and Johnson's 4th Quarter 2024 Earnings Conference Call. All participants will be in a listen only mode until the question and answer session of the conference.

If anyone has any objections, you may disconnect at this time. I'd now like to turn the conference call over to Johnson and Johnson. You may begin.

Hello, everyone. This is Jessica Moore, Vice President of Investor Relations for Johnson and Johnson. Welcome to our company's review of business results for the Q4 and full year 2024 our financial outlook for 2025. A few logistics before we get into the details. As a reminder, you can find additional materials, including today's presentation and associated schedules on the Investor Relations section of the Johnson and Johnson website at investor.jandj.com.

Please note that this presentation contains forward looking statements regarding, among other things, the company's future operating and financial performance, market position and business strategy. You are cautioned not to rely on these forward looking statements, which are based on the current expectations of future events using the information available as of the date of this recording and are subject to certain risks and uncertainties that may cause the company's actual results to differ materially from those projected. A description of these risks, uncertainties and other factors can be found in our SEC filings, including our 2023 Form 10 ks, which is available at investor. Jnj.com and on the SEC's website. Additionally, several of the products and compounds discussed today are being developed in collaboration with strategic partners or licensed from other companies.

This slide acknowledges those relationships. Moving to today's agenda. Joaquin Duado, our Chairman and CEO, will open with a few comments on our performance and key catalysts for the company. I will then review the Q4 sales and P and L results as well as full year 2024 results for the enterprise. Joe Walk, our CFO, will then close by sharing an overview of our cash position, capital allocation priorities and guidance for 2025.

Jennifer Taubart, John Reed and Tim Schmid, our innovative medicine and medtech leaders will be joining us for Q and A. To ensure we provide enough time to address your questions, we anticipate the webcast will last a little over 60 minutes. With that, I will now turn the call over to Joaquin.

Thank you, Jess, and good morning, everyone. 2024

a year of progress and transformation for Johnson and Johnson. Today, we operate in a broad set of high unmet need, high growth and high innovation segments, including oncology, immunology and neuroscience in innovative medicine and cardiovascular, vision and robotics in medtech. In 2024, we continue to make disciplined decisions to exit lower priority businesses while investing industry leading amounts in our pipeline, approximately EUR 50,000,000,000 in R and D and M and A in the last year, inclusive of the recently announced acquisition agreement with IntraCellbar Therapies, which I will speak about shortly. And while we have been through a period of transformation, the fundamentals of our company remain the same. Indeed, our enduring success is rooted in 2 things.

1st, we are a purpose driven company guided by our credo. And second, we are broadly diversified, meaning that we can truly lead where medicine is going. No other company has the span of expertise and capabilities that Johnson and Johnson has. No other company can impact the entire patient journey as we do. We are not just a pharma company or a medtech company.

We are a healthcare company. And our strategies are disease centric focused on end to end solutions. Just think about multiple myeloma and the impact of DARZALEX, CARVICTI, TEGVAILI and TALVE. Think about heart recovery and the impact of AbeOMET's Impella heart pumps and the promise of V waves minimally invasive interatrial shunt. Think about mental health and the impact of our INVEGA portfolio, SPRAVATO and the potential of the intracellular therapies acquisition we announced last week.

And think about inflammatory bowel disease and the impact of STELARA and TREMFYA and the potential of our targeted oral peptide that blocks IL-twenty three, I. E. G. 4,804, our antibody therapeutic targeting IL-twenty three and TNF. As the only major health care company focused both on pharmaceuticals and medical technology, we are unique in the industry with the financial muscle, global reach and this is expertise to deliver the sustained high pace of growth and innovation that is the hallmark of Johnson and Johnson.

These strategic decisions we made in 2024 position Johnson and Johnson for sustained growth through the second half of the decade and beyond and strengthen our confidence in our 2025 guidance. Now to the numbers for 2024. Over the full year, we delivered robust operational sales growth of 7% excluding the COVID-nineteen vaccine. With SPRAVATO surpassing EUR 1,000,000,000 in annual sales, we now have 26 platforms that generate at least EUR 1,000,000,000 in annual revenue. In Innovative Medicine, we reported a 3rd consecutive quarter of sales exceeding EUR 14,000,000,000 with 10 key brands growing double digit.

