A N N U A L R E P O R t 2 0 0 8
`
`ARGENTUM Exhibit 1179
`Argentum Pharmaceuticals LLC v. Research Corporation Technologies, inc.
`IPR2016-00204
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`Page 00001
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`CARING
`
`Comforts • Fulfills
`Heals • Touches • Empowers
`Transforms • Inspires
`Endures
`
`O N T H E C O V E R Around the world, we’re focused on making life-changing, long-term differences in the prevention and treatment of
`HIV/AIDS. Our HIV franchise continues to grow as we discover, develop and provide access to medicines like PREZISTA® (darunavir)
`and INTELENCE™ (etravirine). And our involvement in community-based programs, such as mothers2mothers in South Africa,
`continues to touch lives. Read about HIV-positive mentor mother Kangela and her son—who is HIV-negative—in the story on page 18.
`
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`C H A I R M A N ’ S L E T T E R
`
`To Our
`Shareholders
`
`The men and women of Johnson & Johnson
`come to work each day driven by a shared
`passion: caring. Our caring touches the lives
`of people around the world. It motivates
`us to identify unmet health care needs,
`reach increasing numbers of patients and
`consumers, and create broader solutions—
`not only for the most serious medical
`conditions but also for the general health
`and well-being of the world’s population.
` Our caring empowers others. It touches patients and
`consumers across the world, and it inspires hope. It’s grounded
`in the fundamental tenets of Our Credo and in a decentralized
`management approach that keeps our people close to their
`customers and their markets. It drove our business success in
`2008, and it mobilizes us to capitalize on new health care opportu-
`net sales $63.7
`nities while we meet the challenges ahead in an unprecedented,
`diluted earnings per share $4.57
`difficult global economic setting.
`dividends paid per share $1.795
`2008 HIGHLIGHTS We remember 2008 as a year of extraordinary
`economic events that shook our financial markets and global econ-
`omies. Against this backdrop, I am proud of our accomplishments.
`
`Johnson & Johnson delivered on its financial commitments,
`driven by the strength of a broad base of human health care busi-
`nesses. We achieved these results despite anticipated market
`challenges—such as increased generic competition worldwide and
`
`W I L L I A M C . W E L D O N
`Chairman, Board of Directors, and Chief Executive Officer
`
`patent expirations—even as we faced an unanticipated deteriora-
`tion of the global economy.
` Worldwide sales grew to $63.7 billion, an increase of 4.3 percent.
`Operational growth was 1.9 percent. We achieved strong adjusted
`earnings growth of 6.8(1) percent and adjusted earnings per share
`growth of 9.6(1) percent, which was higher than adjusted earnings
`growth due to our share-repurchase program. Free cash flow was
`strong at approximately $12 billion.(2)
` While growing our businesses, we also took thoughtful,
`disciplined actions to streamline and improve our cost structure.
`Within our Pharmaceuticals and Cordis businesses, approximately
`$1.6 billion in annual savings were realized. We anticipate
`additional savings in 2009 from standardization initiatives we
`have invested in over time.
` Meanwhile, we remain on track to fulfill the potential of the
`Pfizer Consumer Healthcare acquisition, expecting to meet or
`
`N E T SA L ES
`(in billions of dollars)
`
`$50.5
`
`$53.3
`
`$47.3
`
`$61.1
`
`$63.7
`
`D I LU T E D E A R N I N G S P E R S H A R E
`(in dollars)
`$4.57
`
`$3.73
`
`$3.63
`
`$3.35
`
`$2.74
`
`D I V I D E N D S PA I D P E R S H A R E
`(in dollars)
`
`$1.795
`
`$1.620
`
`$1.455
`
`$1.275
`
`$1.095
`
`2004
`
`2005
`
`2006
`
`2007
`
`2008
`
`2004
`
`2 0 0 5
`
`2 0 0 6
`
`2 0 0 7
`
`2 0 0 8
`
`2004
`
`2 0 0 5
`
`2 0 0 6
`
`2 0 0 7
`
`2 0 0 8
`
`C H A I R M A N ’ S L E T T E R
`
`1
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`Page 00003
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`exceed our target of $500 million to
`$600 million in cost synergies. We expect
`this transaction to be break-even or
`modestly accretive this year, one year
`ahead of the original schedule.
