The paragraph is an introduction to Johnson & Johnson's Third Quarter 2024 Earnings Conference Call. The operator announces the call's format and recording status. Jessica Moore, Vice President of Investor Relations, outlines the purpose of the call, which includes reviewing the third quarter results and the company's financial outlook for 2024. She mentions the availability of additional materials and presentations on the company's website and provides a caution about forward-looking statements, which involve risks and uncertainties detailed in their SEC filings. The paragraph concludes with a brief mention that the Chairman and CEO, Joaquin Duato, will deliver opening remarks and highlight key catalysts within the company's segments.

The paragraph reviews the enterprise's strong third quarter, highlighting a 6.3% operational sales growth due to their broad business scope and focus on high innovation and high growth markets. The company completed acquisitions in MedTech and Innovative Medicine, showing progress in these areas. They reported over $14 billion in sales for Innovative Medicine, with DARZALEX becoming the first product in their portfolio to reach $3 billion in a single quarter. Additionally, their pipeline is progressing rapidly with five major U.S. and European Commission approvals within the quarter. CFO Joe Wolk is set to discuss advancements, financials, and future guidance.

The paragraph discusses significant advancements and strategic moves by Johnson & Johnson in the pharmaceutical and MedTech sectors. It highlights the FDA approvals of RYBREVANT plus LAZCLUZE for EGFR-mutated lung cancer and TREMFYA for ulcerative colitis, promising growth prospects with potential $5 billion in peak year sales from innovative medicines. In MedTech, the company's strategic acquisitions of Shockwave and Abiomed have strengthened its leadership in cardiovascular intervention markets, leading to significant growth. The release of TECNIS Odyssey and ACUVUE OASYS MAX 1-Day lenses is driving growth in Vision, while the upcoming OTTAVA robotic surgical system aims to enhance its surgery business. Overall, the company's high innovation, high growth strategy is yielding positive results, as evidenced by increased operational EPS guidance.

The paragraph reports Johnson & Johnson's financial and sales performance for the third quarter of 2024. The company invested $18 billion in mergers and acquisitions and expects positive outcomes through 2025 and beyond. Worldwide sales reached $22.5 billion, a 6.3% increase, with higher growth in the U.S. than outside. Net earnings were $2.7 billion, with a decrease in diluted earnings per share compared to the previous year, impacted by a talc litigation settlement and expenses related to the NM26 bispecific antibody. Adjusted net earnings were $5.9 billion, with a decrease compared to last year, mainly due to substantial IPR&D expenses. Innovative Medicine sales grew by 6.3%, driven by key brands and new products, with 11 assets showing double-digit growth.

The paragraph outlines strong performance in multiple myeloma and other oncology portfolios, driven by strategic price increases and market dynamics. Key highlights include DARZALEX's 22.9% growth due to share gains and market expansion, and CARVYKTI's 87.6% rise fueled by share gains and improved manufacturing. TECVAYLI showed 21.4% growth despite flat sequential demand, while TALVEY's launch is progressing well with sales disclosure expected in 2025. ERLEADA and RYBREVANT also saw strong growth, with RYBREVANT's sales to be disclosed in 2025. In immunology, TREMFYA grew 14.3%, while STELARA declined by 5.7% due to competition, particularly from biosimilars in Europe and anticipated U.S. market entry in 2025.

The paragraph reports growth across various sectors. In neuroscience, SPRAVATO saw a 55.3% increase, supported by rising confidence among physicians and patients. OPSUMIT and UPTRAVI in pulmonary hypertension grew by 17.4% and 15.2%, respectively, due to market growth and better patient mix. MedTech achieved a 6.4% global sales increase, with notable growth in the U.S. driven by commercial execution and new product launches, despite challenges in China. The cardiovascular segment, particularly electrophysiology and Abiomed, showed robust growth, aided by global procedure growth and product adoption. The contact lenses segment improved by 4.7%, helped by pricing actions and strong product performance, while surgical vision saw a modest 1.9% growth influenced by TECNIS product demand and some market softness.

In the third quarter of 2024, the company experienced a 0.7% decline in surgery sales, primarily due to competitive pressures in energy and endocutters, China's anticorruption campaign, and the Acclarent divestiture, which amounted to a negative 110 basis points impact. Orthopaedics grew by 1.3% thanks to new product launches, despite challenges from competitive pressures and revenue disruption from transformations. Strategic investments in R&D reached nearly $5 billion or 22% of sales, including a $1.25 billion payment for global rights to the NM26 bispecific antibody, while selling, marketing, and administrative expenses were optimized post-Kenvue separation. Interest income dropped due to financing impacts from the Shockwave acquisition. A significant $1.75 billion expense was incurred due to talc litigation settlement proposals, contributing to a total net expense of $1.8 billion, compared to $0.5 billion the previous year.

