The paragraph is an introduction to Johnson & Johnson's First Quarter 2025 Earnings Conference Call, led by Jessica Moore, the Vice President of Investor Relations. It covers logistical details, directs participants to additional materials on the company's investor website, and includes a disclaimer about forward-looking statements and associated risks. The paragraph also notes that some products discussed may involve collaborations or licenses with other companies.

The paragraph outlines the agenda for a company webcast and highlights Johnson & Johnson's first-quarter performance, which saw a 4.2% increase in operational sales. The agenda includes comments from CEO Joaquin Duato, an update on R&D from John Reed, and a financial review by Jess, followed by insights on cash position and future priorities from CFO Joe Wolk. The strong sales growth, despite market challenges, is attributed to the company's diversified approach in both innovative medicine and med tech sectors. The performance in Q1 reinforces confidence in their 2025 guidance, demonstrating the strength of their portfolio, pipeline, and operational execution. The year 2025 is described as pivotal for future growth.

The paragraph discusses the company's achievements in innovative medicine, highlighting a 4.2% operational sales growth despite challenges, driven by double-digit growth in eleven key brands. DARZALEX has shown significant success in multiple myeloma, with over 20% growth and expanded approval in Europe. The oncology portfolio saw advancements with riboflavin and LASCRUZ, extending survival in EGFR-mutated lung cancer and gaining European approval for a subcutaneous administration that shortens treatment time. In immunology, Tremfya's expansion into inflammatory bowel disease, particularly ulcerative colitis and Crohn's disease, has fueled a 20% sales growth, with expectations for it to become a leading product for IBD treatment.

In Q1, the MedTech segment achieved 4.1% operational sales growth, driven by the cardiovascular businesses Abiomed and Shockwave, and strong results in surgical vision and wound closure. Abiomed and Shockwave met expectations by achieving key milestones, such as an Impella heart pump guideline upgrade and launching the Javelin Peripheral IVL catheter. The company resumed U.S. VariPulse cases in electrophysiology and has completed over 5,500 cases globally. In robotic surgery, the company started OTAVA clinical trials, supporting a submission for US FDA de novo in general surgery. The company announced plans to invest over $55 billion in the U.S. over four years, aimed at manufacturing, R&D, and technology, marking a 25% increase in investment. This includes four new manufacturing facilities, with the first began construction in North Carolina.

In April, Johnson & Johnson completed its acquisition of IntraCellular Therapies, enhancing its portfolio in central nervous system disorders with Caplyta, a drug with significant sales potential. The company plans to challenge expert testimony in the TALC bankruptcy litigation and has increased its dividend for the 63rd consecutive year. Looking ahead to 2025, Johnson & Johnson highlights its continued success and milestones, with John Reed detailing advancements in their innovative medicine pipeline, particularly the efficacy and favorable profile of Caplyta for schizophrenia and bipolar depression.

The paragraph highlights significant advancements in both antidepressant and oncology treatments. It discusses the anticipated FDA approval of Caplyta as an adjunctive treatment for major depressive disorder, following impressive Phase 3 study results. Additionally, it details a promising new treatment for non-small cell lung cancer using riboflavin plus LASCRUZ, which has shown to improve overall survival significantly compared to the standard of care. The paragraph also mentions the recent FDA approval of Tremfya for treating Crohn's disease, marking its fourth indication. Overall, these developments represent substantial progress in treating major depressive disorder, lung cancer, and Crohn's disease.

The paragraph highlights Tremfya as the only IL-23 inhibitor with subcutaneous administration for treating Crohn's disease, offering results comparable to IV administration and demonstrating superiority over STELARA in a study. It is unique in dual-acting by neutralizing IL-23 and binding to CD6. The company is also developing an investigational oral IL-23 pathway inhibitor, Ichotrochindra, for plaque psoriasis, showing promising Phase 3 results with impressive skin clearance and safety. Future studies will compare Ichotrochindra's efficacy to injectable biologic STELARA in plaque psoriasis, marking a significant advancement in treatment options.

