Cautions Concerning Forward-looking Statements

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2 Cautions Concerning Forward-looking Statements These presentations contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, future operating and financial performance, product development, market position and business strategy. The viewer is cautioned not to rely on these forward-looking statements. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of Johnson & Johnson. Risks and uncertainties include, but are not limited to: challenges and uncertainties inherent in new product development, including uncertainty of clinical success and decisions of regulatory authorities regarding approval, labeling and other matters that could affect the availability or commercial potential of product candidates; uncertainty of commercial success for new and existing products; the ability of the company to successfully execute strategic plans, including restructuring plans; competition, including technological advances, new products and patents attained by competitors; impact of business combinations and divestitures; challenges to patents; changes to applicable laws and regulations, including global health care reforms; trends toward health care cost containment; changes in behavior and spending patterns or financial distress of purchasers of health care products and services; product efficacy or safety concerns resulting in product recalls or regulatory action; manufacturing difficulties or delays; significant adverse litigation or government action, including related to product liability claims; financial instability of international economies and legal systems; and increased scrutiny of the health care industry by government agencies. A further list and description of these risks, uncertainties and other factors can be found in Johnson & Johnson s Annual Report on Form 10-K for the fiscal year ended January 3, 2016, including in Exhibit 99 thereto, and the company s subsequent filings with the Securities and Exchange Commission. Copies of these filings are available online at or on request from Johnson & Johnson. Any forward-looking statement made in these presentations speaks only as of the date of these presentations. Johnson & Johnson does not undertake to update any forward-looking statement as a result of new information or future events or developments. 2

3 Notice Regarding Non-GAAP Statements These presentations may refer to certain non-gaap financial measures. These non-gaap financial measures should not be considered replacements for, and should be read together with, the most comparable GAAP financial measures. A reconciliation of certain of these non-gaap financial measures to the most directly comparable GAAP financial measures can be found in the Investor Relations section of the Company s website at Note: Operational sales growth excludes translational currency impact and is a non-gaap financial measure. Notice Regarding Trademarks Third-party trademarks used herein are trademarks of their respective owners. 3

4 Strategic Partnerships, Collaborations and Licensing Arrangements During the course of this morning s presentations, we will discuss a number of products developed in collaboration with strategic partners or licensed from other companies. Following is an acknowledgement of those relationships. Diabetes Care Orthopaedics Surgery Consumer INVOKANA licensed from Mitsubishi Tanabe Pharma Corporation; ANIMAS VIBE in partnership with Dexcom; ONETOUCH VERIO FLEX uses Bluetooth MONOVISC and ORTHOVISC licensed from Anika Therapeutics, Inc.; Kick 2D Surgical Navigation co-developed with Brainlab AG; Various products in connection with the Cooperation Agreement with the AO Foundation; TRUMATCH developed in collaboration with imorphics Ltd and Materialise; CARTO software in partnership with Siemens SURGIFLO research collaboration with Ferrosan Medical Devices A/S ZYRTEC licensed from UCB Inc. and its affiliates; RHINOCORT licensed from AstraZeneca AB 4

5 Consumer Overview Jorge Mesquita Executive Vice President Worldwide Chairman Consumer 5

6 We Are Well-positioned for Sustained Growth Accelerating sales growth and market share World-class portfolio of brands in large, growing categories Strong innovation pipeline and world class brand building Well-positioned to grow sales above the market while continuing to expand margins to achieve benchmark profitability 6

7 Our Purpose Caring for people around the world by anticipating their needs, creating solutions and experiences that help them and those they care for live healthy, vibrant lives 7

8 We Are a Company of Firsts Purpose, History & Progress Did you know the Johnson & Johnson Family of Companies created the first First Commercial First Aid Kits BAND-AID Brand of First Aid Products: First commercial dressings for small wounds First mild and soap-free Baby Shampoo First Toothpaste in a tube HELIOPLEX broad spectrum sunscreen First mass-produced silk Dental Floss in 1890s First mass-produced sanitary protection products for women AVEENO : First patented triple oat formula 8

9 Purpose, History & Progress With Enduring Brands That Invented New Categories 9

10 Purpose, History & Progress Proudly Nurturing a World-class Portfolio of Care Baby Care Beauty Oral Care OTC Women s Health* Wound Care * Ex US, Canada, Caribbean 10

11 A look back 11

12 Our Business is Centered Around Six Consumer Health Categories Purpose, History & Progress OTC 29% Beauty 26% Oral Care 12% Baby Care 15% Wound Care 9% Women s Health 9% Based on FY 2015 Consumer sales, Beauty reported as Skin Care. 12

13 Purpose, History & Progress We Have 12 Mega Brands 3 BRANDS >$1B 13

14 Purpose, History & Progress Our 12 Mega Brands Deliver ~60% of Our Sales Today $1B Brands ~ 85% ~60% 1. Internal estimate Aspiration 1 14

