The paragraph is an introduction to Johnson & Johnson's Fourth Quarter 2024 Earnings Conference Call led by the Operator and Jessica Moore, Vice President of Investor Relations. It outlines the conference logistics, including the availability of additional materials on their website, and highlights that the presentation will contain forward-looking statements. These statements are based on current expectations and are subject to risks that might cause actual results to differ. It also notes collaborations with strategic partners. The agenda includes remarks from Joaquin Duato, the company's Chairman and CEO, on performance and key catalysts.

The paragraph discusses the achievements and strategic direction of Johnson & Johnson in 2024. Joaquin Duato highlights the company's progress in Innovative Medicine and MedTech, emphasizing their focus on high-growth areas like oncology and immunology. The company invested $50 billion in R&D and acquisitions, including a deal with Intra-Cellular Therapies, while continuing to exit lower-priority businesses. Johnson & Johnson's enduring success is attributed to being purpose-driven and broadly diversified, with a disease-centric approach providing comprehensive healthcare solutions, exemplified by their work in multiple myeloma treatments.

The paragraph discusses Johnson & Johnson's advancements and performance in 2024, highlighting its dual focus on Pharmaceuticals and Medical Technology. It mentions the impact of Abiomed's Impella heart pumps, V-Wave's shunt, and products like SPRAVATO, STELARA, and TREMFYA. The company emphasizes its strategic decisions for sustained growth, reporting a 7% operational sales growth excluding COVID-19 vaccines, with SPRAVATO exceeding $1 billion in sales. It boasts having 26 platforms generating at least $1 billion annually. Johnson & Johnson also achieved significant sales and growth in various areas, including oncology and neuroscience, despite challenges like biosimilar competition in the EU for STELARA. The year saw 27 major market approvals, including TREMFYA for ulcerative colitis and new treatments for EGFR-mutated lung cancer.

In 2024, the company reported significant achievements, including 18 positive readouts for registrational studies, the initiation of 16 Phase III studies, and 49 filings across major markets. Highlights include FDA approval of SPRAVATO for treatment-resistant depression, priority review and breakthrough therapy designations for Nipocalimab for generalized myasthenia gravis, and a new drug application for TAR-200 for bladder cancer. The MedTech division achieved over $30 billion in sales, driven by innovations like the VARIPULSE Pulsed Field Ablation platform, VELYS robotic knee surgery solution, expanded FDA indications for Impella heart pumps, and various catheter advancements. The company also successfully launched 10 major products, including versions of the CARTO 3 mapping system and TECNIS Odyssey lens.

The paragraph discusses Johnson & Johnson's recent progress, including clinical trials for the OTTAVA robotic surgical system and strategic acquisitions in MedTech and Innovative Medicine, such as Shockwave, V-Wave, Ambrx Proteologix, and NM26. The company also plans to acquire Intra-Cellular Therapies to enhance its Central Nervous System Disorder therapeutics, emphasizing a commitment to mental health care and research. These investments aim to drive significant sales growth, with expectations of 3% operational sales growth and nearly 9% adjusted operational earnings per share growth by 2025, despite facing challenges like US biosimilar competition for STELARA and economic pressures in China.

The paragraph discusses Johnson & Johnson's business diversification, strength in commercial assets, and upcoming product launches slated for 2025 in areas like IBD, lung cancer, and electrophysiology. It highlights the company's strong start to the year, projecting confidence in its 2025 sales growth and EPS guidance. Jessica Moore then reports on the financial results for Q4 2024, revealing worldwide sales of $22.5 billion, with a 6.7% increase due to 10% growth in the US and 2.5% outside the US. Growth was affected negatively by 290 basis points from STELARA but positively by 100 basis points from acquisitions and divestitures. Net earnings for the quarter were $3.4 billion, with a diluted EPS of $1.41, down from $1.70 the previous year. Adjusted net earnings stood at $4.9 billion, with an adjusted diluted EPS of $2.04, reflecting decreases of over 10% from Q4 2023.