Across the full year, we achieved strong growth in oncology, neuroscience and pulmonary hypertension with immunology performing well despite the entry of biosimilars for Stelara in the EU. Equally impressive is our pace of innovation, which in 2024 resulted in 27 approvals in major markets, including FDA approvals of TREMFYA for the treatment of ulcerative colitis and Rybrev and DALASKRUS for first line treatment for patients with EGFR mutated advanced non small cell lung cancer. In 2024, we reported 18 positive readouts for registrational studies, initiated 16 Phase 3 studies and submitted 49 filings across major markets. And as you have seen over the last 3 weeks, we are off to a fast start in 2025. Ribervant and Las Cruces showed significant improvement in overall survival in first line treatment of advanced or metastatic non small cell lung cancer.

We received FDA approval of SPRAVATO as the 1st and only monotherapy for adults with treatment resistant depression. We received priority review for nipocalimab for the treatment of generalized myasthenia gravis in addition to the FDA breakthrough therapy and fast track designations for other indications received last year. And last week, we announced a new drug application with the FDA for TAR-two hundred, our intravascular drug releasing system for the treatment of non muscle invasive bladder cancer, an area of significant unmet need impacting as many as 1,000,000 patients per year. Turning to MedTech. For the full year, we reported a 2nd year of over EUR 30,000,000,000 in sales with growth across most part of the business, including particularly strong momentum in cardiovascular ambition.

Our pace of medtech innovation also continues to accelerate with 15 major products launched in 2024. Major highlights of the year include the approval of our Body Pulse post field ablation platform in several major markets and FDA clearance of our Bellys robotic assisted solution for the use in unicompartmental knee arthroplasty procedures as well as an expanded FDA indication for Impella heart pumps to treat pediatric patients and FDA clearance of Shockwave's JAVELINE peripheral IVL catheter for the treatment of tight, difficult to cross peripheral lesions. We also achieved the full market release of 10 major products including the Shockwave E8 peripheral IVL catheter in the U. S, version 8 of the Cartos III electro anatomical mapping system and our Technis Odyssey intraocular lens. And we progressed 18 clinical trial programs, including the IDE approval of our OTTAVA robotic surgical system, which allows clinical trials to begin at U.

S. Sites. And last year, we fortified our future by making significant value creating investments in M and A. These investments enable us to further shift our portfolio to address our main needs in high growth and high innovation markets. This included the acquisitions of Shockwave and B Wave in Medtech and Ambrx Proteologics and the NM26 biospecific antibody in innovative medicine And building on our nearly 70 year legacy neuroscience, we announced last week plans to acquire IntraCellular Therapies, a biopharmaceutical company focused on the development and commercialization of therapeutics for central nervous system disorders.

This unique opportunity to add intracellular therapies reflects our commitment to transforming care and advancing research in mental health. It also further solidifies sales growth above analyst expectations now and through the remainder of the decade. Together, these transactions represent industry leading levels of investment for the company, providing strategic near and long term growth catalyst for Johnson and Johnson. Turning to 2025 and as previously guided back at the end of 2023, we expect to deliver operational sales growth of 3%, overcoming headwinds associated with U. S.

Biosimilar entries for Stelara and the impact of the party redesign and continued macroeconomic pressures in China. Perhaps even more impressive, we are planning for adjusted operational earnings per share growth of nearly 9%. I cannot think of any other company that would be able to deliver growth through the 1st year of losing exclusivity of a multibillion dollar product. We are able to achieve these results because of the diversification of our business, strength of our commercial assets as well as the breadth of our pipeline with additional launches in 2025 including Tremfya in IBD, Ribbreba Nalascruz in lung cancer and body pulse and the dual energy Thermocool Smart Touch SF Catheter in electrophysiology. In closing, I want to thank everyone at Johnson and Johnson for all that they do to help patients.

We are starting the year from a position of strength and we have confidence in our sales growth and EPS guidance for 2025. And with that, I'll turn the call over to Jess.

Thank you, Joaquin. Moving to our financial results. Unless otherwise stated, the results and guidance highlighted today reflect the continuing operations of Johnson and Johnson. Furthermore, the percentages quoted represent operational results and therefore excludes the impact of currency translation. Starting with Q4 2024 sales results.

