Mike Weinstein (JP Morgan): Do you have the plan in place to achieve operating margin expansion in 2009 and the face of the fundamental pressures you’ll have?
Dominic Caruso: Yes, the plans are in place for 2009 operating performance that would improve pre-tax operating margins over 2008. As a reminder, we started on this path back in 2007 where we conducted the restructuring of the pharmaceutical business and the Cordis business. Again, 2009 was not a surprise for us, we knew about this for some time.
To put the plans in place now, we are executing on a number of those plans we are very happy we’re able to achieve the higher end of our cost improvement guidance that we provided earlier. We have of course the higher level of the PCH integration synergies happening in 2009 so those plans are in place, we feel comfortable with that.
Bill Weldon: We are always looking for the right opportunities and we think that the pressures in the economy right now are going to create very unique opportunities for us. We have our list of candidates that we think would be good opportunities and other ones are going to be popping up and coming to us as the year progresses.
We are very focused on the unique opportunities that will be presented to us based on the market conditions that we see today.
David Roman (Morgan Stanley): Can you talk a little bit about the avenues you might use to enter disease management a little more whether its IT services or diagnostics?
Bill Weldon: The way we are trying to look at it is basically looking at a patient and saying how do we deal with that patient in taking the resources that J&J has and putting them against it.
When we look at the management of the patient we’re talking about the area of diabetes for example and metabolic disease. Part of it goes to what we were talking about before this wellness and prevention.
If you look at obesity here in the United States or around the world its one of the biggest drivers of problems. If you extrapolate that out to the co-morbidities associated with obesity if we can get obesity under control and that may be through surgical intervention which could be bypass or realized gastric band, it could be through some of the behavior modification programs and diet and exercise. Those are the things that we’re thinking about in that area.
As far as diabetes specifically we have the onemous pump now, the glucose strips but we also have, if you look at Splenda, we look at surgical intervention, we look at the behavior modification programs.
We are actually looking at how do we approach the patient in a way that offers them the comprehensive treatment and bringing that out to further looking at bio-markers in earlier indicators through our ortho-clinical diagnostics programs, it will allow for a treatment of an individual and the management of an individual throughout the whole continuum of care as opposed to just trying to put a piece together here.
Bob Hopkins (Banc of America-Merrill Lynch): Beyond 2009 what emphasis on any major changes that you as CEO of J&J are anticipating beyond 2009 to the way healthcare policy is formed in this country?
Bill Weldon: When you look at policy in Washington we’ve used the term access and affordability for a long time. I think that the administration is talking about coverage and costs and they really mean the same thing.
We do believe that we have to look at how do people gain more access at more affordable prices. There are lots of different ways to look at it and we’ll wait and see what the administration has to do here. We’ll work closely with them and try and support and work in ways that is going to allow patients to get better healthcare.
The critical thing right now though is addressing the economic situation that we have. You can look at negotiating the pricing; you can look at all of these things and can have some short term. They’ll be some changes and some affects in those areas. As you look out further we’re all going to have to get together and really look at how do we get better healthcare.
The single largest issue that has to be dealt with is obesity. When you start looking at prevention and wellness and dealing with obesity, if we don’t get childhood obesity under control, if we don’t start dealing with this they say today one out of three children born today will have diabetes.
The healthcare costs of today will be nothing compared to what they’re going to be. I think there will be a real focus on this area of prevention and keeping people healthy rather than letting them get sick and treating them.
Bruce Nudell (UBS): Structurally a decent chunk of your cash is ex-US does that create relative advantages for acquisition versus share buyback?
Dominic Caruso: With respect to our capital structure and ex-US versus in US cash I would say generally speaking we’re comfortable with the level of cash we have and obviously we’re also very comfortable today given our strong financial position on our access to credit markets at reasonable rates.
The cash location isn’t that much of a factor for us because of our ability to access capital when we need it at very reasonable rates.
Bruce Nudell (UBS): Clarify with regard to Remicade the scale of the de-stocking?
|
