The operator introduces the Johnson & Johnson's First Quarter 2024 Earnings Conference Call and reminds participants that the call is being recorded. Jessica Moore, Vice President of Investor Relations, then welcomes everyone and provides logistics for the call. She also cautions listeners about forward-looking statements and mentions the company's SEC filings. Moore then outlines the agenda for the call, which includes a review of first quarter sales and financial results for the corporation.

In the second paragraph, the CFO of Johnson & Johnson will provide financial commentary and an overview of the company's cash position, capital allocation priorities, and guidance for 2024. The webcast is expected to last 60 minutes and will include a Q&A session with the CEO and other leaders. The first quarter sales results show a 3.9% increase in worldwide sales, with a growth of 7.8% in the U.S. and a decline of 0.3% outside of the U.S. Adjusted net earnings and diluted earnings per share also increased compared to the first quarter of 2023. The business sales performance for Innovative Medicine in the first quarter saw a 2.5% increase in worldwide sales, with growth in the U.S. and a decline outside of the U.S.

The company's operational sales growth, excluding the impact of the COVID-19 vaccine, was 8.3% worldwide and outside of the U.S. This growth was driven by key brands and recently launched products, with nine assets achieving double-digit growth. The multiple myeloma portfolio saw strong sales growth, with DARZALEX sales increasing by 21% due to share gains in all lines of therapy. TECVAYLI and CARVYKTI also saw significant sales growth. Other oncology products, including TALVEY and RYBREVANT, also contributed to overall growth. In the immunology sector, TREMFYA and STELARA saw sales growth due to market growth and share gains, with STELARA's growth partially offset by unfavorable patient mix and share loss in certain areas.

In this paragraph, the company discusses their anticipated growth in volume but also expects price declines due to biosimilar entry. They also mention the growth in their neuroscience drug SPRAVATO, as well as the decrease in sales for XARELTO and IMBRUVICA. In the MedTech division, they saw a 6.3% increase in sales, with strong growth in electrophysiology and Abiomed's Impella technology. However, orthopedics was negatively impacted by fewer selling days and competitive pressures. Overall, the company saw growth in all regions but was affected by various factors such as procedure growth, new product uptake, and weather-related softness.

In the first quarter of 2024, there was a 1.9% growth in surgery due to procedure recovery and strong portfolios, but this was partially offset by competitive pressures in China and the divestiture of Blink. Contact lenses declined 2.3% due to U.S. stocking dynamics, but there was strong performance in the ACUVUE OASYS 1-day family of products. Surgical Vision grew 1.1% driven by CNIS EYHANCE, but offset by China's VBP. The cost of product sold margin increased by 160 basis points due to lower COVID-19 supply network costs. Selling, marketing, and administrative margins decreased by 110 basis points due to timing of marketing investments. The company continued to invest in R&D, with $3.5 billion invested in the first quarter of 2024. Interest income increased due to lower debt and higher interest rates, while other income and expense was positive compared to an expense in the same quarter of the previous year.

In the first quarter of 2024, the company saw a significant increase in their effective tax rate due to a $6.9 billion charge related to a talc settlement proposal. However, excluding special items, the effective tax rate was relatively consistent with the previous year. The company also provided adjusted income before tax numbers for each segment, with the enterprise segment seeing an increase in percentage of sales. The company also announced their acquisition of Shockwave Medical.

Johnson & Johnson's acquisition of Shockwave and Ambrx, as well as their recent regulatory and clinical successes, demonstrate their commitment to addressing cardiovascular disease and expanding their Innovative Medicine portfolio. In the first quarter, they received FDA approval and positive opinions for multiple myeloma treatment CARVYKTI, as well as made progress in the treatment of EGFR-mutated non-small cell lung cancer. This aligns with their strategy of becoming a leading MedTech company.

The company received FDA approval for RYBREVANT in combination with chemotherapy for the treatment of non-small cell lung cancer and submitted a filing for approval in Europe. They also submitted a supplemental application for TREMFYA in the treatment of ulcerative colitis and will present data at an upcoming conference. Positive results were also reported for JNJ2113 and Nipocalimab in psoriasis and other conditions, and the company received FDA designations for the treatment of rare blood disorders. Upcoming data readouts are expected for other treatments in prostate cancer and major depressive disorder.