In the reported quarter, earnings per share were reduced by $0.22 due to expenses from the V-Wave acquisition. For 2024, sales totaled $88.8 billion, a 5.9% increase, with U.S. sales up 8.3% and international sales up 2.9%. STELARA and the COVID-19 vaccine decreased global growth by 260 basis points, while acquisitions and divestitures added 50 basis points. European growth was reduced by 670 basis points because of COVID-19 vaccine impacts and STELARA's loss of exclusivity. Net earnings in 2024 reached $14.1 billion, with diluted earnings per share of $5.79, up from $5.20 the previous year. Adjusted net earnings were $24.2 billion with adjusted diluted earnings per share increasing 0.6% to $9.98 compared to 2023, although adjusted net earnings dropped by 4.6%. IPR&D charges throughout the year reduced earnings per share by $0.67. In the quarter, Innovative Medicine sales grew 6.5%, excluding the COVID-19 vaccine impact, driven by key brands and products, while STELARA negatively affected growth by 490 basis points. DARZALEX showed strong growth, with a 23.5% increase due to market share gains and market growth, particularly in the multiple myeloma portfolio. Argentina's hyperinflation also had a positive impact on results through price adjustments.

Johnson & Johnson experienced significant sales growth across various products, with CARVYKTI achieving $334 million in sales driven by share gains and capacity expansion. TECVAYLI and ERLEADA also saw notable growth, contributing to strong performances in their respective markets. TALVEY and RYBREVANT, part of the company's oncology portfolio, continued their growth trajectories, although detailed sales figures for these will be disclosed in 2025. In immunology, TREMFYA sales grew due to market expansion, despite some setbacks, while STELARA declined due to anticipated biosimilar competition. REMICADE and SIMPONI benefited from regained distribution rights in Europe. In neuroscience, SPRAVATO achieved over $1 billion in annual sales, fueled by increased demand.

The paragraph reports on financial performance and growth dynamics across various healthcare segments. In neuroscience, a decline was noted due to the loss of a SPINRAZA tender in Europe. Pulmonary Hypertension drugs, OPSUMIT and UPTRAVI, experienced growth due to market and share gains, while XARELTO benefited from a favorable patient mix. MedTech sales increased by 7.6%, driven by new product introductions and commercial execution, although competitive pressures in electrophysiology and headwinds in Asia Pacific, especially China, were noted. Cardiovascular growth was achieved through global procedure growth and the adoption of new technologies, with Abiomed delivering strong regional growth despite an IV saline shortage. The segment also included gains from the Shockwave acquisition. Contact Lenses and Other saw growth from inventory dynamics and strategic pricing, while Surgical Vision growth was driven by new product successes.

In the fourth quarter of 2024, orthopedics grew by 2.5%, largely due to successful product launches, despite challenges from a transformation in orthopedics, China's VBP, and competition. Surgery saw a modest 0.4% growth, hindered by Acclarent's divestiture but bolstered by strong new products and price adjustments. Noteworthy financial changes included a strategic investment of $5.3 billion in R&D, impacting selling and administrative expenses. Interest income declined to $144 million from $212 million due to lower interest rates and altered cash and debt balances. Other income dropped to $161 million, influenced by reduced securities gains and benefits from employee programs, but slightly offset by lower litigation costs.

In the quarter, the company's effective tax rate decreased to 11.7% from 14.4% the previous year, due to integration efforts allowing for tax deductions and resolution of prior tax matters. Excluding special items, the tax rate was 8.8%, down from 10.8% last year. For more details, the company recommends reviewing their upcoming 2024 10-K filing. Adjusted income metrics are provided, excluding intangible amortization and special items. Innovative Medicine's margin fell due to investments in commercial strategies and R&D, while MedTech's margin dropped due to expenses from the V-Wave acquisition. Excluding one-time items, MedTech margin was stable. Overall, adjusted income before tax decreased from 29.2% to 24.1% of sales, impacted by V-Wave expenses. For the full year, adjusted income before tax was flat when accounting for one-time expenses from acquisitions. The call's sales and earnings portion concluded, and the presentation was handed over to Joe.

In the paragraph, Joseph Wolk discusses Johnson & Johnson's successful financial performance for the fourth quarter and full year 2024, surpassing initial projections when excluding acquisition costs. The company made significant advancements in its pipeline, strengthened core therapeutic areas, and formed strategic partnerships to enhance its business and improve margins. They are also making progress in resolving the talc litigation, with strong support for their bankruptcy plan and an upcoming confirmation hearing. Financially, Johnson & Johnson ended 2024 with $25 billion in cash and marketable securities, $37 billion in debt, and generated $20 billion in free cash flow, highlighting their strategic capital investment and deployment.