The paragraph highlights upcoming plans for the medication Ichotrochindra, including its anticipated approval filing later in the year and successful Phase 2b trial results for ulcerative colitis. Jessica Moore expresses enthusiasm for the company's progress across therapeutic areas in the first quarter of 2025, anticipating further milestones. Financially, the company's Q1 2025 worldwide sales were $21.9 billion, a 4.2% increase, with notable growth in the U.S. aided by acquisitions and divestitures. Net earnings were $11 billion, with a significant rise in diluted earnings per share due to the reversal of a talc settlement proposal. Adjusted net earnings and earnings per share saw modest increases compared to Q1 2024.

The paragraph outlines the company's financial performance, highlighting a 4.2% increase in worldwide sales, despite challenges such as the loss of exclusivity for STELARA and the redesign of Part D. Key contributors to growth include the oncology segment with notable growth in SARS, Pervixi, TechValley, and Talvei, and strong launches like Ribrovant plus LastClues. Within immunology, Tremfya showed significant growth, although STELARA faced a decline due to biosimilar competition. The neuroscience segment also saw substantial growth. Additionally, the return of Remicade and Symphony distribution rights in Europe positively impacted results.

The paragraph discusses the impact of Part D redesign on various assets, noting declines in Invego injectables and pulmonary hypertension, but a significant increase in Xarelto. It then shifts focus to MedTech, reporting a worldwide sales increase of 4.1%, with higher growth in the U.S. The growth benefited from acquisitions and divestitures, despite some negative effects from one-time events affecting orthopedics and pressures in China. Electrophysiology had flat growth due to prior inventory dynamics and competition, though somewhat mitigated by global procedures and new products. Abiomed saw a 14% growth, propelled by Impella technologies. The acquisition of Shockwave added $258 million to cardiovascular results, with the benefit expected to end by May. In vision, a 2.7% sales growth was driven by strategic pricing and strong performance of Acuvue Oasis products.

In the first quarter of 2025, the company saw a 6.2% growth in surgical vision, driven by recent innovations such as Tegnis Odyssey, PIRC, and Eye Hands, alongside effective commercial execution, despite facing U.S. competitive pressures. Surgery grew by 1.1%, with divestitures negatively impacting results by about 180 basis points, although this was mitigated by strong commercial execution and adoption of new products in wound closure and biosurgery. However, competitive pressures in energy and endocutters, as well as the negative impact of China VBP, partially offset this growth. Orthopedics experienced a 3.1% decline due to one-time events like a revenue recognition timing change, fewer selling days, and disruptions from an orthopedic transformation. These events significantly impacted orthopedics growth, but were partially countered by successful new product launches. On the financial side, there was a 320 basis point increase in the cost of products sold, driven by unfavorable currency transactions, a product mix shift due to the decline of STELARA, and Shockwave acquisition-related amortization. However, selling, marketing, and administrative expenses improved by 130 basis points thanks to effective spend management and phased investments in innovative medicine.

In the recent quarter, research and development expenses increased by 190 basis points due to the progress towards commercialization and investment in innovative medicine, somewhat offset by MedTech acquisitions. Net interest income was $128 million, down from $209 million in the first quarter of 2024 due to higher interest rates on debt. Other income rose to $7.3 billion, primarily due to a $7 billion talc reserve reversal compared to a $2.7 billion settlement proposal last year. The effective tax rate increased to 19.3% from 12.4% last year, largely due to the tax implications of the talc settlement reversal, with an adjusted rate of 16.3%. GAAP to non-GAAP reconciliations by segment are newly provided for transparency. The innovative medicine margin decreased from 42.9% to 42.5%, affected by currency issues, product mix, and Part D redesign, despite some operating leverage benefits.

The paragraph discusses a decline in MedTech's margin from 26.4% to 25.9% due to increased R&D and administrative investments following the acquisition of Shockwave and V Wave. This led to a slight decrease in adjusted income before tax as a percentage of sales. Joe Wolk takes over the call, thanking Jessica for her leadership in investor relations and announcing her new finance role. He highlights Johnson & Johnson's strong first-quarter results, despite challenges from STELARA biosimilars. The company is focusing on commercial execution and accelerating new product launches for future growth in MedTech. Recent acquisitions like Abiomed and Shockwave are helping Johnson & Johnson expand into higher-growth markets. Additionally, a restructuring program aims to streamline the surgery business by exiting non-strategic product lines and optimizing site operations.