Worldwide sales were $22,500,000,000 for the quarter. Sales increased 6.7% with growth of 10% in the U. S. And 2.5% outside of the U. S.

Worldwide growth was negatively impacted by 290 basis points due to Stelara and positively impacted by 100 basis points due to acquisitions and divestitures. It's important to note growth in Europe was negatively impacted by 7 20 basis points due to the loss of exclusivity of STELARA and the COVID-nineteen vaccine. Turning now to earnings. For the quarter, net earnings were $3,400,000,000 and diluted earnings per share was $1.41 versus diluted earnings per share

$1.70 a year ago. Excluding after tax intangible asset amortization expense and special items for both periods, adjusted net earnings for the quarter were $4,900,000,000 and adjusted diluted earnings per share was $2.04 representing decreases of 11.1% and 10.9%, respectively, compared to the Q4 of 2023. Earnings per share in the quarter was negatively impacted by $0.22 of acquired IPR and D expense related to the Z Wave acquisition. For the full year 2024, sales were $88,800,000,000 Sales grew 5.9 percent with growth of 8.3 percent in the U. S.

And 2.9% outside of the U. S. ZULARA and the COVID-nineteen vaccine negatively impacted worldwide growth by 260 basis points. Acquisition and divestitures positively impacted worldwide growth by 50 basis points. Growth in Europe was negatively impacted by 670 basis points due to the COVID-nineteen vaccine and the loss of exclusivity of STELARA.

Net earnings for the full year 2024 were $14,100,000,000 and diluted earnings per share was $5.79 versus diluted earnings per share of $5.20 a year ago. Full year 2024 adjusted net earnings were $24,200,000,000 and adjusted diluted earnings per share was $9.98 representing a decrease of 4.6% and an increase of 0.6%, respectively, versus full year 2023. Earnings per share in the year was negatively impacted by $0.67 due to acquired IPR and D charges on various transactions throughout the year. I will now comment on business sales performance in the quarter. Beginning with Innovative Medicine.

Worldwide sales of $14,300,000,000 increased 6.5% excluding the COVID-nineteen vaccine with growth of 11.1% in the U. S. And a decline of 0.3% outside of the U. S. Stelara negatively impacted worldwide growth by 4.90 basis points.

Innovative medicine growth was driven by our key brands and continued uptake from recently launched products with 10 assets delivering double digit growth. Results across the portfolio continue to be positively impacted by price adjustments associated with Argentina hyperinflation consistent with market practice. Starting with oncology, we continue to drive strong sales growth across our multiple myeloma portfolio. DARZALEX growth was 23.5%, primarily driven by share gains of over 3 points across all lines of therapy and 6 points in the frontline setting as well as market growth. This marks Johnson and Johnson's first brand to achieve over $3,000,000,000 in sales in a quarter.

CARVICTI achieved sales of $334,000,000 with growth of over 100% driven by share gains and capacity expansion. This reflects sequential growth of 17.3% aligned with our expectations of accelerating growth in the back half of the year. TechValley sales were $146,000,000 in the quarter with growth of 18%, reflecting a strong launch in the relapsed refractory setting. Demand remains strong despite continued adoption of longer duration dosing intervals. Finally, within our multiple myeloma portfolio, Talveig continued its launch trajectory with another quarter of strong growth.

As a reminder, we anticipate disclosing Talve sales in the Q1 of 2025, which are currently reported in the category other oncology. ERLEADA continues to deliver strong growth of 22.7 percent, primarily driven by share gains and market growth, reaching $3,000,000,000 in annual sales for the first time. Rybovant, our bispecific antibody for non small cell lung cancer contributed to growth in the category other oncology as we continue to expand approved indications. We also anticipate disclosing ribavant sales in the Q1 of 2025. Within immunology, we saw sales growth in TREMFYA of 5.6%, driven by strong market growth and share gains in PSO and PSA, partially offset by unfavorable patient mix and inventory dynamics.

We are excited about the recent UC launch and expect to see strong uptake of the IBD indications in 2025. STELARA declined 13.6 percent driven by the impact of current and anticipated biosimilar competition. As a reminder, biosimilar competition has entered the U. S. In January 2025.

