- Hip growth on a worldwide basis was 11% operational, outpacing the market growth in both the US and international businesses.
- On an operational basis worldwide knee growth was 6% while spine grew 8% with the rate of growth in the spine business accelerating throughout the year due to the successful launch of a number of products.
- Animas, the insulin pump business grew 40% on an operational basis due to new product launches and continued development of the international market.
- The Harmonic technology business achieved strong double digit operational growth due to the global success of recently launched products and the underlying strength of this platform.
Strategic Insights:
- The firm streamlined its infrastructure to reduce the cost basis and prioritizing R&D investments to ensure the success of the most promising products.
- It continues investment in new product launches, focusing on emerging markets and expanding presence in new and adjacent markets.
- The firm is building market leadership positions and venturing into new growth spaces for Johnson & Johnson.
Developing own products and technologies within the Johnson & Johnson family of companies is the most efficient way to grow the existing businesses.
- It has continued to make significant investments in R&D across the business with approximate spending of $7.6 billion in 2008.
- As planned, R&D investments began leveling off last year because it had substantially increased investments over the past several years to accommodate progress in the late stage pipeline.
- It has eight new compounds currently in registration and five of those were filed with the FDA in 2008.
- In surgical care, JNJ has developed the first computer assisted personalized sedation system called Sedasys, which is currently under review by the FDA.
- The first clinical trial for Nevo resolution one completed patent enrollment ahead of schedule and the company plans to present six month primary end point data from this trial at the Euro PCR conference in May.
Within the Biosense Webster business, it is awaiting FDA approval for an atrial fibrillation indication for the Navistar Thermocool Ablation Catheter.
- The firm has built a significant portfolio of proprietary technologies including dissolvable strips and taste masking for oral care and OTC drug delivery.
- In late 2008, the firm announced several other acquisitions in the surgical care business, acquiring Omrix Biopharmaceuticals, Mentor Corporation, and SurgRx whose end seal products complement theharmonic technology.
- The emerging markets look to provide the most robust healthcare opportunities over the next decade and the firm is preparing its businesses to capitalize on this growth. We define high growth emerging markets on a business by business basis.
Key questions and answers from the fourth quarter earnings call conducted by Johnson and Johnson (JNJ) on 20 January, 2009.
Larry Biegelsen (Wachovia):
Could you articulate J&J’s strategy in the Pharmaceutical business?
Bill Weldon:We have historically been very focused on the specialty markets so when you look at the impacts we have much less of the impact but like everyone else really assessed our sales force, different ways of going to market but we have identified the specific therapeutic areas where we continue to focus on continue to develop our products where we think there is high potential whether its here in the United States or around the world.
We modified our strategy but haven’t really changed it other than some of the ways we go to market with sales organization and new ways of looking at promoting our products that we think make us more efficient. As far as the specialty area it’s been an area that we’ve historically been focused on and will continue to be focused on. We think it gives us a lot of leverage and a lot of strength.
Larry Biegelsen (Wachovia):
Any additional colour on acquisitions?
Bill Weldon: We took last year really and tried to look across the landscape, we looked at health information technology for example. We zeroed in on prevention and wellness and the two acquisitions we have coupled with the experiences we’ve had over the last two decades at Johnson & Johnson.
We think there’s a very strong business model looking at that in that today we pay about $400 less per employee for our healthcare costs than the normal company would pay. The reason for that is for two decades now we have 4% tobacco users at J&J where a normal population is about 20%.
We have a focus on obesity and weight loss; we have a focus on cholesterol, hypertension and the areas that really many of the co-morbidities associated with obesity and keeping people healthy and well. We think that will also drive to engagement, absenteeism. We know, we’ve documented it in our own programs.
By looking at the behavior modification technology that HealthMedia has coupled with the Human Performance Institute which looks at nutrition, exercise, recovery and the critical pieces. Putting it together with the facts we have we think we have a very strong model to go to governments and other businesses with to improve the health of their employees.
I wouldn’t expect you’d see us going into large acquisitions trying to move things forward but build from the base that we have in wellness and prevention as we continue to assess other opportunities.
Catherine Arnold (Credit Suisse):
With a lot of your competitors talking about going down the path of bio-similars or bio-betters, do have a similar interest given your capabilities and expertise in that area?
Bill Weldon: We continue to assess whether its generics, bio-similar or anything else we’ll continue to assess it. We don’t see it as a real opportunity at the moment and part of that is because with bio-similars you’re probably going to still have to show because of the size of the molecule and everything else the way it forms, the way it shapes, the way it fits into the receptor there is going to have to be clinical trials so its going to require a significant investment.
Our belief is we need to keep focused on creating new opportunities in the marketplace, driving them forward through the products that we can. As far as getting into the bio-similar area we don’t see any opportunity for us at this point in time.