` These types of actions drove gains in
`our adjusted segment operating profit to
`$17.3(3) billion, or 27.1(3) percent to sales, in
`2008 compared with $15.9(3) billion, or
`26.0(3) percent to sales, in 2007. Our teams
`did an excellent job improving margins even
`as the volatile economic climate began
`driving increases in commodity costs and
`shifts in consumer and patient behaviors.
` We also continued with our $10 billion
`share-repurchase program, and as of
`year-end, we had purchased approximately
`$8.1 billion of stock.
` During the turbulent economic times
`of 2008, Johnson & Johnson was the third-
`best-performing stock on the Dow Jones
`Industrial Average. Our shareholder returns over one-, three-,
`five- and ten-year periods have exceeded our major comparative
`indices. While delivering financial results and cost structure
`improvements, we have been investing in our businesses for sus-
`tained growth. We made significant strides toward strengthening
`our market positions in the areas in which we compete today,
`identifying new high-growth opportunities and broadening our
`capabilities into more of the $4.1 trillion health care market.
`We continue to deliver on four major business priorities that
`remain fundamental to our long-term growth:
`• Winning in Health Care
`
`• Capitalizing on Convergence
`• Accelerating Growth in Emerging Markets
`• Developing Leadership and Talent
`
`
`
`
`
`
`
`WINNING IN HEALTH CArE Winning in health care requires a multi-
`pronged approach for long-term success. Accordingly, we continue
`to invest in internal development and to pursue selective licenses
`and acquisitions. Meanwhile, we are thoughtfully navigating the
`competitive and industry challenges affecting global health care.
` Research and development remained strong at $7.6 billion in
`2008. Driven by strong science and unmet patient needs, we have
`advanced our pipelines.
` Last year was one of the most productive for our pharmaceuti-
`cal pipeline in terms of filings, approvals and positive regulatory
`opinions. Our pipeline is diverse and well-balanced, in both bio-
`pharmaceuticals and small molecules, covering therapeutic areas
`with high unmet needs. We sustained research productivity, and
`we are on track to complete filings for seven to 10 new products
`between the beginning of 2008 and the end of 2010. In doing so,
`we’ll meet our target set back in 2007.
` Our late-stage pipeline is robust. Eight new compounds
`are currently in registration, five of which were filed with the
`U.S. Food and Drug Administration (FDA) in 2008. NUCYNTA™
`(tapentadol) immediate-release tablets for the relief of moderate
`to severe acute pain in adults age 18 and older were granted FDA
`approval. Regulatory authorities in Canada, the European Union
`(EU) and the U.S. approved INTELENCE™ (etravirine) for
`
`During the turbulent
`economic times of 2008,
`Johnson & Johnson
`was the third-best-
`performing stock on
`the Dow Jones Industrial
`Average. Our share-
`holder returns over
`one-, three-, five- and
`ten-year periods have
`exceeded our major
`comparative indices.
`
`HIV combination therapy. STELARA™
`(ustekinumab) was approved in Canada and
`the EU for the treatment of moderate to
`severe plaque psoriasis; ustekinumab is
`currently under review with the FDA.
` Our Medical Devices and Diagnostics
`pipeline is strong, both with new products
`and entries into new markets. For example,
`Ethicon Endo-Surgery, Inc. introduced the
`HARMONIC® Combination Hook Blade and
`HARMONIC® SYNERGY™ Curved Blade,
`taking these minimally invasive surgical
`instruments with proven clinical value and
`strong intellectual property into orthopae-
`dic and plastic surgery, new specialties for
`the Company.
` And our Vision Care Franchise continued
`its fifth year of solid growth with ACUVUE®,
`the world’s most widely prescribed contact
`lens brand. It launched two new products:
`ACUVUE® OASYS™ Brand Contact Lenses
`for ASTIGMATISM and, introduced in the United Kingdom, 1-DAY
`ACUVUE® TruEye™, the world’s first daily disposable silicone
`hydrogel contact lens.
` While developing our core businesses, we also expanded into
`new markets through acquisitions. Johnson & Johnson acquired
`Mentor Corporation, a leading supplier of medical products for the
`global aesthetic market. This acquisition provides our Ethicon
`Franchise with an opportunity to grow in aesthetic and reconstruc-
`tive medicine while raising the standard for innovation and patient
`outcomes. We believe Mentor will become the cornerstone of a
`broader Johnson & Johnson leadership strategy for aesthetic
`medicine—a high-growth market serving both consumers and
`medical professionals.