15 Purpose, History & Progress We Are Global Leaders Across Numerous Product Segments # 1 # 2 Allergy Care Baby Toiletries Digestive Remedies Mouthwash Smoking Cessation Aids Diaper Rash Facial Cleansers Feminine Care Sun Protection Therapeutic Beauty Wound Care Source: Euromonitor FY 2015 data. Note: Therapeutic Beauty includes hair loss treatments, acne treatments and medicated shampoos; Wound Care includes adhesive bandages, first aid kits, gauze, and tape. 15

16 Purpose, History & Progress With >50% of Our Sales Outside of North America US Canada 39% 5% Asia Pacific 17% Latin America EMEA 11% 28% Source: 2015 Reported Results. 16

17 We Have a Long History Performance Over Time of Sales Growth 8 Year CAGR 12% 10 Year CAGR 7% 10 Year CAGR 4% At reported rates; including acquisitions and divestitures. 17

18 Performance Over Time Our Business Has Turned the Corner with Accelerating Growth NTS Ops Growth 4% 3% (0.2%) Note: Figures exclude Acquisitions / Divestitures and the effect of translational currency average NTS growth. 2014, 2015 NTS growth vs. prior year. 18

19 Performance Over Time US OTC Has Returned to Health 100% Brands returned to market 1 US OTC NTS, $B +10% CAGR 2 $1.5B 98% Service levels and return to Unconstrained supply >2x Consistently Outpacing the market 3 1. Brand portfolio reintroduced with exception of certain sizes and flavors. 2. CAGR represents 2011 to Nielsen 4. Internal estimate. Aspire to exceed $2B through organic growth 4 19

20 Performance Over Time We Are Seeing a Turnaround in Global Market Share Gaining share in six segments in last six months Compromised Skin Digestive Health Feminine Personal Care Addressing Allergy Care Baby Care Facial Beauty Gaining Holding Oral Care Pain Care Smoking Cessation Body Care Cold & Cough Care Growing faster than market in 2016 NTS Growth vs. Market Market J&J Consumer Priority Need States. Six Month Nielsen Value Share trend as of Feb Last Month Last 3 Months 20

21 Performance Over Time We Are Delivering Major Improvements in Profitability Gross Profit Margin +5 PTS Q Adjusted Income Before Tax Margin Non-GAAP measure. PTS 2014 Q

22 Our Right to Win is Strong Right to Win Enduring Brands Insight-led Innovation Favorable Consumer Trends Attractive Growing Categories 22

23 Right to Win Collection of Enduring World-class Brands 23

24 Right to Win Growing Through Insight-led Innovation, Endorsed by Professionals #1 Allergist recommended brand #1 Brand of OTC pain reliever hospitals use most #1 Dermatologist recommended #1 Dentist recommended mouthwash #1 Pediatrician recommended brand of ibuprofen #1 Hospital recommended #1 Recommended by doctors and moms All claims based on US data. 70 Years relied on by doctors 70 Years recommended by dermatologists 24

25 Playing in Large Structurally Attractive Categories Our total consumer categories represent ~$350B globally Right to Win 2015 Market Sizes ($B) $15 $160 $40 Baby Care Beauty Oral Care $100 $30 $3 OTC Women s Health Wound Care Source: Euromonitor. 25

26 Right to Win That Are Growing Faster Than Consumer Packaged Goods Average 5 Year Sales CAGR 1 6% 3% 5% Baby Care Beauty Oral Care 5% 7% 3% OTC Women s Health Wound Care Our categories are growing a weighted average of >4% versus CPG 2 market growth of 3-4% 1. Source: Euromonitor, CAGR 2. Consumer Packaged Goods Five Year Sales CAGR 26

27 Right to Win Favorable Consumer Trends Healthy Beauty Aging Population Naturals / Organics OTC Self-care Solutions Millennials Are Digital / Social Natives Lifestyle Health Issues 135 Million New Births / Year Emerging Middle-class 27

28 Right to Win We Have a Lot Going for Us Enduring Brands Favorable Consumer Trends Insight-led Innovation Attractive Growing Categories Proud History of Innovation and Growth Unique Right to Win Gaining Business Momentum 28

29 Strategy for Profitable Growth Our Strategy Positions Us to be a Significant Contributor to Johnson & Johnson $13.5B Revenue 14% Profitability 1 Targeted 1-2 pts Above market growth per year Growing earnings faster than sales, reaching benchmark profitability 1. Adjusted Income Before Tax by Segment (Non-GAAP Measure). 29