In the recent quarter, Johnson & Johnson reported an increase in the effective tax rate to 19.3% from last year's 17.4%, influenced by the acquisition of the NM26 bispecific antibody and OECD Pillar 2. Excluding special items, the tax rate rose from 15.6%. The paragraph recommends reviewing the upcoming 10-Q filing for detailed tax information and notes adjustments made for intangible amortization and special items. Innovative Medicine margins dropped from 45.4% to 37.9%, due to a significant investment in IPR&D for the NM26 antibody, while MedTech margins slightly decreased from 24.7% to 24.1%, primarily due to increased R&D and the impact of a prior divestiture. Overall, adjusted income before tax as a percentage of sales fell from 37.6% to 32.4%. Starting in 2025, they will provide more detailed segment reporting. Joe Wolk emphasized the company's consistent performance and progress in pharmaceuticals, with strong revenue and achievement in clinical and regulatory advancements.

The MedTech business, boosted by Shockwave, achieved 6.4% growth but faced challenges in the Asia Pacific region, particularly China. Consequently, the company projects a slightly reduced MedTech sales growth for 2024 at 5% instead of the previously expected 6%. Despite regional volatility, the diversified business model allows for adjusted 2024 enterprise guidance. In legal updates, there is progress in resolving talc litigation, with a pre-packaged bankruptcy plan supported by 83% of current and future claimants, to be heard in Texas Bankruptcy Court. Additionally, in oncology, the company gained U.S. and EU approval for RYBREVANT with chemotherapy for certain lung cancer treatments, and is pursuing FDA priority review for a subcutaneous formulation.

The paragraph outlines recent advancements and achievements across various areas of a healthcare company's portfolio. In oncology, they presented new data on RYBREVANT for colorectal cancer and advanced multiple myeloma treatments DARZALEX FASPRO and CARVYKTI, and reported new findings in bladder cancer with the TARIS platform. In neuroscience, they submitted approvals for nipocalimab for myasthenia gravis and anticipated approvals for several treatments in other conditions such as Crohn's disease and psoriasis. In MedTech, they completed a clinical trial for a cardiac procedure and anticipate approval for VARIPULSE and Impella ECP. In orthopaedics, they launched new US products, including the VELYS SPINE robot. These developments are expected to drive continued business success.

Johnson & Johnson reported a free cash flow of $14 billion year-to-date, compared to $12 billion last year, with an end-of-quarter cash and marketable securities total of $20 billion and $36 billion in debt, resulting in a net debt of $16 billion. The company maintains its capital allocation priorities, balancing business growth investment with shareholder returns, and continues its focus on innovation with a nearly $5 billion investment in R&D. In 2024, J&J spent $18 billion on strategic acquisitions, including the recent V-Wave acquisition for heart failure treatment. The company has raised its full-year 2024 adjusted operational sales guidance, now anticipating growth between 5.7% to 6.2%, and increasing operational sales projections due to a positive foreign currency impact, estimating reported sales growth between 5.1% to 5.6%. The V-Wave acquisition will result in a 200 basis point decline in the 2024 adjusted pre-tax operating margin.

The paragraph discusses the company's financial outlook, indicating that, excluding the effects of asset acquisitions and R&D investments, operating margins would improve by 50 basis points as projected earlier. The company plans heightened investments in the fourth quarter, with net interest income and other income projections increased, driven by a one-time monetization of royalty rights. The effective tax rate remains between 17.5% and 18.5%. Adjusted operational EPS is expected to rise by $0.18 per share due to increased operational performance, a 9.2% growth when excluding acquisitions. The V-Wave acquisition leads to a $0.24 per share dilution in Q4 and $0.06 in 2025, resulting in a 2024 adjusted operational EPS guidance of $9.91, remaining flat year-on-year despite acquisition impacts.

The paragraph discusses the company's financial outlook and strategic plans. It expects a small positive impact on its adjusted earnings per share despite currency fluctuations, aiming for $9.93 at the midpoint for the full year. For 2025, it anticipates growth in Innovative Medicine, surpassing a $57 billion sales target, despite a significant loss of exclusivity (LOE) for STELARA, and plans to introduce biosimilars in the U.S. It highlights potential upcoming product approvals and filings for TREMFYA, RYBREVANT, nipocalimab, TARIS, and aticaprant. Additionally, the company aims for its MedTech segment to achieve sales growth at the higher end of a 5-7% market growth rate from 2022 to 2027.