` Winning in health care also means going beyond the $1.2 trillion
`market in which our businesses compete today and finding growth
`opportunities in the broader $4.1 trillion health care market. Our
`Office of Strategy & Growth is charged with this mission.
` As an initial step in the creation of a Wellness & Prevention
`business platform, Johnson & Johnson made two acquisitions
`and began laying the groundwork for this new business.
`HealthMedia, Inc. offers a suite of interventions that provide
`personalized web-based coaching for wellness, disease manage-
`ment, behavioral health and medication adherence with proven
`outcomes, improved compliance, reduced medical utilization and
`increased productivity. Meanwhile, HUMAN PERFORMANCE
`INSTITUTE™ is developing science-based training programs to
`improve employee health and wellness. We expect this new business
`to contribute to the performance of workforces through products
`and services that keep employees healthy, engaged and productive.
` While building our businesses, we are also actively participating
`in public policy discussions around the world. Given our breadth
`of businesses and long-standing reputation, we are often called
`upon for our perspectives. As always, our focus remains on the
`consumer and patient, preserving access to care and incentives
`for innovation.
`
`Johnson & Johnson is uniquely positioned to thrive in the
`rapidly changing health care landscape. Our blend of industry
`perspectives, consumer insights, scientific innovation and finan-
`
`2
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`cial strength provides us with a uniquely
`strong base for present and future growth.
`
`CApITALIzING ON CONvErGENCE For the
`future, breakthrough innovation lies in
`capitalizing on the convergence of products,
`technologies, patient-centric solutions and
`the power of the Johnson & Johnson
`enterprise. Our broad base of businesses
`working together creates this distinctive
`competitive advantage. And our diverse
`capabilities, expertise, talent and financial
`strength enable us to develop innovative
`solutions that advance health care around
`the world and build long-term success for
`Johnson & Johnson.
` Good collaborative thinking leads to
`important new products. The Fibrin Pad,
`developed jointly by our scientists at Ethicon,
`Inc. and Centocor, Inc., along with Omrix
`Biopharmaceuticals, Inc., combines mechani-
`cal and biological action for advanced hemostasis, reducing surgery
`time and the need for blood transfusions. Johnson & Johnson
`acquired Omrix Biopharmaceuticals in late 2008 to further our
`capabilities in this area.
` The companies that comprise our Diabetes Care Franchise are
`creating a full range of solutions that empower patients through
`technology, education and services. New product introductions
`allow patients to consistently monitor blood glucose levels and
`discreetly administer insulin. We also acquired two online
`communities—Children with Diabetes, Inc. and the Spanish-
`language Diabetes Juvenil—to help connect families virtually.
`Also, the Johnson & Johnson Diabetes Institute, LLC brings together
`diverse medical professionals with the common goal of improving
`outcomes for people with diabetes.
` Capitalizing on the power and scope of the Johnson & Johnson
`enterprise is also a source of competitive advantage for our busi-
`nesses. The launch of ZYRTEC® (cetirizine HCl) for sale without a
`prescription in the United States was our most successful product
`launch in 2008. It also marked the largest prescription to over-
`the-counter (OTC) switch in Company history. The ZYRTEC®
`launch demonstrated the unique advantage we have when our
`Consumer and Pharmaceuticals businesses work together to
`combine strong consumer marketing expertise with our in-depth
`knowledge of the managed-care market.
` Our scientists and marketers continue to develop convergent
`and personalized health care solutions in other high-growth areas,
`such as skin care, obesity, oncology and cardiology. The potential
`for making an impact on standards of care in these categories is
`tremendous, and we believe the breadth of Johnson & Johnson
`makes us uniquely able to seize the opportunities that lie ahead.
`
`ACCELErATING GrOWTH IN EMErGING MArkETS One of the
`largest growth opportunities rests in emerging global markets such
`as Brazil, Russia, China and India. Other rapidly developing coun-
`tries, such as Turkey and Mexico, are also showing solid growth.
`Johnson & Johnson has maintained a significant and well-established
`presence in these markets for decades, utilizing our decentralized
`operating model to stay close to patients, consumers and health care
`
`research and
`development
`remained strong
`at $7.6 billion
`in 2008. Driven by
`strong science and
`unmet patient needs,
`we have advanced
`our pipelines.
`
`providers with local market insights, prod-
`ucts and strategies.