REMICADE and SYMPHONY worldwide sales were positively impacted by return of distribution rights in Europe. In neuroscience, SPRAVATO growth of 45.3% continues to be driven by increased physician and patient demand. As Joaquin mentioned, SPRAVATO has exceeded $1,000,000,000 in annual sales for the first time. Other neuroscience decline was driven by the loss of a SPINRAZA tender in Europe. In pulmonary hypertension, OXOMIC grew 2.5%, driven by market growth and share gains, partially offset by inventory dynamics in the U.

S. And austerity measures in Europe. Starting in 2025, we will begin to report OXEMBI, which is currently reported in the category other pulmonary hypertension in OPSUMIT. OBTRAVI grew 12.1 percent driven by market growth, patient mix and share gains. Finally, Xarelto sales growth was driven by favorable patient mix.

I'll now turn your attention to MedTech. Worldwide sales of $8,200,000,000 increased 7.6 percent both in the U. S. And outside of the U. S.

Acquisitions and divestitures had a net positive impact of 300 basis points on worldwide growth, 430 basis points in the U. S. And 150 basis points outside of the U. S. Overall, MedTech growth was driven by commercial execution and strength of new product introductions, partially offset by increased competitive PSA pressures in U.

S. Electrophysiology and continued headwinds in Asia Pacific, primarily in China. In cardiovascular, electrophysiology delivered growth of 7.3%. Performance was driven by global procedure growth, new product uptake and commercial execution, partially offset by competitive PFA ablation catheter uptake in the U. S.

And VBP in China. Despite the IV saline shortage in the U. S, Abiomed delivered growth of 13.2%, driven by strong growth in all regions and continued adoption of Impella 5.5 and Impella RP technology. Cardiovascular results also included $258,000,000 associated with the acquisition of Shockwave. Contact lenses and other grew 7.4 percent driven by trade inventory dynamics, continued strategic price actions, strong performance in Acuvue Oasis 1 day family of products as well as lapping prior year impacts from Russia sanctions.

Surgical Vision growth of 13.6% was driven by Technis PureSee and Technis EyeHands. Commercial execution partially offset by competitive pressures in the U. S. Orthopedics grew 2.5% inclusive of HITS growth of 5.6%, primarily driven by the success of recent product launches and commercial execution, partially offset by revenue disruption from the previously announced orthopedics transformation, impacts of China VBP and competitive pressures. Lastly, surgery grew 0.4% with the Aclaren divestiture negatively impacting results by approximately 130 basis points.

Performance was driven primarily by commercial execution, strength of new products across wound closure and biosurgery and continued price adjustments primarily associated with hyperinflation consistent with market practice. Growth was partially offset by competitive pressures in energy and endocutters as well as VBP and the anti corruption campaign in China. Now turning to our consolidated statement of earnings for the Q4 of 2024. I'd like to highlight a few noteworthy items that have changed compared to the same quarter of last year. We continue to invest strategically in research and development at competitive levels to fortify our future, investing $5,300,000,000 or nearly 24 percent of sales, which includes $540,000,000 of acquired IPR and D expense associated with the Z Wave acquisition.

Selling, marketing and administrative expense as a percent of sales deleveraged 150 basis points, driven by increased commercial investment in the Innovative Medicine business. Interest income and expense was a net income of $144,000,000 as compared to $212,000,000 of income last year, driven by lower interest rates earned on a lower average cash balance and higher interest rates on a higher average debt balance. Other income and expense was a net income of $161,000,000 compared to $421,000,000 of income in the prior year. This was primarily driven by lower gains on securities, a lower benefit related to employee benefit programs due to the discount rate, partially offset by lower litigation expense in 2024. Regarding taxes in the quarter, our effective tax rate was 11.7% versus 14.4% in the same period last year.

This decrease was primarily driven by post acquisition integration efforts that allowed the company to deduct certain acquisition costs for tax purposes as well as the resolution of prior tax matters both in jurisdictions outside of the U. S. Excluding special items, the effective tax rate was 8.8% versus 10.8% in the same period last year. I encourage you to review our upcoming 2024 10 ks filing for additional details on specific tax related matters. Lastly, I'll direct your attention to the box section of the slide, where we have also provided our income before tax, net earnings and earnings per share adjusted to exclude the impact of intangible amortization expense and special items.