The paragraph outlines expectations and challenges for MedTech's financial performance. It anticipates continued adoption of new MedTech products and addresses the effects of volume-based pricing in China and the 2024 tenders on Orthopaedics and intraocular lenses. It discusses potential influences on the operating margin, including reduced R&D expenses, MedTech margin improvements, and operational efficiencies post-separation. Challenges include unfavorable product mix and reduced interest income due to lower rates and acquisition-related debt. Additionally, income is expected to decline due to non-recurring royalty rights monetization and changes in employee benefit programs. The company forecasts a slightly lower tax rate for 2025 compared to 2024. Overall, the 2024 performance sets a strong foundation for 2025.

The paragraph is part of a Q&A session during a call, where Chris Schott from JPMorgan asks about Johnson & Johnson's (J&J) progress and future steps in resolving talc litigation. Joaquin Duato from J&J expresses the company's intention to responsibly resolve the claims and mentions significant progress, including filing a reorganization plan supported by 83% of claimants and a court ruling to keep the case in Houston. Erik Haas, J&J's Head of Worldwide Litigation, adds that the parties are working on a schedule for an expeditious resolution, aiming for a confirmation hearing early next year. The operator then moves to the next question from Larry Biegelsen of Wells Fargo.

Larry Biegelsen questions Tim Schmid about the impact of one-time items in Q3 for MedTech, including ortho SKU rationalization, and potential impact from hurricanes in Q4. Tim highlights their operational growth, particularly in cardiovascular space due to acquisitions like Shockwave, Abiomed, Laminar, and V-Wave. Despite a softer Q3 in Orthopaedics due to restructuring, they anticipate strong full-year performance, with significant growth in hips and knees driven by technologies like VELYS, KINCISE, and Hip Navigation systems.

The paragraph discusses advancements and challenges in the healthcare company's portfolios. It highlights significant efforts in addressing gaps in their orthopaedics and spine portfolios with new product launches such as TriLeap, VOLT, TELIGEN, and the TriALTIS thoracal lumbar system, alongside gaining approval for a new spine robot. It mentions the adverse impacts of Hurricanes Helene and Milton, particularly noting concerns about the IV saline shortages that could affect surgical procedures. Additionally, it touches on strategies for the innovative medicine segment by acknowledging double-digit growth in key brands, the launch of TREMFYA for ulcerative colitis, RYBREVANT plus LAZCLUZE for non-small cell lung cancer, and the acquisition of NM26 for treating atopic dermatitis.

The paragraph discusses the excitement surrounding TREMFYA, particularly its prospects in treating ulcerative colitis and inflammatory bowel disease (IBD). The product has received strong reception from the medical community for its unique dual action, blocking IL-23 and CD64 receptor cells, and showing superior efficacy in Crohn’s disease. With $4 billion in sales for the quarter primarily from psoriasis and psoriatic arthritis, TREMFYA is expected to match or surpass the success of STELARA in IBD. The company is also developing an oral asset, 2113, which is anticipated to expand the market by offering a convenient oral treatment option with known efficacy and safety profiles.

The paragraph discusses the progress and potential of a new oral peptide targeting the IL-23 receptor, designed for once-daily dosing, which is being tested for psoriasis and inflammatory bowel disease (IBD). The psoriasis trials are in Phase 3 and include diverse studies, such as head-to-head comparisons against TYK2 inhibitors and trials in hard-to-treat areas. Data from these studies will be available soon. In IBD, a Phase 2 study on ulcerative colitis is underway, exploring different doses before advancing. Confidence in the IL-23 pathway is high due to existing drugs like STELARA and TREMFYA. Additionally, a co-antibody approach, combining TREMFYA with a TNF inhibitor, is being tested in refractory IBD patients, with results expected next year. Altogether, the immunology portfolio, especially for IBD and dermatology, is robust and promising.

The paragraph discusses the ongoing development of treatments for ulcerative colitis and Crohn's disease, beginning with ulcerative colitis. It then transitions to a question-and-answer session where Terence Flynn from Morgan Stanley inquires about the growth of the multiple myeloma portfolio, specifically focusing on CARVYKTI and TECVAYLI. Jennifer Taubert responds by highlighting the strong performance of DARZALEX with over $3 billion in sales and significant growth. She emphasizes CARVYKTI's impressive sales growth, driven by the CARTITUDE-4 approval for second-line and beyond patients, and notes the impact of recent overall survival data that underscores CARVYKTI's significance in treating multiple myeloma.