` Three components are core to our
`emerging-markets strategy. First, we are
`training health care professionals to
`provide optimal patient care. We opened a
`professional education center in Beijing in
`conjunction with our 2008 Olympic Games
`sponsorship. We also established a
`professional education center in Russia.
`Meanwhile, the Vision Care Institute, LLC
`is providing important training and infor-
`mation on eye care in 11 diverse cities,
`including Shanghai, Dubai and Bangkok,
`and plans to continue its global expansion.
`We launched the Johnson & Johnson
`Diabetes Institute, LLC in four global
`markets. In all, we have more than
`20 professional education centers across
`the world.
` Second, we continue to build local
`capabilities to fully integrate with the market and its people. As the
`official health care sponsor of the Beijing 2008 Olympic and
`Paralympic Games, our Company and businesses built a lasting
`bond with the Chinese people, opening opportunities for sustained
`business growth and recruitment of the best talent. Local capabili-
`ties were further enhanced with the acquisition of Beijing Dabao
`Cosmetics Co., Ltd., maker of a well-known and respected skin care
`brand in China; this is our first significant acquisition in this mar-
`ket. Additionally, we began manufacturing at our new orthopaedic
`facility in Suzhou, China, and our Emerging Market Innovation
`Center in Shanghai develops products for emerging markets and
`gathers in-depth insights about the Chinese consumer.
`
`Finally, we are developing a number of market-appropriate
`products, such as endosurgical instruments, sutures and baby
`care products, to better meet local needs.
`
`DEvELOpING LEADErSHIp AND TALENT While we are well-
`positioned with long-term growth strategies, I remain most
`passionate about the people of Johnson & Johnson. Inspired by
`Our Credo, our teams overcome daily competitive challenges in
`their quests to discover new ways to improve health care, satisfy
`unmet needs and open new markets.
` The professional development of our people remains a top
`priority. With more than 250 operating companies around the
`world, we have the capability to develop leaders by exposing them
`to a wide variety of businesses, with ever-increasing responsibility.
`We allow them to take prudent risks as they enhance their own
`judgment and business-building capabilities. Our focus on leader-
`ship development ensures smooth succession through our most
`senior management levels.
`
`In addition to making excellent progress on our business
`priorities throughout 2008, we achieved sustained results in each
`of our business segments, driven by our solid management teams
`and dedicated employees.
`
`CONSuMEr HEALTH CArE Our Consumer Health Care business
`delivered strong growth in 2008, with sales of $16 billion and a
`total growth rate of 10.8 percent. Growth drivers included our
`
`C H A I R M A N ’ S L E T T E R
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`33
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`
`OTC/Nutritionals business, led by ZYRTEC®;
`skin care brands, led by AVEENO®, CLEAN &
`CLEAR® and NEUTROGENA®; LISTERINE®
`antiseptic mouth rinse; and international
`sales of baby care products. DABAO™, the
`leading moisturizer in China, also contrib-
`uted to this growth.
` Our Consumer business continues a
`history of strong revenue and operating
`profit growth. We maintain solid leadership
`posi tions, with the No. 1 or No. 2 positions
`in nine of the 15 major categories in which
`we compete.
` Our focus on superior science differen-
`tiates us from competitors and builds
`long-term advantage. Science and deep
`consumer insights are the catalysts behind
`our growth strategies, which include organic
`growth of iconic brands, a focus on new
`ventures and a commitment to emerging-
`market development.
` Across all franchises, clinical trial design and analysis are
`critical competencies, both for new products and innovative new
`claims. Our strong network of professional relationships,
`supported by science, has built many of our brands to the No. 1
`place in professional recommendations in the United States
`and international markets. TYLENOL®, JOHNSON’S® Baby,
`NEUTROGENA®, LISTERINE® and NEOSPORIN® are just some
`of our brands that are trusted—and highly recommended—by
`medical professionals around the world.
`
`Johnson & Johnson
`is uniquely positioned to
`thrive in the rapidly
`changing health care
`landscape. Our blend of
`industry perspectives,
`consumer insights,
`scientific innovation
`and financial strength
`provides us with a
`uniquely strong base
`for present and future
`growth.
`
`devices, which offer surgeons greater func-
`tionality and flexibility for diverse surgical
`procedure requirements. Through the
`acquisition of Åmic AB, a privately held
`Swedish developer of in vitro diagnostics,
`Ortho-Clinical Diagnostics, Inc. has access
`to new delivery channels in point-of-care
`and near-patient settings outside the
`clinical laboratory.
