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Johnson & Johnson Successes and Challenges

A look back at the Successes and Challenges of Johnson & Johnson.

Successes

Advancing Human Health and Well-Being

  • Received U.S. Food and Drug Administration (FDA) accelerated approval of SIRTURO™ (bedaquiline) Tablets as part of combination therapy to treat adults with pulmonary multidrug resistant tuberculosis (TB); SIRTURO is the first TB therapy in 40 years with a new mechanism of action and represents an important step in the development of new compounds for this serious contagious disease. (See story on page 9.)
  • Continued development of new and existing treatments for HIV and enhanced access to these treatments for patients around the world; supported efforts by generic manufacturers to produce our HIV medicine, PREZISTA® (darunavir).
  • Moved up from No. 9 to No. 2 in the 2012Access to Medicines Index biannual survey.
  • Announced Johnson & Johnson Patient Assistance Foundation, Inc. participation in an industry-wide public-private partnership aimed at streamlining access to HIV medicines through the use of a Common Patient Assistance Program Application developed in partnership with the U.S. Department of Health and Human Services. This form allows patients to apply to multiple HIV manufacturers’ patient assistance programs through a single application.
  • Signed the UNAIDS pledge for leaders in 46countries to lift the remaining travel bans on people with HIV/AIDS.
  • Extended our global reach and focus on meeting local health needs: Today, 56 percent of our total revenues are from outside the U.S. compared to about 40 percent a decade ago. The broader emerging markets represent more than 20 percent of our sales, reflecting double digit growth in 2012 on an operational basis, inclusive of Synthes. Sales were up 16percent operationally in the BRIC markets (Brazil, Russia, India and China). In Japan, the world’s largest pharmaceutical market, we are the fastest-growing company of the top 25, having launched six new products there in the last two years.
  • Received FDA approval of EVARREST™ Fibrin Sealant Patch, a novel product that rapidly and reliably aids in stopping problematic bleeding during surgery.
  • Created an annual award to recognize those working to reduce the stigma of mental illness. The Dr. Guislain “Breaking the Chains of Stigma” Award program is a joint project of the Museum Dr. Guislain and Janssen Research & Development, LLC. Janssen provides financial and in kind support for the program. The award is an important component of Janssen’s Healthy Minds initiative, which aims to encourage collaboration among biotechnology, pharmaceutical and public-sector partners to accelerate the discovery of new therapeutic solutions for diseases and disorders of the brain, as well as support the mental health community and various advocacy organizations and projects.
  • Launched Johnson & Johnson Gateway to a Healthy Community™ – Healthier Kids (GHC-HK) program, a health, science and technology-based core curriculum to help combat childhood obesity in four major U.S. cities. Nearly 28,000 school children in grades K-3 in Atlanta, Houston, Newark and Philadelphia burned more than 61 million calories in 85 classroom days. (See story on page 13.)
  • Launched training for health care workers in Tanzania and Ethiopia that provides critical prenatal and obstetric care for mothers and newborns as part of our support for the United Nations’ Health 4+. This joint action platform aims to coordinate the UN Secretary General’s Global Strategy on Women and Children’s Health at the country level.
  • Continued to make progress two years into our five-year comprehensive pledge to the United Nations’ Millennium Development Goals by expanding the number of health workers, piloting innovations and scaling up proven global health interventions in five areas: making childbirth safer; reaching mothers with life-saving health information through their mobile phones; eliminating mother-to-child HIV transmission; treating children at risk for intestinal worms and preventing the cycle of reinfection; and increasing research and development for new medicines to treat HIV, tuberculosis and other conditions.
  • Launched Aponjon, a Mobile Alliance for Maternal Action (MAMA) program in Bangladesh, in conjunction with other partners. MAMA uses mobile phones to deliver prenatal and post-birth health information to new and expectant mothers in the developing world. Over the next two years, the program will also reach mothers in India and South Africa.
  • Arranged free vision screening for hundreds of students at a school in Bangkok on World Sight Day to celebrate the 10th anniversary of Sight for Kids, a partnership program with the Lions Clubs International Foundation (LCIF) and Johnson & Johnson Vision Care, Inc. (JJVC) to reduce visual impairment and disability in Asia.; screened another 1 million kids in six Asia Pacific countries during 2012. Since Sight for Kids was established, more than 16 million children have received free vision screening through volunteer-directed vision screenings involving ministries of health, school districts, eye care professionals and hospitals, along with Lions Clubs International volunteers and JJVC employees.
  • Worked with partner organizations to provide relief in communities throughout the U.S. Eastern seaboard in the aftermath of superstorm Sandy, and in Joplin, Missouri, following the tornados there. Help included hygiene kits, first aid items and cash donations. Contributions made to partner organizations were matched through the Johnson & Johnson Matching Gifts Program. Employee volunteers gave of their time to aid in the recovery efforts.
  • Became the first Official Healthcare Sponsor of the 2014 FIFA World Cup Brazil™ and FIFA Confederations Cup Brazil 2013. This sponsorship provides our businesses with an unparalleled opportunity to tie our passion for caring with the world’s passion for football. To engage others in our efforts, we have developed the global platform, CAREINSPIRES CARE™, or CARINHO INSPIRACARINHO™ in Portuguese. This philosophy encourages selfless acts of care—big and small—with the goal of making the world a more caring place.
  • Provided helmets to 11,000 primary school children and traffic safety education to parents at 20 primary schools throughout Vietnam’s Ha Tinh, Quang Binh and Dong Nai provinces as part of a partnership effort with the nonprofit Asia Injury Prevention (AIP) Foundation.
  • Developed standardized process to have all suppliers in high-risk countries confirm awareness of and conformance with the human rights provisions of our policies.
  • Conducted human rights training for 76 percent of global procurement staff.
  • Continued to increase measurement of health-related outcomes among our philanthropic programs; of 250organizations from whom requests for funding were assessed in an electronic grant-making process, 72 percent indicated that they measure long-term outcomes. To further increase our evaluation capacity, logic models were developed for each major program. These models are a key part of all major grant reviews and include metrics that will help to evaluate the effectiveness of programs.


