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Letter from Alex Gorsky, Chairman and Chief Executive Officer
Johnson & Johnson is a company that does good and does well. This is perhaps the simplest expression of how we live up to the principles of Our Credo. Written in 1943, Our Credo continues to guide the way we conduct business: always in service of the patients, customers, doctors, nurses, mothers, fathers and all others who use our products and services. It outlines our responsibilities to our, the communities in which we live and work, to the world community, to protect the environment and natural resources and finally, to our stockholders. Our Credo is itself the basis of our corporate citizenship and sustainability.
We increasingly understand citizenship as all the ways we impact the world, socially, environmentally and economically. As the world’s most broadly based health care company, Johnson & Johnson is privileged to play a role in the health and well-being of billions of people throughout the world. We must use our capabilities, our strengths, and expertise to make a real, lasting and profound difference in the world.
Performance Against Priorities
Our citizenship priorities are fourfold: advancing human health and well-being; safeguarding the planet; keeping our business strong; and conducting business responsibly. Partnerships and alliances played an important role in our sustainability performance in 2011.
Advancing human health and well-being:
We’re working together to advance global health. Our efforts range from generic licensing partnerships that help us to enhance access to our HIV medicines; to a collaboration between Johnson & Johnson, the World Health Organization, the Bill & Melinda Gates Foundation, the U.S. and U.K. governments, officials from endemic countries, the World Bank and 12 other pharmaceutical companies for a coordinated effort to combat 10 neglected tropical diseases; to public/private partnerships such as the United Nations’ Health 4+ and our work with other partners including Children Without Worms, Save the Children, the American Academy of Pediatrics and USAID, who are partners in our efforts to support the United Nations’ Millennium Development Goals to improve the lives of women and children. In 2011 alone, we invested $7.5 billion to advance robust pipelines across all three business segments, including making Johnson & Johnson the U.S. leader in new molecular approvals. From developing new medicines to improving current standards of care and increasing access to health care, our work focuses on significant unmet health care needs.
Safeguarding the planet:
We have a strong history of leadership in environmental goal setting and achievement, and we’re expanding the way we think about how we impact the planet. One way is by working within our own businesses, across our enterprise supply-chain model to reduce complexities and redundancies so we can consistently produce high quality products that are environmentally conscious. Our EARTHWARDS® process has enabled product teams to apply sustainability concepts throughout each product’s life cycle. In 2011 we granted EARTHWARDS® recognition for 15 products, bringing our total to 26 products that have measurably reduced environmental impacts.
We’re also targeting our water conservation efforts, having mapped the location of our manufacturing facilities against known areas of water stress. We’ve increased the amount of clean-technology energy capacity that is installed or under construction. In addition, we’ve transformed and expanded our supplier standards to reach beyond our external manufacturers and go further regarding sustainability, applying the new standards to our entire supplier base.
Keeping our business strong:
We are focused on maintaining a strong, successful global business that can extend access to health care in an economical and sustainable manner and enable us to continue developing new health care innovations. Whether it is bringing the highest quality products for mothers and children, for patients and customers; introducing lower cost versions of products that are equally accurate and effective in emerging markets; or training and educating physicians in developing markets, we utilize various approaches and strategies to ensure the long-term success of our business and the long-term benefits for our patients and consumers. In 2011, our worldwide sales of $65.0 billion, an increase of 5.6 percent, returned Johnson & Johnson to sales growth. We launched a number of innovative new products to address unmet health care needs across the globe, advanced our pipelines, and strengthened our product portfolios and leadership positions in many areas, including immunology, oncology, surgical devices, and emerging markets.
Conducting business responsibly:
Our Credo inspires us to do great things. We strive to deliver high-quality products and services to meet our customers’ needs, and to do it accurately and promptly. We say we must treat each other with respect and be open to each other’s ideas. We promise to be good citizens of the world, protecting natural resources. We commit to experimenting with new ideas, and by extension, to learning from failure. By staying focused on these ideals, we will live up to our own expectations and those of our customers. We’re listening to our customers and other stakeholders to help us to continue to be a trusted partner in health and well-being. For example, we held stakeholder dialogues on executive compensation and then redesigned our long-term incentive program for named executive officers with the aim of drawing a more visible link between pay and performance. We became the first health care company to join the prestigious Billion Dollar Roundtable upon achieving global spending of at least $1 billion with diverse suppliers and increased our spend with diverse suppliers to $1.3 billion in 2011. Overall, we continue to embed sustainability into our business. We delivered good first-year progress on our five-year Healthy Future 2015 sustainability goals, tracked by our enterprise Sustainability Working Group. Also, all three business segments now have business-specific sustainability strategies and goals.