` Our businesses introduced several new
`products and strengthened pipelines to
`sustain future growth. DePuy Orthopaedics,
`Inc. introduced TRI-LOCK™, a bone-
`preserving hip stem with proprietary
`GRIPTION™ technology for stability,
`maintaining its leading position in
`hip replacement in the U.S. market. In
`Europe, LifeScan, Inc. launched the new
`ONETOUCH® VITA™ Blood Glucose Meter,
`particularly beneficial for people with type 2
`diabetes who find their disease complex and
`difficult to manage. With the convergence of accurate, reliable
`and easy-to-use technology and patient insights about preferred
`sizes, shapes and colors, the ONETOUCH® ULTRAMINI™ Blood
`Glucose Meter has become the No. 1-selling blood glucose meter in
`the United States.
` Given the competitive strengths of our MD&D businesses and
`opportunities for growth, we remain enthusiastic about the
`potential for sustained long-term growth in this segment.
`
`MEDICAL DEvICES AND DIAGNOSTICS Our Medical Devices
`and Diagnostics (MD&D) franchises continue to comprise the
`world’s largest medical technology business, with 2008 sales of
`$23.1 billion, a total increase of 6.4 percent over the prior year.
`Growth was driven by minimally invasive products, disposable
`contact lenses, and orthopaedic and sports medicine products.
` The medical technology market offers significant growth
`opportunities in light of aging demographics, unmet medical
`needs and technological innovation. In addition, we see low
`penetration rates in many of our key categories, along with
`geographic development opportunities. We are well-positioned
`to capitalize on this market potential, with No. 1 or No. 2 positions
`in the majority of markets in which we compete.
` Our opportunities are particularly solid in markets such as
`ophthalmology, cardiology and metabolic disease, where there is a
`strong need for patient-centric solutions to address chronic disease.
`Within this area, the Comprehensive Care Group is charged with
`developing novel approaches to care across the entire continuum of
`a disease while delivering cost-effective outcomes. Meanwhile, the
`Surgical Care Group focuses on developing surgical businesses with
`new technologies and solutions that support patients beyond the
`time of surgical intervention.
` Our MD&D businesses achieved several significant milestones
`during 2008. In addition to Mentor Corporation and Omrix
`Biopharmaceuticals, the strategic acquisitions of several other
`companies strengthened our pipelines. Ethicon Endo-Surgery, Inc.
`acquired SurgRx, Inc., bringing together that company’s ENSEAL®
`products with its own HARMONIC® line of ultrasonic medical
`
`pHArMACEuTICALS Our Pharmaceuticals businesses ended the
`year with sales of $24.6 billion, representing a total decrease of
`1.2 percent versus the prior year. The breadth and depth of our
`growing product portfolio enabled us to lessen the impact of
`generic competition for RISPERDAL® (risperidone) and slower
`sales of PROCRIT® (Epoetin alfa).
` Nine products had sales of more than $1 billion. Growth was
`driven by the strength of currently marketed products, fueled
`in some cases by new indications and in others by approvals in
`additional markets.
` Growth products included VELCADE™ (bortezomib),
`which received European Commission approval for previously
`untreated multiple myeloma; REMICADE® (infliximab), a
`biologic approved for the treatment of a number of immune-
`mediated inflammatory diseases; and TOPAMAX® (topiramate)
`for treatment of epilepsy and migraines. In our HIV Franchise,
`the European Commission approved once-daily dosing of
`800 mg PREZISTA® (darunavir) with low-dose ritonavir as part
`of combination therapy in treatment-naïve adults (those who
`have never taken HIV medication). This approval broadens the
`previous indication of darunavir for treatment-experienced
`HIV-1 patients. This means PREZISTA® will be used for the
`full spectrum of HIV/AIDS patients in the 27 EU member states.
` Our antipsychotic franchise with INVEGA® (paliperidone), a
`once-daily atypical antipsychotic, and RISPERDAL® CONSTA®
`(risperidone) Long-Acting Injection continued to grow. We have
`filed an additional indication for RISPERDAL® CONSTA® in
`frequently relapsing bipolar disorder in the U.S. Other new indica-
`tions for our existing products included CONCERTA® (methyl-
`
`4
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`
`
`Around the world,
`our people bring
`a passion for caring
`to work every day.
`This is perhaps
`the greatest reason
`for our enduring
`success.