The paragraph highlights Johnson & Johnson's robust financial discipline, emphasizing their strong credit rating and commitment to their capital allocation priorities. The company invested over $17 billion in R&D, making it a top investor across industries, and has consistently increased dividends for 62 years. They have allocated over $32 billion to strategic growth opportunities, including larger transactions like Shockwave and planned acquisitions like Intra-Cellular Therapies. For 2025, they aim to maintain a focus on cash flow generation and project operational sales growth of 2.5% to 3.5%, driven by key products like DARZALEX, ERLEADA, and SPRAVATO. Acquisitions and divestitures are expected to positively impact growth by about 50 basis points.

The paragraph discusses the recent product launches and acquisitions by a company in its Innovative Medicine and MedTech segments, which are expected to drive growth despite increased competition and a negative impact from Part D redesign. It anticipates challenges in the Chinese market until 2025 and mentions the ongoing investigation of VARIPULSE in the U.S., with no impact on international activity. Currency fluctuations are affecting sales projections, with the euro's decreased value leading to an estimated $1.7 billion negative impact on sales. The company predicts modest sales growth by 2025 and an increase in adjusted pre-tax operating margins, driven by cost management and reduced expenses in acquisitions. Additionally, it estimates net other income for 2025 to be between $900 million and $1.1 billion.

The paragraph outlines factors affecting financial projections, including a decrease in employee benefit program benefits, the impact of debt from 2024 acquisitions, and a discontinued Kenvue dividend, leading to an expected net interest income between zero and $100 million. The company forecasts an effective tax rate of 16.5% to 17.0% for 2025. Adjusted operational earnings per share are projected to grow by 8.7%, with a midpoint EPS estimate of $10.60, factoring in a $0.25 negative currency impact. The planned acquisition of Intra-Cellular Therapies aims to enhance market penetration and R&D, projecting a sales growth acceleration of 80 basis points, financed mainly through debt, without expecting near-term cost synergies.

The paragraph discusses the anticipated financial impacts and considerations for a transaction expected to be dilutive to adjusted EPS by $0.30 to $0.35 in 2025, with effects dependent on transaction timing and borrowing rates. It predicts higher sales growth for Innovative Medicine and MedTech in the second half of the year, highlighting increased biosimilar competition for STELARA and the positive influence of new product launches. The MedTech sector faces challenging year-over-year comparisons initially but expects sales acceleration throughout the year. It also addresses one-time items affecting EPS in 2024, such as the non-repeating Kenvue dividend, interest income impacts, and specific acquisitions and expenses.

The company anticipates higher earnings per share growth in the second half of the year and is excited about its pipeline for 2025. In Innovative Medicine, they expect several drug approvals and regulatory filings, along with data readouts for various conditions. In MedTech, they plan an FDA submission for Impella ECP, progress on the OTTAVA robotic surgical system, and advancements in their cardiovascular portfolio. The company is confident in addressing 2025 challenges, advancing their pipeline, fulfilling financial commitments, and creating long-term shareholder value, recognizing the efforts of their dedicated colleagues. They then open the floor for a Q&A session.

The paragraph discusses the significant growth of the myeloma franchise as a major driver for the company's success, both historically and looking towards 2025. Jennifer Taubert highlights the strong performance of key brands, including DARZALEX, CARVYKTI, and others, which contributed to a strong quarter of over $14 billion in sales. Notably, the company achieved its $57 billion target a year ahead of schedule. DARZALEX, in particular, is emphasized for its extraordinary performance, reaching over $3 billion in quarterly sales with 22% growth, marking it as the company's first brand to achieve this milestone.

The paragraph discusses the strong performance of CARVYKTI, nearing $1 billion in sales with robust demand and capacity expansion in the US, Europe, and through a contract manufacturer. It highlights the success of TEC and TAL, best-in-class bispecific products, which are gaining competitive share, especially within academic settings. The company is leveraging its strength in multiple myeloma by working on additional combination therapies. John Reed acknowledges the impressive pipeline achievements of the past year, including 27 approvals, 49 submissions, numerous successful Phase III results, and significant additions to the research pipeline through both internal efforts and strategic acquisitions.