The paragraph discusses the progress in capacity expansion and strong performance of CARVYKTI, highlighting its success as the most successful CAR-T launch in the industry with over 4,200 patients. It notes that capacity growth may not be linear but is expected to be more robust in the second quarter. Additionally, it mentions TECVAYLI's $135 million in sales for the quarter and a 21% growth rate, despite being flat sequentially, with promising market uptake and potential growth in treatment durations and combinations with other therapies like DARZALEX and TAL. It also briefly mentions that sales for TALVEY will likely be reported next year.

The paragraph discusses the progress and promising data for two treatments, TEC and TAL, both T-cell engagers, in the context of community settings and patient treatments. TEC is highlighted as a first-in-class BCMA-targeting T-cell engager with deep responses, high complete response rates, and a long duration of response, particularly when combined with dara, resulting in high response rates in heavily pretreated myeloma patients. Similarly, TAL, a B-cell preserving target, shows high overall response rates and fewer severe infections. Both treatments are being advanced in combination with the CD38 class by J&J, emphasizing their unique position in the field. The paragraph also notes an upcoming question from Danielle Antalffy regarding the EP business.

The paragraph discusses Johnson & Johnson's leadership and growth in the electrophysiology (EP) market, highlighted by their $5 billion EP business that saw an 11% growth in the third quarter and 17% year-to-date. The company is progressing with the launch of VARIPULSE in EMEA and Japan, with over 800 successful cases and promising data from the admIRE study. While facing competition in the U.S. ablation space due to the absence of a PFA product, J&J is anticipating the approval of VARIPULSE soon. Despite not having a PFA catheter, J&J dominates over 50% of competitive mapping cases with its CARTO software and is benefiting from increased procedure volumes.

The paragraph discusses the competitive advantages and strategies of a company in the field of electrophysiology (EP), highlighting their CARTO system and QDOT RF catheter. They express confidence in their leadership position with a strong portfolio, including the newly launched VARIPULSE and a forthcoming dual energy catheter for which they've applied for CE marking. The discussion then shifts to the challenges and dynamics in the Asia Pacific MedTech market, particularly China. Shagun Singh from RBC Capital Markets asks about the headwinds and normalization expectations due to China's volume-based procurement (VBP) expansions. Tim Schmid mentions various issues in the region, including a healthcare professional strike in Korea and macroeconomic pressures in Japan.

The paragraph discusses the impact of volume-based procurement (VBP) and an anti-corruption campaign on a company's medical technology operations in China, particularly affecting premium products. Despite facing challenges in several product categories due to these factors, the company remains confident in China's long-term value and its ability to achieve growth and shareholder returns. It emphasizes the importance of the Asia Pacific region due to its large patient population, and reassures that, though these issues present challenges for MedTech, they are not significant to the overall business of Johnson & Johnson, as only a small fraction of its global sales come from China.

The paragraph discusses the U.S. sales performance of Johnson & Johnson's immunology drugs, TREMFYA and STELARA, which were lower than expected due to unfavorable patient mix issues. Jessica Moore explains that the patient mix refers to different patients coming through different channels and involves accounting adjustments known as true-ups for gross to net reductions. Jennifer Taubert adds that TREMFYA experienced strong international growth but only moderate U.S. growth, impacted by the patient mix issue, while future growth is expected due to new launches. STELARA saw a decline in sales both in the U.S. and internationally, notably in EMEA, due to biosimilar competition.

The paragraph discusses the anticipated performance and growth prospects for a company's MedTech division in the fourth quarter of the year. It mentions the decline of the product STELARA and the strong growth potential of TREMFYA and other products in the portfolio. Tim Schmid addresses a question regarding the impact of a storm on IV fluid supplies, indicating that the impact is mostly seen in affected areas like Western North Carolina and Florida, with concerns about further shortages affecting elective procedures. The company expects adjusted operational growth of around 5% and over 6% on an operational basis for the year due to momentum in their Cardiovascular businesses, particularly electrophysiology and Shockwave, and improved performance in their Vision business. The strong performance in the third quarter supports their confidence in achieving better results in the fourth quarter.

In the paragraph, the company reports strong performance, particularly in its contact lens business in the U.S., where double-digit growth was achieved due to stabilized distributor inventory and an unrestricted supply, notably in the astigmatism portfolio. The company is optimistic about a strong upcoming quarter for its Vision segment, citing successful new product launches across its portfolio, including cardiovascular and surgery businesses. The fourth quarter typically sees stronger performance, and the company is confident in achieving around 5% growth on an adjusted basis and over 6% operationally. Jessica Moore thanks participants and invites further questions to the Investor Relations team. Joaquin Duato closes by expressing confidence in the company's innovative and rapidly advancing portfolio and future expectations. The call concludes with the operator's statement.

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