`
`phenidate HCl) Extended-release Tablets in
`adult attention deficit hyper-activity disorder
`(ADHD) and DORIBAX™ (doripenem for
`injection) in the EU for urinary tract
`infections, intra-abdominal infections and
`nosocomial pneumonia infection.
` Our late-stage pipeline is also promising,
`and we are poised for several potential
`launches. Rivaroxaban, which we are
`co-developing with Bayer HealthCare AG in
`the United States, is initially in development
`for prevention of deep vein thrombosis and
`pulmonary embolism in patients undergoing
`hip and knee replacement surgery. We are
`also encouraged by paliperidone palmitate, a
`long-acting injectable antipsychotic with
`monthly dosing.
`
`In addition to concentrating on R&D
`productivity, we are carefully navigating the
`challenging regulatory and reimbursement
`environments and the growing competition
`from generics. With this combined focus, we remain confident in
`our pharmaceutical pipeline as we introduce new and better solu-
`tions for unmet medical needs.
`
`tant, I am confident because of our people.
` Around the world, our people bring a
`passion for caring to work every day.
`This is perhaps the greatest reason for our
`enduring success. Each day, our people
`remind me that caring is an extraordinary
`motivator that overcomes the many chal-
`lenges of today’s health care environment
`and difficult economic times.
` As you browse the stories on the fol-
`lowing pages, you will see some of what
`inspires the people of Johnson & Johnson.
`Added to these stories are countless other
`works throughout the Company. From
`great science … to deep insights about our
`patients and consumers … to innovative
`market approaches … to a dedication to
`corporate citizenship … our people bring a
`new definition to caring. They are inspired
`by Our Credo, which reminds us of who we
`are as a Company and what we believe.
` Our operating model—broadly based in human health care,
`decentralized in approach, managed for the long term and
`focused on people and values—impels us to find the best possible
`solutions to today’s most pressing health care needs. This focus
`has been passed from generation to generation of employees at
`Johnson & Johnson—all of whom share the inspiration of caring
`that remains our hallmark.
`
`Our COMMITMENT TO YOu During 2008, we achieved solid
`progress against our growth strategies. We strengthened our core
`franchises, advanced our pipelines and introduced new products
`to sustain revenue growth. We invested in new opportunities to
`fuel robust future growth. We maintained a strong balance sheet
`that allows us to capitalize on emerging opportunities for the
`future. We continued to operate under a business model that
`delivers sustained results and to be led by inspired people who
`take ingenuity and caring to new levels. For all these reasons,
`I remain confident that Johnson & Johnson will continue to grow
`stronger in the years ahead, delivering superior levels of
`performance that benefit patients, consumers, medical profes-
`sionals, employees, our communities and our loyal shareholders.
`
`William C. Weldon
`Chairman, Board of Directors, and Chief Executive Officer
`
`March 11, 2009
`
`(1) Excludes in-process research and development and other special items.
` See Reconciliation of Non-GAAP Financial Measures, page 72.
`(2) Free cash flow is defined as operating cash flow less capital spending.
`(3) Adjusted segment operating profit, before (income)/expenses not allocated
`to segments, which excludes in-process research and development and other
`special items. (See Note 11 to the Consolidated Financial Statements and
`Reconciliation of Non-GAAP Financial Measures, page 72.)
`
`Our COMMITMENT TO GrOWTH Unprecedented technologies,
`aging populations, strong emerging markets and more powerful
`consumers are creating a number of new opportunities for our
`businesses. We maintain a clear strategy for pursuing future
`growth. This is evident in the progress we made during 2008.
` For 2009, we have entered an unusually challenging period,
`facing a global financial and business slowdown unlike anything
`we have seen during our lifetimes.
` Every challenging period brings with it a corresponding
`opportunity for growth, and this is no exception. By working in a
`disciplined way, Johnson & Johnson will emerge stronger than
`ever. I believe this for several reasons:
` We are fortunate to have an experienced management team in
`place with the right skills to capitalize on market conditions and
`build businesses for long-term growth.
` We are strengthening our core franchises, advancing our pipe-
`lines and introducing new products that will replenish and grow
`our revenue streams.
` We are building our market leadership positions and venturing
`into new growth spaces for Johnson & Johnson.
` We are maintaining our financial strength and flexibility with a
`combination of strong cash flows and AAA credit rating, which
`gives us access to credit at favorable rates.