Navigating Change
Our business environment is changing rapidly. The health care environment is shaped by factors including variable macro economics, shifting demographics and new dynamics in government, reimbursement and regulation. These changing world economies and marketplaces result in increased demand for health care and health care reforms, and present opportunities for us as the world’s most broadly based health care company. We’re focused on areas identified by a sustainability materiality assessment completed in March 2010. These include topics around access and affordability of medicine, emerging markets, human rights, supply chain management, product eco-design and environmental impacts. We’re also working to advance global health, ensure quality and safety of products (including anti-counterfeiting measures), drive innovation, and to uphold our principles related to bioethics, operation of clinical trials, business ethics and health care compliance. Science and technology also continue to evolve in ways that will help uncover solutions to health care needs as well as other social and environmental challenges. We need to foster even more innovation, whether it comes from our own research facilities or from strategic alliances and partnerships with others.
Outlook and Strategic Approach
How people around the world achieve good health, in a sustainable manner, is likely to be the most significant challenge for our generation. To meet this challenge we must create value through innovation in what we do and how we do it; have a global reach and a local focus; execute with excellence— everything we do must be of high quality—and act as leaders at all levels of our organization. In the short term, our priorities are clear: repair the issues in our Consumer over-the-counter business, keep up the momentum in our Pharmaceuticals business, and effectively integrate the largest acquisition in our history, Synthes Inc. Other priorities are of longer-term interest. For example, Johnson & Johnson remains committed to improving the lives of women and children. In 2010 we pledged to support the United Nations’ Millennium Development Goals. Our efforts are focused on maternal and child health initiatives, as well as innovation in treatment for HIV/AIDS and tuberculosis (TB). We made good first-year progress and announced additional commitments in 2011.
Our Healthy Future 2015 sustainability goals express our ongoing commitment around advancing global health, safeguarding the planet, supplier sustainability, transparency and other areas related to our material issues. We will continue to work toward our Healthy Future 2015 sustainability goals and work with stakeholders to understand their expectations of us regarding areas identified in our sustainability materiality assessment. As I stated earlier, Our Credo is the basis for our citizenship. So much good can come from living by its principles: good for our employees, good for our company, good for the environment, but mostly good for the customers and patients who rely on us every day. It is in this way we are enabled to make a real, lasting and profound difference in the world.
Sincerely,
Alex Gorsky
Chairman and Chief Executive Officer, Johnson & Johnson
We increasingly understand citizenship as all the ways we impact the world, socially, environmentally and economically. As the world’s most broadly based health care company, Johnson & Johnson is privileged to play a role in the health and well-being of billions of people throughout the world. We must use our capabilities, our strengths, and expertise to make a real, lasting and profound difference in the world.
Performance Against Priorities
Our citizenship priorities are fourfold: advancing human health and well-being; safeguarding the planet; keeping our business strong; and conducting business responsibly. Partnerships and alliances played an important role in our sustainability performance in 2011.
Advancing human health and well-being:
We’re working together to advance global health. Our efforts range from generic licensing partnerships that help us to enhance access to our HIV medicines; to a collaboration between Johnson & Johnson, the World Health Organization, the Bill & Melinda Gates Foundation, the U.S. and U.K. governments, officials from endemic countries, the World Bank and 12 other pharmaceutical companies for a coordinated effort to combat 10 neglected tropical diseases; to public/private partnerships such as the United Nations’ Health 4+ and our work with other partners including Children Without Worms, Save the Children, the American Academy of Pediatrics and USAID, who are partners in our efforts to support the United Nations’ Millennium Development Goals to improve the lives of women and children. In 2011 alone, we invested $7.5 billion to advance robust pipelines across all three business segments, including making Johnson & Johnson the U.S. leader in new molecular approvals. From developing new medicines to improving current standards of care and increasing access to health care, our work focuses on significant unmet health care needs.
Safeguarding the planet:
We have a strong history of leadership in environmental goal setting and achievement, and we’re expanding the way we think about how we impact the planet. One way is by working within our own businesses, across our enterprise supply-chain model to reduce complexities and redundancies so we can consistently produce high quality products that are environmentally conscious. Our EARTHWARDS® process has enabled product teams to apply sustainability concepts throughout each product’s life cycle. In 2011 we granted EARTHWARDS® recognition for 15 products, bringing our total to 26 products that have measurably reduced environmental impacts.
