Johnson & Johnson Deutsche Bank 2026 Healthcare Summit

First off, thank you, Cal and John, for your interest, as well as all of you for your interest in Johnson & Johnson. It certainly is a pleasure to be here today. It is, I think, a really good story that we have to talk about at these conferences nowadays. I got to say, the board, the executive committee, we do not really wake up to a formula that says it has got to be two-thirds pharmaceuticals and one-third med tech. We want to make sure, and I think Joaquin has done an excellent job in this regard, in making sure we are playing in higher growth markets where we have a right to win. I think our business has got a better level of clarity now to investors like all of you with respect to where we think those areas that we can win are. In pharmaceuticals, oncology, immunology, neuroscience.

In med tech, it is surgery, where we have had a longstanding presence, vision, and then finally, it is cardiovascular, where we have beefed up our presence there. So I would say it does provide some advantages to think about our business where you have some overlap. When regulatory policy is being made and they think about a cancer patient, it is good to know that Johnson & Johnson can be there if that cancer patient needs a surgical procedure or a therapeutic, because Johnson & Johnson has expert voices in the room. Often an oncology patient does need that overlap. Cardiovascular, we have got a partnership with Bristol Myers for milvexian, a promising drug potentially to treat AFib. That complements our cardiovascular business very nicely. Those are just some examples, but I would not want anyone to leave here under the premise that Johnson & Johnson is about those convergences.

If those convergences happen, it is nice. But each business we hold accountable to competing against its peer set. It has to stand on its own and making sure we have got a right to win, either number one or number two in that respective marketplace. From a CFO perspective, I like the diversification it offers. As we approached a few years ago, the STELARA loss of exclusivity, even with an okay med tech business back then, we were still able to invest in our R&D pipeline on pharmaceuticals because we had that balance. I think it provides a lot of flexibility, not just for the company, but for how investors can look at us.

Yeah. It has been a good year so far. I would say that 5%-7% range is something that we committed to back at our Investor Day in 2023. We have, and hopefully many of you will be able to attend another Investor Day coming up on December 8th. You are going to see growth rates that are better than that. Okay? That is exciting. You've heard Joaquin, you've heard myself say publicly, we see double digits, clear line of sight to double digits for the enterprise over the next few years by the end of the decade.

Let's get into that a little bit. 2027, you've got a weird dynamic in 2026 where we have an extra week of sales. Think about 1.5 to 2 points worth of growth. When you normalize for that, we'll be up next year over that, if you adjust for each period. After that, it's really unencumbered. What's amazing about next year is, let's say you're going to have equivalent reported growth, but actually operational growth a little bit better when you account for that 53rd week. There's about $4 billion to $4.5 billion of products that are losing exclusivity.

That's more than what we experienced STELARA's loss of exclusivity impact in year one of that biosimilar coming out. It truly is amazing. You think about XARELTO, loss of exclusivity, I don't think it's really appreciated. About $2 billion. The Pulmonary Arterial Hypertension franchise, about $1.5 billion. SIMPONI and STELARA combined, another $1 billion. Yet nobody's focusing on that, right? That's the amazing part of our portfolio. What gives me confidence? One, you've got largely a de-risked portfolio. Things that are on the market today or close to approval don't have a lot of risk left in them. We maybe have indication risk or things like that, but these are things that are pretty well known, markets that continue to grow, that are under-penetrated. You think about icotrokinra, which we just launched for psoriasis. Fantastic start. Maybe we'll talk about it a little bit later.

That's going to get likely indications in IBD somewhere down the road. You think about we're moving beyond multiple myeloma, where we've had a presence for probably the last decade, and prostate cancer, into different types of cancer like bladder cancer, lung cancer, head and neck, colorectal cancer, and then more therapies for multiple myeloma on the horizon. In med tech, we continue to have strong presence in wound closure and biosurgery, vision care. Contact lens is a good, steady business that's highly profitable within our portfolio, and now surgical vision is starting to emerge with some of their TECNIS platforms. OTTAVA was just recently approved.

We will go slow there to go fast later on, but that's an exciting new development that won't really have any material financial contribution for the balance of this decade relative to the scope of Johnson & Johnson, but really promises to be something big to support the next decade. So we're thinking 2031 and beyond at this point, placing those bets to make sure that's solidified. But we feel very comfortable with not just 5%-7% growth, but as you've heard us say publicly, we've got line of sight to double-digit growth over the next few years. The one thing I think, we've always thought about how do we replenish the portfolio when you have these loss of exclusivity events, right? A number of our peers are facing that now in the pharmaceutical industry. It's nothing new to have that skill set.

Matter of fact, there has been one other company that has been able to grow through a period where they have had a significant biosimilar enter the market or a significant loss of exclusivity. That other company was Johnson & Johnson back in 2018 with REMICADE. We have done it now with STELARA. We are going to do it again whenever the next big LOE hits, and we think about it that way. We probably need to get a little bit more forthcoming with how we are positioned for that so investors can appreciate that. But there is a really good stable that John Reed and his team are working on that promise well for a good long time. But we feel really good about the balance of this decade.

Yeah. That is a great question, John. I think the markets, if I look at it, a top-tier pharmaceutical market growing in its heyday is going to have a higher growth profile than what you will see for a top-tier med tech company. But what I can say really with a lot of confidence is both our med tech segment and our innovative medicine segment are positioned to have higher growth rates than where they are today. That growth rate is not going to come from price. We just simply do not play in markets that allow for price. Matter of fact, the growth in pharmaceuticals for us has probably overcome 3%-4% price erosion on an annual basis for at least the last seven to eight years.