The company is advancing its portfolio of myeloma treatments by combining existing therapies, such as DARA with TEC or TAL, achieving 100% minimal residual disease (MRD) negativity, a key FDA-recognized surrogate endpoint for accelerated approvals. They are also exploring the potential of CARVYKTI, a CAR-T therapy, to replace traditional stem cell transplants in frontline myeloma treatment. CARVYKTI is already the sole approved CAR-T therapy in the second-line setting and has shown promising survival outcomes. Additionally, the company recently reached a significant milestone, completing the infusion of their 5000th patient with CARVYKTI, making it the most successful cell therapy launch in the industry.

The paragraph discusses Johnson & Johnson's acquisition strategy, emphasizing the importance of external innovation in their capital allocation. Joaquin Duato explains that while the company invests significantly in both M&A and R&D, their primary focus is on smaller acquisitions that enhance their MedTech and Innovative Medicine portfolios. Despite this focus, larger acquisitions like Shockwave in MedTech and Intra-Cellular in Innovative Medicines are seen as exceptions. In 2024 alone, they completed over 40 business development transactions aimed at building value, with major opportunities like TARIS and an IL-23 blocker being highlighted as substantial investments.

The paragraph highlights Johnson & Johnson's progress and future plans within its MedTech sector, particularly focusing on the successful acquisitions and integrations of Abiomed and Shockwave. These acquisitions have contributed significantly to their growth, with Abiomed experiencing a 15% increase in 2024. The paragraph emphasizes the breakthrough results of a study demonstrating a 12.7% mortality improvement, marking a significant advancement in evidence-based care. Additionally, the FDA approved the use of Impella for pediatric patients, further reinforcing its safety profile. Johnson & Johnson is also preparing to submit its ECP, the world's smallest pump, for FDA approval, underscoring ongoing development and innovation.

The paragraph discusses various medical technology advancements and business strategies. It talks about a 9-French device that expands to 21-French inside the heart, emphasizing its ease of use and potential for wider adoption. They also mention acquiring V-Wave to enhance their role in heart failure management by actively diverting blood across the intraatrial septum. Another acquisition, Shockwave, closed in May of the previous year, generated $564 million in growth. Shockwave is noted as a pioneer in IVL technology with a first-mover advantage and an expanding catheter lineup. The conversation then shifts to a question and response about the recent Intra-Cellular deal and the anticipated sales growth of CAPLYTA, with an inquiry about the potential deprioritization of seltorexant and aticaprant.

In this paragraph, Johnson & Johnson expresses enthusiasm about acquiring Intra-Cellular and their drug, CAPLYTA, which is used for schizophrenia and bipolar depression. They highlight CAPLYTA's potential growth, especially with pending approval for major depressive disorder (AMDD), which is anticipated to be its largest indication. The company sees CAPLYTA as a significant asset, forecasting it will exceed $5 billion in value. Additionally, Johnson & Johnson is excited about Intra-Cellular's drug pipeline, including treatments for conditions like Alzheimer's psychosis and anxiety. They emphasize that depression is varied and their strategy involves developing different drugs with unique mechanisms to target various subpopulations. They plan to maintain a diverse portfolio to address the needs of the 260 million people worldwide with chronic depression.

The paragraph discusses advancements in treatments for depression, highlighting several medications within a portfolio known for their benign side effect profiles compared to standard treatments. Key developments include the approval of SPRAVATO for monotherapy use in treatment-resistant depression, which avoids the side effects common with standard care. SPRAVATO is noted for receiving priority review and breakthrough designation from the FDA, marking significant progress in depression treatment. Additionally, the conversation shifts to a question about the impact of biosimilars on the immunology franchise and potential volume shifts towards TREMFYA, similar to how biosimilar competition affected AbbVie's HUMIRA, benefiting other products like Skyrizi.

The paragraph discusses the progress and market positioning of TREMFYA, focusing on its potential as a treatment for psoriasis, psoriatic arthritis, and inflammatory bowel diseases such as ulcerative colitis and Crohn's. Jennifer Taubert highlights the movement of patients towards newer and more effective therapies, suggesting that TREMFYA, as the only dual-acting IL-23 agent, is well-positioned to meet these needs. The drug offers flexibility in treatment options with both subcutaneous and IV administration. The company has made strategic investments to ensure patient access and successful market penetration, addressing the question of price erosion and patient switches relative to competitors like STELARA and HUMIRA.