We’re also targeting our water conservation efforts, having mapped the location of our manufacturing facilities against known areas of water stress. We’ve increased the amount of clean-technology energy capacity that is installed or under construction. In addition, we’ve transformed and expanded our supplier standards to reach beyond our external manufacturers and go further regarding sustainability, applying the new standards to our entire supplier base.
Keeping our business strong:
We are focused on maintaining a strong, successful global business that can extend access to health care in an economical and sustainable manner and enable us to continue developing new health care innovations. Whether it is bringing the highest quality products for mothers and children, for patients and customers; introducing lower cost versions of products that are equally accurate and effective in emerging markets; or training and educating physicians in developing markets, we utilize various approaches and strategies to ensure the long-term success of our business and the long-term benefits for our patients and consumers. In 2011, our worldwide sales of $65.0 billion, an increase of 5.6 percent, returned Johnson & Johnson to sales growth. We launched a number of innovative new products to address unmet health care needs across the globe, advanced our pipelines, and strengthened our product portfolios and leadership positions in many areas, including immunology, oncology, surgical devices, and emerging markets.
Conducting business responsibly:
Our Credo inspires us to do great things. We strive to deliver high-quality products and services to meet our customers’ needs, and to do it accurately and promptly. We say we must treat each other with respect and be open to each other’s ideas. We promise to be good citizens of the world, protecting natural resources. We commit to experimenting with new ideas, and by extension, to learning from failure. By staying focused on these ideals, we will live up to our own expectations and those of our customers. We’re listening to our customers and other stakeholders to help us to continue to be a trusted partner in health and well-being. For example, we held stakeholder dialogues on executive compensation and then redesigned our long-term incentive program for named executive officers with the aim of drawing a more visible link between pay and performance. We became the first health care company to join the prestigious Billion Dollar Roundtable upon achieving global spending of at least $1 billion with diverse suppliers and increased our spend with diverse suppliers to $1.3 billion in 2011. Overall, we continue to embed sustainability into our business. We delivered good first-year progress on our five-year Healthy Future 2015 sustainability goals, tracked by our enterprise Sustainability Working Group. Also, all three business segments now have business-specific sustainability strategies and goals.
Navigating Change
Our business environment is changing rapidly. The health care environment is shaped by factors including variable macro economics, shifting demographics and new dynamics in government, reimbursement and regulation. These changing world economies and marketplaces result in increased demand for health care and health care reforms, and present opportunities for us as the world’s most broadly based health care company. We’re focused on areas identified by a sustainability materiality assessment completed in March 2010. These include topics around access and affordability of medicine, emerging markets, human rights, supply chain management, product eco-design and environmental impacts. We’re also working to advance global health, ensure quality and safety of products (including anti-counterfeiting measures), drive innovation, and to uphold our principles related to bioethics, operation of clinical trials, business ethics and health care compliance. Science and technology also continue to evolve in ways that will help uncover solutions to health care needs as well as other social and environmental challenges. We need to foster even more innovation, whether it comes from our own research facilities or from strategic alliances and partnerships with others.
Outlook and Strategic Approach
How people around the world achieve good health, in a sustainable manner, is likely to be the most significant challenge for our generation. To meet this challenge we must create value through innovation in what we do and how we do it; have a global reach and a local focus; execute with excellence— everything we do must be of high quality—and act as leaders at all levels of our organization. In the short term, our priorities are clear: repair the issues in our Consumer over-the-counter business, keep up the momentum in our Pharmaceuticals business, and effectively integrate the largest acquisition in our history, Synthes Inc. Other priorities are of longer-term interest. For example, Johnson & Johnson remains committed to improving the lives of women and children. In 2010 we pledged to support the United Nations’ Millennium Development Goals. Our efforts are focused on maternal and child health initiatives, as well as innovation in treatment for HIV/AIDS and tuberculosis (TB). We made good first-year progress and announced additional commitments in 2011.
Our Healthy Future 2015 sustainability goals express our ongoing commitment around advancing global health, safeguarding the planet, supplier sustainability, transparency and other areas related to our material issues. We will continue to work toward our Healthy Future 2015 sustainability goals and work with stakeholders to understand their expectations of us regarding areas identified in our sustainability materiality assessment. As I stated earlier, Our Credo is the basis for our citizenship. So much good can come from living by its principles: good for our employees, good for our company, good for the environment, but mostly good for the customers and patients who rely on us every day. It is in this way we are enabled to make a real, lasting and profound difference in the world.
Sincerely,
Alex Gorsky
Chairman and Chief Executive Officer, Johnson & Johnson