Now let's look at adjusted income before tax by segment for the quarter. Innovative Medicine margin declined from 37.4% to 32.5%, primarily driven by strategic commercial investment and R and D pipeline advancement. MedTech margin declined from 15.5% to 10.8%, primarily driven by acquired IP R and D expense related to the Vwave acquisition. Please note that the MedTech margin was negatively impacted in both years due to expenses associated with the strategic acquisition of Laminar. When adjusting for these one time items, MedTech margin was relatively flat.

As a result, adjusted income before tax for the enterprise as a percentage of sales decreased from 29.2% to 24.1% with the Vwave acquired IPR and D expense impacting results by 2 40 basis points. When looking at the full year, Innovative Medicine, Medtech and the Enterprise adjusted income before tax remained relatively flat year over year when adjusting for the one time items highlighted on the slide, mainly acquired IPR and D expenses on various transactions across both years. This concludes the sales and earnings portion of the call. I am now pleased to turn it over to Joe.

Thank you, Jessica, and thanks everyone for joining us today. As you've heard already, we delivered solid overall Q4 and full year results in 2024, above the operational guidance we set at the beginning of the year when excluding acquisition costs we incurred to fortify our business for the future. We are particularly pleased with advancements made throughout the year, strengthening our pipeline, achieving key milestones across core therapeutic areas and platforms. We continue to prioritize investment and innovation, forge strategic partnerships that further enhance our differentiated business and focus on improving margins, positioning the company for near and long term growth. Additionally, we've made progress toward resolving the talc litigation.

As many of you are aware, our prepackaged bankruptcy plan received overwhelming support from current claimants and the futures claims representative and that support has only increased in recent months. The next milestone is the scheduled confirmation hearing commencing on February 18 in the Southern District of Texas Bankruptcy Court. Now let's get into the numbers starting with cash and capital allocation. We ended 2024 with approximately $25,000,000,000 of cash and marketable securities and approximately $37,000,000,000 of debt for a net debt position of approximately $12,000,000,000 Our focus on cash flow resulted in the company delivering approximately $20,000,000,000 of free cash flow during 2024, $1,600,000,000 more than in 2023 despite having higher litigation settlement payments during 2024, higher TCJA toll tax and 8 months of contribution from consumer health in 2023. Our ability to strategically invest and deploy capital that unlocks value has made Johnson and Johnson successful in the past and will be as important for our success moving forward.

We value a strong credit rating, which underscores the strength of Johnson and Johnson's financial discipline and enables us to execute against our capital allocation priorities. In research and development, we invested more than $17,000,000,000 or 19.4 percent of sales. We remain one of the top investors in R and D across all industries. 2024 marked the 62nd consecutive year of dividend increases. We know this use of capital is a priority for our investors.

We plan to continue to increase our dividend annually. We also deployed, announced or committed to over $32,000,000,000 in strategic value creating inorganic growth opportunities in the last 12 months. This amount includes larger transactions such as Shockwave, Proteologics, the NM26 bispecific antibody, V wave, the planned acquisition of intracellular therapies as well as more than 40 smaller early stage collaborations and partnerships to complement our businesses that are much more common for us than larger transactions. As we look ahead to 2025, we will maintain a heightened focus on cash flow generation to build on our strong financial foundation and judiciously deploy capital on behalf of shareholders to create value. Let's now discuss our full year guidance for 2025.

It is important to note that guidance at this time excludes the impact from the planned acquisition of IntraCellular Therapies, but I will provide some comments on that transaction in a few moments. We anticipate operational sales in the range of 2.5% to 3.5 percent with a midpoint of $91,300,000,000 or 3.0 percent in line with the expectation outlined at our late 2023 enterprise business review as Joaquin noted. Acquisitions and divestitures are expected to favorably impact operational growth by approximately 50 basis points resulting in an adjusted operational sales growth midpoint of 2.5%. Sales growth across our innovative medicine businesses will be driven by our proven assets such as DARZALEX, ERLEADA and SPRAVATO, our recently launched products, CARVICTI, TEGVELI and TALVAY and our new launches of TREMFYA in IBD and rivorant plus last clues in lung cancer. The strength of our portfolio enables innovative medicine to grow despite expanded STELARA biosimilar competition and approximately $2,000,000,000 negative impact from Part D redesign.