The paragraph discusses the growth outlook for the MedTech market in 2025, with J&J expecting end markets to grow by 5% to 7% and procedure rates to have normalized to pre-COVID levels globally. It also mentions a temporary pause on US VARIPULSE cases due to reported neurovascular events, emphasizing the company's commitment to patient safety and collaboration with the FDA. Further updates will be provided when available.

The paragraph discusses the current situation and future opportunities for a company in the electrophysiology market, specifically concerning the VARIPULSE technology. The announcement pertains only to the U.S., with no expected impacts on VARIPULSE cases outside the U.S. The company highlights its strong market position with a $5 billion lead in electrophysiology, bolstered by a solid product portfolio and a 20-year market leadership. The company has successfully launched new products like the VARIPULSE catheter with positive initial feedback in Europe, Japan, and Canada, and has expanded its product line with the EU-approved Dual Energy STSF catheter. Despite facing competitive pressures in the U.S., the company continues to innovate and aims to grow its share in the global market by expanding its RF and PFA technology offerings.

The paragraph discusses a company's strategic focus on the Left Atrial Appendage closure market through its acquisition of Laminar, announced in the fourth quarter of 2023, and its confidence in maintaining global market leadership despite short-term challenges. It also includes a Q&A section where Chris Schott from JPMorgan inquires about operating margins, particularly the 150 basis points improvement in process R&D. Joseph Wolk explains that the improvement stems from reviewing and optimizing corporate infrastructure after separating the consumer health business and prioritizing investments in Innovative Medicine and MedTech, leading to more focused operations.

The paragraph discusses the company's restructuring efforts in the MedTech sector, focusing on exiting less profitable markets, enhancing manufacturing infrastructure, and investing heavily in oncology, immunology, and neuroscience. It highlights the anticipation of biosimilar competition for STELARA, stressing the need for strategic preparation. The company forecasts operational growth, with a 3% increase in top-line growth and 9% in the bottom line, despite significant financial challenges. Looking towards 2026 and beyond, there's an expectation of improved sales growth and operating margin stability. The section concludes with a transition to subsequent questions from analysts on a conference call.

The speaker discusses the performance and strategy of their MedTech business, highlighting a significant contribution from mergers and acquisitions (M&A) to their growth, which exceeded the expected 7% range. Without M&A, organic growth was slightly lower, between 5% to 7%. They emphasize the importance of both organic and inorganic investments, particularly in established areas like surgery and orthopedics. Joseph Wolk expresses satisfaction with achieving nearly $32 billion in sales and a 6.2% operational growth rate in 2024, which decreases to 4.7% when excluding the impact of Shockwave. He reaffirms confidence in the company's market growth projections and operational CAGR targets. Notably, the cardiovascular segment, especially through acquisitions like Abiomed and Shockwave, and improvements in orthopedics, show continued strong performance. There is also a brief mention clarifying the absence of revenue recognition reversal charges for VARIPULSE this quarter.

The business, traditionally a laggard for MedTech, has seen significant improvements, particularly in hip and knee growth and innovation in technologies like VELYS. Vision, another vital sector, has also improved. Despite a slow start to 2024, the year ended with strong operational growth. However, the company faces short-term challenges, including competitive pressures in the US and ongoing headwinds in China, expected to persist into 2025. Looking ahead, growth is anticipated from new products across various sectors, including ortho and surgery, as well as from recent acquisitions like Shockwave and Abiomed. The company expects acceleration in the latter half of 2025, considering new revenue recognition in the Ortho business and other factors impacting comparability with 2024.

The paragraph is the closing segment of Johnson & Johnson's Fourth Quarter 2024 Earnings Conference Call. It addresses a question about accounting reversal related to VARIPULSE, confirming there was no impact on the quarter from it. Jessica Moore expresses gratitude to participants, encourages further questions to be directed to the Investor Relations team, and hands over to Joaquin Duato for closing remarks. Duato thanks participants, reiterates readiness for 2025, and anticipates strong performance for the rest of the decade. The operator then ends the call.

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