` We have implemented cost structure improvements that
`should reap benefits for the bottom line and help us operate more
`efficiently.
` We are actively participating in the dialogues on public policy
`that will shape our business environment for years to come.
` Whenever the economy and health care markets return to more
`robust growth, we will be stronger and better-positioned for lead-
`ership in our markets.
`
`Our COMMITMENT TO CArING I am confident in the growth of
`Johnson & Johnson for many reasons, but perhaps most impor-
`
`C H A I R M A N ’ S L E T T E R
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`O U R C A R I N G T R A N S F O R M S :
`
`A Surgeon’s Care
`
`Many of the children that
`
`W. Fred Hess, M.D., treats
`for scoliosis and other spinal
`deformities have an uneven
`waist, asymmetrical shoulders or a large hump.
`Some are in such great pain that they’re barely
`able to walk. The intricate surgery that Dr. Hess
`performs can last up to 12 hours and often
`requires transfusions due to major blood loss.
` But when some patients go on to be football, tennis, swimming
`or diving champions, “it makes your day, your week, your year,”
`says Dr. Hess, Chief of Spine Section, Department of Orthopaedic
`Surgery at Geisinger Medical Center in Danville, Pa.
`
`In 2008 Dr. Hess began using two new surgical devices: the
`HARMONIC® Combination Hook and the HARMONIC SYNERGY™
`Curved Blade. These latest innovations in HARMONIC® energy
`from Ethicon Endo-Surgery, Inc. take this proven technology
`into orthopaedic and plastic surgery, new specialties for
`Ethicon Endo-Surgery. Another device launched in 2008, the
`ergonomically enhanced HARMONIC ACE® Curved Shear, has an
`easy-to-use handle for laparoscopic procedures.
` What’s unique about HARMONIC® technology is that it uses
`ultrasonic energy to simultaneously cut and coagulate tissue
`during surgery. The benefits over traditional scalpel and electro-
`surgery techniques include minimal thermal tissue damage for
`the patient and more precise cutting for the surgeon, as well as
`fewer instrument exchanges in some cases. “It seems to impact
`the recovery process,” says Dr. Hess. “It makes a difference in the
`care I can provide for my patients.”
`
`EnErgy Platform DrivEs growth HARMONIC® devices
`have been used worldwide in more than 6.5 million open and
`laparoscopic procedures, including general, gynecological,
`bariatric and colorectal surgeries. Feedback from hundreds of
`surgeons who regularly perform these procedures continues to
`play an important part in developing the devices.
`
`“The vision we have is to use HARMONIC® technology as the
`
`cornerstone of a growing energy franchise that will offer multiple
`benefits to surgeons and patients in any procedure,” says
`Hedy Hashemi, Ethicon Endo-Surgery marketing director with
`responsibility for the HARMONIC® line.
`In 1995, there was only one HARMONIC® surgical device
`
`when Ethicon Endo-Surgery acquired the technology. Today
`the HARMONIC® product line comprises more than 50 devices,
`including seven products launched in a six-month period
`between November 2007 and April 2008. The energy franchise
`gained another platform in 2008 with the acquisition of
`SurgRx, Inc., makers of ENSEAl® devices, which seal large vessels
`during surgery.
`
`a winning touchDown Dr. Hess, a longtime user of surgical
`products by DePuy Spine, Inc., operates with the latest HARMONIC®
`devices. And his surgeries continue to touch lives.
` When off-duty, he performs surgery on children in Ecuador,
`Ghana, Barbados and several other countries. His wife, Heather,
`son Andy, 21, and daughter Ashley, 23—a college student,
`volunteer firefighter and EMT—have joined Dr. Hess on trips to
`distribute food and medicine. He also brings children to Geisinger
`Medical Center for treatment, including a Bosnian boy who was
`injured in a landmine explosion and a Honduran girl who was
`becoming a paraplegic due to tuberculosis of the spine; after a
`10-hour surgery, she can now walk.
` An avid football fan who plays on the hospital team, Dr. Hess
`also volunteers as physician for the Danville High School
`Ironmen football team. One day he spotted an offensive tackle
`who looked familiar and realized he had operated on the teen
`after the boy broke his back in a car accident. Now, he was an
`all-state champion. Though the player was on the opposing team,
`Dr. Hess’ heart swelled.
`
`“It’s wonderful to make a difference in someone’s life,” he says.
`
`t o o l s t o t r a n s f o r m W. Fred Hess,