Medtech sales growth will be driven by our recent acquisitions Shockwave and Abiomed as well as continued uptake of our recently launched products such as Varipulse, Technis Odyssey, AccuVu, OASIS Max, the Velas portfolio of enabling technology and our Barb Suture and Hemostat portfolio. We continue to expect China to remain a headwind through 2025. Regarding VARAPULSE in the U. S, we are working diligently to complete our investigation and we'll provide an update when we have additional information to share. As a reminder, there's no impact to commercial activity to VARAPULSE outside of the United States.

As you know, we don't speculate on future currency movements. For today's call, we are utilizing yesterday's euro spot rate relative to the U. S. Dollar of 1.04 significantly below last quarter's euro spot rate of 1.10. This results in an estimated unfavorable foreign currency impact on sales of $1,700,000,000 or 2.0 percent.

As such, we estimate reported 2025 sales of $89,600,000,000 or 1% growth at the midpoint. Turning to other items on the P and L. Despite STELARA biosimilar competition and the impact of Part D redesign, we expect our 2025 adjusted pretax operating margins to increase by approximately 300 basis points, of which approximately half is driven by operating spend management and the remainder from reduced acquired IP R and D expense. This is about 50 basis points better than we discussed on the Q3 earnings call in October. We anticipate net other income to be $900,000,000 to $1,100,000,000 for 20.25.

The reduction versus last year is primarily driven by a lower benefit related to employee benefit programs based on discount rate assumptions, the non recurring monetization of royalty rights in 2024 and no longer receiving a Canvue dividend. Due to higher debt incurred associated with 2024 acquisitions and the reduction in interest rates earned on cash, we expect net interest income between $100,000,000 Finally, we are projecting an effective tax rate for 2025 in the range of 16.5% to 17.0% based on current tax laws and our anticipated geographic income mix across our businesses. Given all these factors, we expect adjusted operational earnings per share to grow 8.7% at the midpoint for a range of $10.75 to $10.95 While not predicting the impact of currency movements, utilizing the recent exchange rate previously referenced, our reported adjusted earnings per share for the year now estimates a full year negative impact of $0.25 As such, we expect reported adjusted earnings per share of $10.60 at the midpoint. When adjusting for this impact, it becomes clear that our operational EPS performance is considerably stronger than consensus assumed as only about half the analysts incorporated the impact of foreign currency into their models. A few initial considerations outlined on this chart regarding the planned acquisition of intracellular therapies, a transaction we plan to finance mainly with debt.

We are not planning for material near term cost synergies, rather we expect to accelerate penetration of CAPLYTA in existing markets, explore additional geographies to commercialize the portfolio and potentially accelerate research and development to expand into new indications and disease areas where high unmet need exists. Given this and assuming a close subject to regulatory review early in the Q2, we anticipate an acceleration of our sales growth of approximately 80 basis points. Inclusive of the impact of financing cost, the transaction is expected to have a dilutive impact on adjusted EPS of approximately $0.30 to $0.35 in 2025. Again, these are very preliminary thoughts, which will be influenced by when the transaction closes and borrowing rates. We will be sure to provide an update to our full year guidance shortly after the acquisition is complete.

I'll now provide some qualitative considerations on the phasing of notable events for your modeling. We expect both Innovative Medicine and MedTech operational sales growth to be higher in the second half of the year versus the first half. Regarding Innovative Medicine, we anticipate Stelaro biosimilar competition to accelerate throughout the year as the number of biosimilar entrants increase. HUMIRA's erosion curve once faced with material biosimilar competition continues to be the best proxy for STELARA erosion with the additive impact of Part D redesign. The impact of Part D redesign as a percent of sales will be consistently applied throughout the year.