Safeguarding the Planet

  • Granted Earthwards® recognition for 11 new products; a total of 36 products have been recognized to date. Earthwards® is the Johnson & Johnson process that improves the sustainability of our products.
  • Launched “Project Cold,” engineering improvements that optimize our chilled water systems. Collectively, the projects have the potential to reduce location CO2emissions 6–8 percent.
  • Realized a 2.1 percent reduction from 2011in our facility CO2 emissions, for a 6 percent improvement since 2010. The largest contributors to this were efficiency projects and site closures.
  • Confirmed 138 suppliers, representing over $4 billion in spend, requested by Johnson & Johnson to participate in the Carbon Disclosure Project’s Supply Chain program, have chosen to do so.
  • Launched our expanded Responsibility Standards for Suppliers, supported by assessment tools, protocols and implementation guidance, to assist our suppliers in complying with the standards.
  • Drove progress toward the Healthy Future 2015 goal to ensure all strategic suppliers have at least two publicly reported sustainability goals. As of year-end 2012, 41 percent of strategic suppliers have two or more publicly reported sustainability goals.
  • Collaborated with government, academia and other businesses to develop more advanced wastewater treatment technologies to improve active pharmaceutical ingredient removal.
  • Updated the Johnson & Johnson Environmental Health & Safety, Climate Friendly Energy and Sustainable Design & Construction policies.
  • Realized significant improvement in the greening of our fleet vehicles in Europe, Asia and Latin America. We achieved a global average carbon dioxide emission per vehicle of 161 g/km, which represents a 9.1 percent reduction from 2010 to 2012.
  • DePuy Ireland achieved certification to the new ISO 50001 energy management standard, the first Johnson & Johnson facility to do so. (See story on page 10.)
  • Increased the amount of on-site, clean technology or renewable energy capacity that is installed or under construction by 14.9 percent over 2011. That brings our total to 45.5 megawatts, of which 38 megawatts are installed and 7.5 megawatts are approved or under construction.