The company expects to release Phase 2 results for their combination therapy in psoriatic arthritis and pivotal data for a bladder cancer treatment. They also plan to present Phase 3 data for a Crohn's disease treatment and a new Sub-Q data for another treatment at upcoming medical meetings. In the MedTech sector, they have made significant advancements in their cardiovascular portfolio, including receiving approvals and filing for approvals for various treatments. They have also begun enrollment for a pivotal trial for a left atrial appendage elimination device and presented data for a heart attack treatment at a recent conference. In the vision sector, they have launched a new lens for cataract patients and presented data for a presbyopia-correcting IOL. They plan to continue advancing their electrophysiology pipeline in the US.

In the first quarter, Johnson & Johnson announced the market release of the QDOT microcatheter, the U.S. commercial launch of Abiomed Impella RP Flex with SmartAssist, and the submission of Impella ECP. They are also on track to submit an investigational device exemption for Otava in the second half of 2024. The company ended the quarter with a strong balance sheet and generated $3 billion in free cash flow. They are committed to innovation and have increased their R&D spending. Johnson & Johnson also announced a 4.2% increase in their dividend and maintains a disciplined approach to acquisitions.

The company's pending acquisition of Shockwave Technologies is expected to add a profitable portfolio and strengthen their pipeline. Their full year 2024 guidance has been updated to reflect the expected dilution to earnings per share and they have tightened their ranges and increased the midpoint for operational sales and adjusted EPS. The company expects operational sales growth of 5.5% to 6.0%, with a negative foreign currency impact of $700 million. Other elements of their guidance remain unchanged, except for interest income and adjusted operational EPS, which have been increased.

The company predicts a negative impact of $0.03 per share due to currency movements, but adjusted earnings per share remain unchanged. They expect stronger sales growth in the first half of the year for Innovative Medicine, and consistent growth for MedTech. The company has important catalysts in the pipeline for both segments. They thank their employees for their hard work and dedication. The Q&A portion of the call will include Joaquin, Jennifer, John, and Tim. The first question is about myeloma. The company is asked to elaborate on the phasing comments that impacted sales in the quarter.

Joaquin Duato, from Johnson & Johnson, discusses the company's performance in the first quarter and highlights their strong strategic platforms that will drive growth in the future. He mentions the success of their new product launches and the progress made in MedTech. Duato also mentions important capital allocation milestones achieved in Q1 and the company's efforts to resolve talc litigation.

In the first quarter, Johnson & Johnson had a strong performance financially and in terms of pipeline advancements. This puts them in a good position for 2024 and gives them confidence in achieving their long-term growth goals. The Innovative Medicine division saw above-market growth, with nine brands achieving double-digit growth. The acquisition of Ambrx adds another key pipeline asset for the company. Multiple myeloma continues to be a strong area, with significant growth in assets such as DARZALEX and CARVYKTI, which saw over 100% growth in demand compared to the first quarter of 2023.

The company has received unanimous approval for CARVYKTI in the United States and has doubled its manufacturing capacity for cell processing. They are also expanding their capacity for TECVAYLI and have seen strong uptake and rapid adoption of the therapy. The product is performing well in later line settings and is competitive in the market.

The speaker discusses the growth of TALVEY, their 10th product, in the field of oncology. They mention the potential for combination therapies and their positive outlook for the rest of the year. A question is then asked about the MedTech business, which grew 6.5% in the first quarter but had some one-time items that affected the results. The speaker is proud of their performance compared to competitors and highlights the double-digit growth in their Electrophysiology business.

The leadership position in PFA is driving strong performance, despite some noise around the Vision business. The business grew 6.6% last year and is expected to continue growing in high single digits. There were some one-time factors affecting the quarter's performance, but overall it was strong. The company remains committed to strong high single-digit growth for the remainder of the year. In terms of M&A, there is an appetite for larger tuck-in transactions in both the MedTech and Pharma businesses.

J&J's portfolio and pipeline have evolved nicely in recent years, and the company's M&A strategy remains consistent and focused on the long term. They have the flexibility to consider various types of transactions and have demonstrated this with recent acquisitions. Their criteria for evaluating opportunities include improving standard of care, positive patient impact, alignment with in-house capabilities, entering higher growth markets, and delivering financial results for shareholders.