We expect a more pronounced benefit from our newly launched products as we progress throughout 2025 to counter these headwinds. In medtech for the first half of the year and more prominently in Q1, we face tougher year over year comparisons excluding the positive impact associated with the Shockwave acquisition. We anticipate acceleration of our newly launched products to build throughout the year. As we've said before, we continue to expect normalized procedure volume and seasonality. Regarding the P and L, it is important to consider one time items that impacted our EPS results in 2024, specifically the benefit of Canvue dividend in the 1st two quarters of 2024 is not repeating, higher interest income prior to the Shockwave acquisition closure in May, the monetization of royalty rights recorded in Q3 and IP R and D expense associated with the NM26 bispecific antibody in Q3 and V wave acquisition in Q4.

Given these factors and aligned with sales, we expect higher earnings per share growth in the second half of the year versus the first half. Moving to discussion beyond financial commitments, we are excited for the pipeline progress planned for 2025. In innovative medicine, this includes expected approvals for TREMFYA subcutaneous for Crohn's disease, nipocalumab for generalized myasthenia gravis and subcutaneous ribavant for non small cell lung cancer. We expect to file for regulatory approval of TAR-two hundred in non muscle invasive bladder cancer and echotrikinje in psoriasis. And planned data readouts for ribavant lung cancer overall survival as well as data in head and neck and colorectal cancer and iCotrokindra in ulcerative colitis as well as head to head data versus SYDYK2 in psoriasis.

In medtech, building upon the 15 major product launches in 2024, we anticipate a submission to the FDA for Impella ECP regulatory approval, continued progress on our OTAVA robotic surgical system and advancements across our cardiovascular portfolio, including electrophysiology, heart recovery and circulatory restoration. So to summarize, we are well positioned to tackle the challenges in 2025, continue to advance our pipeline, deliver on our financial commitments and create long term sustainable value for shareholders. Our success is the result of the hard work and dedication of our colleagues who share a sincere passion to successfully serve patients around the world. We are extremely grateful for their efforts. With that, we are happy to take your questions.

So I will now turn it to Kevin to provide instructions for those seeking to participate in the Q and A.

Thank you. Our first question is coming from Terence Flynn from Morgan Stanley. Your line is now live.

Great. Thanks so much for taking the questions. Appreciate it. Obviously, myeloma franchise is a very important growth driver as we think about history, but also 2025. So just wondering if you can frame for us how you're thinking about that, both from the bispecifics as well as CAR T and maybe a broadening into the community setting and the pace of growth here as we think about the ramp in 2025?

Great. Well, good morning, Terrence, and hello, everybody. I'd like to start by thanking all of our Innovative Medicine colleagues around the world for a very strong quarter. This was our Q3 with sales over 14,000,000,000 dollars with 10 key brands achieving double digit growth. And Terrence, I'll come back to that.

That includes brands like DARZALEX, CARVICTI, Talve and TekVali as well as ones such as Erlitus, Bravado and Eptravi. We're making really nice progress on our launches, including TREMFYA in ulcerative colitis and ribrevant plus last clues in non small cell lung cancer. And just an important note, we hit our $57,000,000,000 target this year, a year early. For those that were here back at our enterprise business review, we had made that commitment to hit the $57,000,000,000 by 2025, and we cleared that goal this year in 2024. So multiple myeloma is really an extraordinary franchise for us.

And maybe I will start with DARZALEX because our quarter was over $3,000,000,000 It was $3,100,000,000 and 22% growth. And we continue to really build out share across the frontline settings in both transplant eligible and ineligible patients and in triplet and quad regimens. And so we're performing very well for DARZALEX and anticipate that to continue. And in fact, with DARZALEX, it's our first brand to hit $3,000,000,000 in quarterly sales. So important to note that milestone too.

CARVICTI had a really, really robust quarter as well as year nearing $1,000,000,000 for the year, dollars 963,000,000 as we continue to see very strong demand in that second line plus setting as well as very strong capacity expansion in the U. S, in Europe and also with a contract manufacturer. And so we've talked before about that being more of a stair step rather than a direct linear line, and it is performing very, very well. And we're seeing nice continued expansion in the Q1 of this year that will also continue throughout the year. For Teck and Tal, both products did well.

We report sales or we break out sales on Teck. We don't yet on Teck. Both of these agents are best in class bispecifics. They're performing very well from a competitive share standpoint. We've got them nicely being utilized in the academic setting, and we're working that out into more of the community setting, which will be important for their continued growth and uptake.