Keeping Our Business Strong

  • Increased sales in 2012 by 3.4 percent, 6.1 percent operationally, reflecting the outstanding progress of our newly launched pharmaceutical products, the addition of Synthes to our Family of Companies, and strong growth in emerging markets.
  • Generated significant cash flow and maintained our AAA credit rating. Importantly, we continued our track record of consistent performance, with 29 straight years of adjusted earnings increases and 50consecutive years of dividend increases. Johnson & Johnson is one of only six companies in the Standard & Poor’s 100Index to achieve that record.
  • Delivered a total shareholder return of nearly 11 percent for 2012, exceeding the Dow Jones Index but trailing the other indices to which we compare.
  • Advanced our near-term business priorities. First, restoring a reliable supply of our over-the-counter (OTC) products to the market has been paramount and we’re committed to continue building trust in our OTC products. We also made significant strides in successfully integrating Synthes, solidifying our leadership position in orthopedics. We continued building on our strong momentum in pharmaceuticals.
  • Established four regional innovation centers as part of our focused approach to accessing early research programs for use across all three segments of Johnson & Johnson. Continued our commitment to research and development by investing approximately $7.7 billion; one quarter of 2012 sales were from products introduced in the last five years.
  • Strengthened our focus on the future by investing in innovation, progressing our enterprise initiatives and expanding our global presence.


Conducting Business Responsibly

  • Created a new Regulatory, Compliance & Government Affairs Committee of the Board of Directors. This new committee is charged with responsibility for monitoring and oversight of the Company’s Health Care Compliance and Quality & Compliance systems and issues.
  • Made a global commitment in 2012 to remove a number of commonly used ingredients from our baby and beauty consumer products; launched a website where consumers can view our ingredient policies and learn about the rigorous scientific standards of our five-level safety assurance process. The website, www.safetyandcarecommitment.com, is dedicated to helping consumers better understand how we ensure the safety of beauty and baby care products, and the ingredients that go into them. (See story on page 15.)
  • Achieved a total Minority- and Women Owned Business supplier spend of $1.2billion, representing 8.4 percent of our total supplier spend.
  • In 2012, for the second consecutive year, Johnson & Johnson was a member of the Billion Dollar Roundtable, maintaining our position as the first and only health care company to achieve this status.
  • Received multiple recognitions for diversity programs, including being recognized by DiversityBusiness.com as a Top 50Corporation for Multi-Cultural Business for the fifth consecutive year, and being named to Top Corporations of the Year for Women’s Business Enterprises for the sixth consecutive year.


Challenges

  • Reducing risk in Research & Development while fostering innovation. In 2012, we discontinued the Phase III clinical development of bapineuzumab IV.
  • Tightening integration of our quality systems across the enterprise. In 2012, McNeil Consumer Healthcare continued to operate certain manufacturing operations under a signed consent decree with the FDA. We incurred additional costs related to the recall of DePuy Orthopaedics, Inc.’s ASR™ XL Acetabular System and ASR™ Hip Resurfacing System.
  • Reducing complexity and redundancies throughout our global supply chain so our companies can consistently produce high-quality products, maintain reliable supplies and increase customer satisfaction. We continue working to restore a reliable supply of DOXIL® (doxorubicin HCI liposome injection)/CAELYX® (pegylated liposomal doxorubicin hydrochloride), impacted by supply constraints from the Company’s third-party manufacturer.
  • Applying the new Standards for Responsible Suppliers to our entire supply chain. This is a challenge due to the number of suppliers—in the tens of thousands—and complexity of the supply chain.
  • Confirming that all suppliers in high-risk countries are aware of and in conformance with the human rights provisions of our policies. This is a challenge, due to the number of suppliers involved and the information required to confirm compliance.
  • Managing health care pricing pressures. For example, our Medical Devices & Diagnostics segment is facing more pressure on product prices because hospital customers are looking for cost relief. The global economy has also affected sales of medical devices, with people postponing non-acute care.
  • Continuing to reduce our water consumption. Johnson & Johnson has been reducing water consistently for more than 20 years and the easier, cost-effective reductions have been implemented.
  • Continuing work to strengthen data collection systems to enable enterprise wide reporting on issues of interest to our stakeholders.
  • Reversing a 7 percent increase in employee fleet car crashes. Our crashes per million miles driven (CPMM) decreased in 2012 to 5.82 from 5.94 in 2011, but remains behind pace.
  • Reducing the lost workday case (LWDC) rate among our contractors. We experienced an increase in the LWDC rate from 0.14 in 2011 to 0.17 in 2012.
  • Sourcing our palm oil derivatives from certified sustainable sources by year-end 2015, because the market for Certified Sustainable Palm Oil has evolved at a slower pace than expected.