The company anticipates a temporary revenue disruption of about $250 million in its Surgery division over the next two years, with the goal of enhancing growth and profitability by 2027, at a cost of approximately $900 million. They reported a free cash flow of $3.4 billion and ended the quarter with $38.8 billion in cash and $52.3 billion in debt, resulting in a net debt of $13.5 billion. Factoring in the recently completed IntraCellular acquisition, net debt would be $27.5 billion. The company prioritized innovation, investing over $3 billion in R&D in the first quarter and increased its dividend by 4.8%, marking the sixty-third year of consecutive increases. The IntraCellular acquisition strengthens its neuroscience portfolio, with a focus on strategic growth through acquisitions and partnerships. Following the reversal of a $7 billion reserve for the bankruptcy plan from talc litigation, the company remains confident in executing its capital allocation priorities without disruption. Full-year guidance for 2025 was also discussed.

The company has increased its operational sales guidance for the year by $700 million due to the acquisition of IntraCellular, projecting overall operational sales growth between 3.3% and 4.3%, with a midpoint of $92 billion. Excluding the effects of acquisitions and divestitures, the adjusted operational sales growth is anticipated to be between 2% and 3% compared to 2024. A recent shift in the euro-to-dollar exchange rate has led to a positive currency impact, with a full-year headwind of $600 million, resulting in reported sales growth between 2.6% and 3.6% ($91.4 billion at the midpoint). Operating margins are expected to improve by 300 basis points versus 2024, factoring in the impact of the IntraCellular acquisition and tariffs. Net interest expense projection ranges from $100 million to $200 million, mostly due to acquisition financing, while other income is expected to increase slightly to $1 billion-$1.2 billion. Despite a $0.25 earnings per share dilution from the IntraCellular acquisition and tariffs, the company maintains its adjusted reported earnings per share guidance at 6.2%, with a range of $10.50 to $10.70, aided by a reduced FX impact.

The paragraph outlines the company's expectations for operational sales growth in innovative medicine and MedTech in the second half of the year. For innovative medicine, the company anticipates increased competition from STELARA biosimilars and ongoing impacts from Part D redesign, with a greater benefit expected from newly launched products. In MedTech, growth is expected to normalize with seasonal procedure volumes and new product launches, including the relaunch of VERIPULSE in the U.S. and introductions in Europe. The company also highlights future pipeline progress, with planned approvals and data readouts for various treatments through 2025.

The paragraph discusses advancements in MedTech, specifically in robotic surgical systems and cardiovascular products like Impella ECP, Javelin, and Shockwave E8. These developments are expected to enhance financial performance through the decade. The company is optimistic about the pipeline's potential to exceed market estimates, projecting significantly higher sales for products like riboflavin plus LASCRUZ, SPRAVATO, Tremfya, and others compared to current estimates. While there's a slight discrepancy between analyst expectations and the company's forecasts for nipocalumab, they anticipate closing this gap post-launch. Overall, there is strong confidence in growth opportunities fueled by recent regulatory approvals and ongoing progress.

In the paragraph, Johnson & Johnson discusses their expectations for asset sales, anticipating peak sales beyond 2028 with potential for exceeding street estimates. They believe there's additional value in their outlooks, even after accounting for risks associated with unapproved products. They assert that their diverse business model positions them to handle challenges in 2025, meet financial commitments, and progress their pipeline to provide long-term shareholder value. During a Q&A session, Larry Biegelsen from Wells Fargo inquires about the impact of $400 million in tariffs on 2025 guidance. Joe Wolk responds that these tariffs, mainly affecting MedTech products, include those from Mexico and Canada not covered by USMCA, as well as some steel and aluminum tariffs. He also mentions strategies for mitigating these costs.