So in total, multiple myeloma really is a stronghold for us, and we're not stopping there because of the strength that we have, the assets that we have. We're also working on multiple additional types of combinations. John, maybe you want to address what we're doing with the bispecifics specifically? Yes.

Thank you, Jennifer. Maybe before I jump in, I'll follow your lead and just offer my appreciation and thanks to our colleagues in Innovation Business R and D. We had a heck of a year for the pipeline, 27 approvals, 49 submissions, 15 out of 17 positive Phase III is more than 90% success rate, 9 out of 12 POCs came in positive, exceeding the industry benchmarks by approximately double. 10 First in Humans, 10 new NMEs added to the pipeline from internal research at a price point well below the industry median and quite an impressive year on the BD front with 5 bolt on acquisitions and 6 new molecules added to the pipeline. So my congratulations to the team.

Now on the point around our broad portfolio of myeloma medicines, this is where we are now bringing them together to reinvent the next frontline therapies. And if you were at the ASH Congress, the American Society of Hematology, you saw some of the early tantalizing data where in early lines of therapy front, 1st, 2nd line of myeloma, we're bringing Dara together with either Teck or tau and we've been getting 100% minimal residual disease negativity, MRD negativity, showing the impressive potential of these new combinations. Mind you, last year the FDA declared MD, minimal residual disease negativity or MRD as a surrogate endpoint within myeloma that could form the basis for accelerated approvals. So we're really excited about bringing these into earlier lines. And then I would also remind you with CARVICTI, we are now doing studies in frontline transplant eligible and ineligible and asking whether we can replace autologous stem cell transplant with our CAR T therapy as a new opportunity there to break through with unprecedented outcomes for patients.

CARVICTI, of course, already is the go to regimen in the second line setting, the only CAR T for myeloma approved in that setting. And last year, we reported overall survival data for CARVICTI in a randomized setting with an impressive hazard ratio of 0.55. So really feel great about bringing CARVICTI into earlier lines of therapy as well.

Maybe hot off press last night, the team was very excited to come tell me we've actually completed and reached our 5000th patient infused with CARVICTI, both across the clinical and commercial settings and it is the most successful cell therapy launch in the industry.

Thank you. Our next question today is coming from Josh Jennings from TD Cowen. Your line is now live.

Hi, good morning. Thanks for taking the questions. I was hoping to just ask about the medical device or the sector business, excuse me, and just the acquisition strategy. You've had a couple of pre revenue swings with Laminar and Vwave and some other more established businesses under the roof. Can you just talk about the strategy on a go forward basis?

I mean, is it going to continue to be a mix between pre revenue companies and more fully established businesses? Or are you going to be is there going to be a shift in that strategy? Thanks for taking the question.

Thank you, Jos. It's Joaquin, and good morning, everyone. External innovation has always been a very important part of our capital allocation strategy for Johnson and Johnson for the enterprise. And in fact, we are one of the top investors not only in M and A, but also in R and D. We are always looking for opportunities to be able to enhance our portfolio and our pipeline.

And in 2024 alone, we completed more than 40 business development transactions. Some of them were big, some of them were small, but all of them complement both our innovative and MedTech portfolio. Many of these smaller acquisitions were also in our medtech portfolio. You have to think that larger acquisitions like the case of Shockwave or in the Innovative Medicine side intracellular are more outliers. Our go forward, it's always been focused on these smaller opportunities like the ones you mentioned like glaminar or V wave or some of the ones we have completely innovative medicine like TARIS or our IL-twenty three blocker, which are more than EUR 5,000,000,000 opportunities.

That's where we are able to create value. Larger opportunities have to be seen more like outliers. And finally, I want to underline that both Abiomed and Shockwave are progressing really well ahead of the deal model, delivering on our financial commitments there and that we are looking forward upon closure to start working on the intracellular acquisition too, which is an opportunity to reinforce our position of leadership in the neuroscience space, which has been always a strength of Johnson and Johnson. And also an opportunity overall to fortify revenue projections that you have looking today and also into the future. Thank you.

Johnson & Johnson (JNJ) Q4 2024 Earnings Call Transcript

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