The CEO of the company discusses their M&A strategy and how it has been successful in creating value. They think about M&A in the long term and not just opportunistically. The operator then asks about the performance of the Vision Care business, which has seen some positive and negative factors affecting it. The CEO explains that the business has consistently grown in the past and they believe in its strong performance. The recent decline in Q1 was due to a contraction in U.S. distributor inventory for contact lenses, but they are now seeing a normalization as their supply stabilizes. They are also pleased with the performance of their premium ACUVUE OASYS 1-Day family and have seen share gains in multifocal.

The speaker discusses the performance of the contact lens business, noting sequential share gains and expectations for continued growth. They also mention the strong performance of the IOL business in Asia Pac and EMEA and the upcoming release of new products. Another topic discussed is the Pulmonary Hypertension business, which saw strong growth due to share gains and favorable patient mix. However, the speaker does not expect this trend to continue at the same level due to anticipated market shifts with the introduction of a new product.

The company's products for patients with PAH are performing well, and they recently received approval for a new combination tablet. Despite new competitors, the company believes their current portfolio will continue to be successful. In the MedTech segment, there was a one-time change in revenue recognition timing that impacted overall performance, but the market is still robust and there is a backlog of procedures that will benefit the Orthopedics business for the first half of 2024.

The company's orthopedics business was impacted by about 300 basis points, with fewer selling days disproportionately affecting the ortho business by 80 bps. However, the company saw high single-digit growth in hips and knees, driven by the success of their VELYS platform. The company plans to expand VELYS into EMEA and Asia Pac, which will continue to drive improvement in the orthopedics business. In terms of other updates, the company addressed recent news regarding INVEGA SUSTENNA and mentioned upcoming data on TAR bladder cancer.

The company is excited about recent data for their product HAFYERA, which has shown a 96% relapse-free rate at two years. They remain confident in their INVEGA SUSTENNA patents and will continue to defend them despite ongoing litigation. They also discuss their drug-device combo for early bladder cancer and the positive results from their initial study.

The company has seen strong performance in the cardio and EP sectors, with plans to expand their portfolio in other high-growth categories. The upcoming AUA presentation is expected to show more positive results and the company remains on track for a filing early next year. The discontinuation rate for their therapy has been low and the company looks forward to sharing their results at the congress. The company has made progress in building out their portfolio in the cardiovascular sector and has seen strong performance in electrophysiology.

The company has a strong position in electrophysiology and has recently acquired Abiomed to further strengthen its position in cardiovascular care. They are also in the process of acquiring Shockwave, which will make them one of the only strategics with high-growth, high-margin businesses in the $60 billion MedTech market. They have seen growth in excess of 20% in EP, and are confident in their ability to expand their presence in this area with the approval of new products. There was no specific question about Ortho.

During a recent earnings call, Matthew Miksic commented on the growth of Ortho, which has been low to mid-single digits but reached double digits with the addition of a selling day. Joseph J. Wolk attributes this growth to the team's progress and filling gaps in the portfolio, particularly in hips and knees with the launch of the VELYS robot. He expects high single-digit growth to continue in these categories, and notes that the company's recent restructuring has also focused on improving margins. The company has reduced its number of implants by 20% as part of this effort. Vamil Divan also asked a question during the call.

The speaker is pleased with the growth of SPRAVATO, a treatment for depression, and expects it to continue performing well. They also mention other key products in the neuroscience area. The speaker also mentions concerns about the impact of drug pricing negotiations on healthcare innovation.

The speaker addresses concerns about the impact of government regulations on R&D investments and patient access to their products. They mention ongoing negotiations with the government regarding pricing and reassure investors of their growth potential and commitment to achieving their goals. The call is then handed over to Joaquin for closing remarks.

Joaquin Duato, Johnson & Johnson's executive, acknowledges the company's strong first quarter performance and attributes it to their focus and progress in their portfolio and pipeline. He also mentions their unique impact in the healthcare industry and highlights the significant milestone of their planned acquisition of Shockwave. Duato expresses confidence in achieving their goals and concludes the call.

This summary was generated with AI and may contain some inaccuracies.