The paragraph discusses the impact of tariffs, particularly those involving China, on US goods, highlighting a $400 million cost due to these tariffs, which affects the cost of goods and future financial reporting. The company faces limitations on price adjustments due to existing contracts, especially in the MedTech and pharmaceutical sectors. They argue that tariffs can disrupt supply chains and suggest that tax policy, rather than tariffs, is more effective in encouraging US manufacturing investment. They cite increased investment following the 2017 tax reform and plan a significant manufacturing investment for advanced medicines in the US.

The paragraph discusses the impact of tax policy on U.S. manufacturing capacity for MedTech and pharmaceuticals, and touches upon the uncertainty surrounding tariffs and their potential effects up to 2026. Chris Schott from JPMorgan asks a question about the decline in gross margins for the quarter. Joe Wolk responds, explaining that the decline was due to factors like the high-margin STELARA product, pricing pressures from Part D, and unfavorable currency exchange impacts. He anticipates an improvement in gross margins going forward, estimating a recovery of 100 to 150 basis points, including the effects of tariffs.

In the paragraph, representatives from a company discuss the impact of STELARA biosimilar erosion on their business. Despite analysts being optimistic about gross profit, the company acknowledges that projections might have been overly positive concerning STELARA's impact on gross margins. The company clarifies that their performance aligns with expectations, referencing a comparison to the HUMIRA erosion curve. STELARA had a negative impact of 810 basis points on their growth; however, excluding STELARA, the company's remaining business grew at over 12%, with 90% of the business demonstrating strong growth in innovative medicine. The strength is attributed to eleven key brands experiencing double-digit growth, highlighting the overall robustness of the business despite STELARA's loss of exclusivity (LOE).

The paragraph discusses the resilience and growth of a healthcare company despite challenges like STELARA biosimilars and Part D redesign. John Reed highlights the decline of STELARA and the rise of Tremfya, which has received recent approvals for inflammatory bowel disease and shown superiority over STELARA in clinical studies. Tremfya is praised as the first selective IL-23 inhibitor, with upcoming data expected to show strong results in psoriatic arthritis. The operator then takes a question from Daniela from UBS, who thanks the team for their insights and bids farewell to Jess, before asking about the possibility of an upcoming recession.

In this paragraph, Joe Wolk responds to Daniela's inquiry about the recession-proof nature of their business. He explains that the company closely monitors job reports in the U.S., as these indicate the number of people with benefits and coverage for medications and procedures, including elective ones. Historically, elective procedures may be delayed during recessions, especially in orthopedics, but not abandoned. Healthcare is generally more recession-proof than other industries, and the company feels confident about the current demand for care, innovation in medicine, and MedTech offerings. Another team member adds that their advanced intraocular lens (IOL) category serves as an economic health indicator, with recent product launches resulting in strong performance and no major challenges encountered.

The paragraph is a transcript of a Q&A session during an earnings call. Terence Flynn from Morgan Stanley asks about the likelihood of Section 232 pharma tariffs focusing on generic APIs versus complex branded biologics. Joaquin Duato responds, indicating that they are analyzing the situation, acknowledging the inevitability of such measures, and emphasizing the importance of collaborating with the government to mitigate supply chain vulnerabilities. Duato mentions working with the administration to ensure sufficient US manufacturing capacity and expresses deference to the government's process, acknowledging that their views are speculative. The paragraph ends with the operator introducing the next question from Joanne Wuensch of Citibank.

The paragraph discusses the impact of several factors on the orthopedic sales of a company, which saw a decline due to one-time events totaling about 480 basis points. These factors include changes in revenue recognition, fewer selling days, and disruptions from an orthopedic transformation in 2023. Despite these challenges, the company expects growth due to innovative new products and technology in the orthopedic portfolio, with strong performance anticipated in areas like trauma, shoulder, and foot and ankle. The company is confident in its future growth due to new product approvals and advancements, particularly in its Hips portfolio, and is optimistic about maintaining momentum with products like Attun and Velas, now available in multiple markets.