30 Strategy for Profitable Growth Clear Where to Play Choices Across Geographies Markets prioritized based on attractiveness and our right to win Differentially investing for growth Building scale and infrastructure to reach growing middle-class ~60% of planned growth will come from Emerging Markets, outpacing overall market growth Consumer segment enables Emerging Market growth strategy across J&J Enterprise 30

31 11 Prioritized Need States and 12 Mega Brands Strategy for Profitable Growth 11 NEED-STATES 12 MEGA-BRANDS Well-being & Beauty Health & Healing Baby Care Body Care Facial Beauty Feminine Personal Care Sun Care Allergy Care Compromised Skin Cough & Cold Care Digestive Health Oral Care Pain Care 31

32 Strategy for Profitable Growth Strengthening Competitiveness in Five Areas New Way of Marketing Transformational Innovation New Way of Selling Benchmark Margin Expansion Acquisitions & Licensing 32

33 Transformational Innovation Our Innovation Program is Getting Stronger Focus on Fewer & Bigger 2015 vs Driving Evolution of Portfolio Incremental NTS from Innovation ($MM) Number of Projects ~ (75%) 2x Portfolio Value ~ +100% value of our portfolio with ¼ of the projects x estimated impact of our new product development by

34 New Way of Selling We Are Driving Excellence in Sales via Revenue Growth Management Pricing Architecture Value Assortment Optimization Promotion & Trade Terms 34

35 New Way of Selling Partnering with Retail Customers on In-store Activation and Aisle Leadership Awards & Recognitions Health & Wellness Supplier Partner of the Year Vendor of the Year across Pharmacy, Personal & Baby Care We are a partner of choice for our customers and are winning at the shelf Walmart Canada Vendor of The Year Watsons China Best Supplier Watsons Philippines People s Choice Brazil Best Supplier 35

36 New Way of Selling e-commerce / Digital Initiatives Sales CAGR Retail vs. Online Focus on e-commerce Execution, Operations, Infrastructure and Insights >2x Retail Online $4B Online revenue opportunity if we take our fair share Global Market SOURCE: Euromonitor - Baby & Child, Bath & Shower, Hair Care, Oral Care, Beauty, Sun Care, OTC, Sports Nutrition and Vitamins & Supplements. 36

37 Productivity Initiatives Breakthrough Margin Expansion Delivering Major Value Revenue Growth Management Supply Chain Transformation >$1B in savings Marketing Productivity SG&A Optimization 37

38 Proactively Managing Portfolio Management Our Portfolio of Brands We have taken a disciplined approach to pruning our portfolio & focusing on core need states Core Focus Well-being & Beauty Health & Healing 11 NEED-STATES Baby Care Body Care Facial Beauty Feminine Personal Care Sun Care Allergy Care Compromised Skin Cough & Cold Care Digestive Health Oral Care Pain Care Recent Divestitures KY, Splenda, Benecol Note: KY, Splenda and Benecol are no longer trademarks of Johnson & Johnson and are owned by their respective companies. 38

39 Acquisitions and Divestitures We Are Actively Shaping Our Portfolio to Capture Growth Opportunities Investment Strategy Pillars Build scale in OTC Enable growth in Beauty Strengthen our leadership in Baby Care Regional and key country opportunities Invest in longer-term external pipeline Transition to Growth with Recent Deals & More to Come #1 diaper-rash cream in Brazil 1 Entry into beauty devices Dermo-cosmetics 1 1. Estimated Q closing. 39

40 Acquisitions and Divestitures We Know How to Create Value Through Acquisitions NTS ($MM) NTS ~$1.5B CAGR post 1995 acquisition = 9% Acquired 1995 NTS ~$300MM Guess the Brand? At reported rates. 40

41 Acquisitions and Divestitures We Know How to Create Value Through Acquisitions NTS ($MM) NTS ~$1.5B CAGR post 1995 acquisition = 9% Acquired 1995 NTS ~$300MM At reported rates. 41

42 Acquisitions and Divestitures We Know How to Create Value Through Acquisitions NTS ($MM) NTS ~$700MM CAGR post 1999 acquisition = 21% Acquired 1999 NTS ~$30MM Guess the Brand? At reported rates. 42

43 Acquisitions and Divestitures We Know How to Create Value Through Acquisitions NTS ($MM) NTS ~$700MM CAGR post 1999 acquisition = 21% Acquired 1999 NTS ~$30MM At reported rates. 43

44 Our Focus is to Create a Virtuous Strategy for Profitable Growth Cycle of Profitable Growth Revenue Growth Management Drives sustainable profitable growth over time P&L Productivity Big Innovation & Brand Building 44

45 We Are Well-positioned for Sustained Growth Accelerating sales growth and market share World-class portfolio of brands in large, growing categories Strong innovation pipeline and world class brand building Well-positioned to grow sales above the market while continuing to expand margins to achieve benchmark profitability 45

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