The paragraph discusses the current status and upcoming launches of medical products in the company's orthopedic portfolio. The company reports strong operational growth in trauma, driven by their VoLTE plating system and positive feedback from surgeons. However, their spine segment has underperformed, but they are set to launch the TriAlta Spine System and Velo Spine soon. The conversation then shifts to a Q&A session where Vamil Divan from Guggenheim Partners asks why certain products (Carvicki, Talve, and Tekvely) are no longer listed on a presentation slide despite consensus expectations remaining unchanged. Jessica Moore responds, confirming the absence of the multiple myeloma portfolio from the slide without providing specific reasons for their removal.

The paragraph discusses the performance and growth prospects of CARVYKTI, a pharmaceutical product. Despite an initial disconnect in estimates, actual numbers increased with a $2 billion addition. Joe Wolk and Jennifer Taubert express strong optimism based on CARVYKTI's significant sales growth, capacity expansion, and global rollout efforts, forecasting it as a $5 billion-plus asset. John Reed highlights early success in combining two molecules, achieving high response rates in recent hematology meetings. Overall, CARVYKTI is progressing well with no capacity constraints foreseen.

The paragraph discusses the promising potential of combining either TEC or Tal with DARZALEX, resulting in 100% minimal residual disease negativity in earlier therapy lines. This indicates a significant opportunity to introduce these bispecific T cell redirecting molecules earlier in treatment protocols, even in initial lines, alongside DARZALEX. Jennifer Taubert highlights the strong academic penetration of Tech and Tal and their expansion into the community, despite challenges with less frequent dosing due to their effectiveness. The products are expected to see increased patient starts and community penetration. Following this, the operator introduces a question from Matt Miksic of Barclays, who asks about the opportunities involving Tremfya and the emerging potential of Ichotrochindra in the immunology portfolio, along with seeking clarification from Tim about the impacts on orthopedics.

The paragraph discusses challenges and progress in two sectors: orthopedics and immunology. In orthopedics, Tim Schmid acknowledges that their performance in hip and knee replacements was slightly below market expectations in the first quarter of 2024, despite seeing robust procedures. He attributes this to competitive pressures and emphasizes the need for improvement, which they expect to achieve through innovations and new products. In immunology, Jennifer Taubert highlights the strong performance of Tremfya, which achieved nearly a billion dollars in sales with over 20% growth, particularly driven by its launch for ulcerative colitis and Crohn's disease. The company is optimistic about continued success in these indications.

The paragraph discusses the success and growth of Tremfya in the ulcerative colitis and Crohn's disease markets. Tremfya is the fastest-growing product in ulcerative colitis, capturing nearly a 50% share of new patient starts in the IL-23 class, largely due to its dual-acting profile and robust efficacy data. It offers simplicity with subcutaneous induction and maintenance dosing. In Crohn's disease, Tremfya has quickly gained traction post-approval, with patient initiation volumes surpassing other IL-23 launches. A significant majority of gastroenterologists view its dosing flexibility and efficacy as strong differentiators. Overall, Tremfya is expected to perform as well as or better than STELARA in IBD indications.

In the paragraph, John Reed and Jennifer Taubert discuss the potential of Ichotrochindra in the psoriasis treatment market. Reed highlights the opportunity to offer a once-a-day pill with efficacy comparable to biologics, addressing patients' aversion to injections. Despite the established market, many eligible patients aren't using advanced therapies. Taubert sees a market expansion opportunity for Ichotrochindra alongside Tremfya, driven by strong efficacy akin to biologics. Later, Tim Anderson from Bank of America raises a question about the impact of tariffs on transfer pricing structures at J&J. Joe Wolk acknowledges the question but does not provide detailed information.

In the paragraph, Joaquin Duato discusses Johnson & Johnson's plan to manufacture all advanced medicines in the US by the end of their $55 billion investment plan, which spans four years. This plan aligns with increased investments following the 2017 US tax reform. Jessica Moore thanks participants for their questions and mentions Darren Snellgrove's transition to the Innovative Medicine CFO role. Joaquin Duato concludes the call by highlighting the promising Q1 results for 2025, reinforcing confidence in the company's future guidance. The operator then ends the earnings conference call.

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