To Our Shareholders
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At the start of 2020, no one could have imagined just how dramatically our world was about to change due to a virus that has impacted billions of people in every nation. By any measure, it was a year dominated by uncertainty—yet the pandemic helped to clarify our priorities and reinforce our values. And while the familiar yard signs may be faded now, their message is more resonant than ever: We’re all in this together.
Because of COVID-19, we all have a profound new appreciation and gratitude for the doctors, nurses, and hospital staff serving on the front lines of care, and for the everyday heroism of the essential workers who show up 24/7 to keep the world’s critical healthcare infrastructure up and running. Expectations that companies must drive positive change on behalf of everyone—no matter who you are, or where you live—are higher than ever. And we were all served an important reminder about just how central good health is to our collective prosperity, our security, and our society at the most fundamental level.
Nothing is more essential to every person, every family, every town, and every nation on earth than health. Whether COVID-19 touched you directly or indirectly, no individual’s life was left unchanged by the pandemic—and together we gained a shared understanding of a universal truth: No one is safe until everyone is safe.
We Were Built for Times Like These
In early January 2020, it was impossible to guess exactly how the nascent pandemic would unfold. But Johnson & Johnson has been investing in and applying the best science to take on the most serious public health threats for more than a century—and there was never any question that we would contribute the full breadth and depth of our company’s expertise to global efforts to combat COVID-19.
As the world’s largest and most broadly-based healthcare company, we have both a unique perspective on global health and a profound responsibility to lead when called. As soon as the DNA sequencing of the COVID-19 virus was made available, our role was clear even though success was anything but guaranteed: We at Johnson & Johnson would do everything in our power to develop a safe, effective, and efficient vaccine for the largest number of people around the world.
With this ambitious, urgent goal driving us forward, we set out to follow the science and to make our potential vaccine available on a not-for-profit basis for pandemic emergency use.
This work was done around the clock, through innovative models of public–private partnerships and new heights of purpose-driven collaboration. In the face of both successes and challenges, we continually affirmed our commitment to safety, scientific integrity, and transparency. And exactly one year after we officially began the development process, we were able to share positive top-line results from our Phase 3 ENSEMBLE clinical trial for our company’s single-dose COVID-19 vaccine. Shortly after, based on the totality of scientific evidence, we received Emergency Use Authorization from the U.S. Food and Drug Administration for our single-dose COVID-19 vaccine and immediately began shipping doses in the U.S.
This monumental achievement will be an enduring point of pride for us for decades to come. Perhaps most remarkable of all: The successful development of our COVID-19 vaccine was only one of the many incredible accomplishments that made 2020 a year like no other for our company.
Thanks to the resilience, dedication, and resourcefulness of my colleagues all around the world, Johnson & Johnson didn’t just survive 2020—our company pivoted with great agility and delivered notable financial performance during a tumultuous year while continuing to invest in sustainable, transformative innovation for the long-term.
As we have during so many periods of upheaval since our founding in 1886, our broad base of diversified healthcare solutions created stability for investors as we increased the shareholder dividend for the 58th consecutive year.
The core strengths that powered our performance last year are the same ones that have served our stakeholders well in every market environment: an unwavering focus on execution, innovation, and people.
Excellence in Execution
The confidence placed in us by patients, physicians, customers, and consumers today is the result of superb, sustained delivery on the commitments we make—and 2020 was no exception.
- While the development of our COVID-19 vaccine in just 12 months is an incredible triumph of science, it was not our only significant achievement. Our Pharmaceutical business continued to outperform the industry across therapeutic areas and regions. And 2020 marked the 9th consecutive year of above-market adjusted operational growth—all while keeping our pipeline submissions and approvals on track, as well as achieving greater patient enrollment in clinical trials compared to 2019. We received approval for a subcutaneous formulation of multiple myeloma drug DARZALEX® (daratumumab) in 2020—ahead of our scheduled U.S. PDUFA date. This new formulation took a multi-hour intravenous treatment down to a subcutaneous delivery that is executed in just minutes. We focused on educating healthcare practitioners and successfully launched the product in a virtual environment—reaffirming our strong commercial capabilities.
- Our Consumer Health business didn’t just meet but exceeded goals for the year, being agile enough to recognize and quickly adapt to fulfilling increased demand for products like TYLENOL® and LISTERINE® in millions of homes worldwide and recording approximately 55% year-over-year growth in e-commerce. Our Consumer Health team also refused to let the challenges of 2020 deter them from launching their ambitious Healthy Lives Mission. This holistic approach to health and wellness—advancing sustainable innovation and packaging, providing enhanced transparency to the ingredients used in our products, supporting proactive self-care, and encouraging new consumer behavior—has been a welcome reminder of what our company can accomplish when we tackle the widest range of unmet health needs.
- Perhaps the most striking testament to the power of world-class execution can be seen in the rebound across our Medical Devices business after the COVID-19 pandemic caused many individuals to delay healthcare treatment—from routine exams to important elective surgeries to emergency room visits. Our Medical Devices business continued prioritizing patient and customer needs, maintaining product reliability, and advancing innovation. We quickly identified urgent needs and focused efforts on supporting patients by training more than 6 million healthcare professionals on our virtual platforms, conducting live and remote case support, securing and providing personal protective equipment (PPE), bringing together industry partners, and expanding coverage to emerging sites of care. Through these efforts we’ve developed new capabilities that strengthened our customer relationships and set us up for even greater performance in 2021 and beyond.
- We focus our sustainability efforts in areas where we believe we can make the greatest impact to advance health for humanity. As a healthcare company, Johnson & Johnson understands that climate health can affect human health. This is why we have a long-standing commitment to environmental health and set new climate goals in 2020 that we will track over the next 10 years. To this end, we are honored to have, once again, been recognized as a global corporate leader in climate action and water security and awarded two ‘A-List’ ratings from the Carbon Disclosure Project—the third year in a row for tackling climate change and the second year in a row for our work on water security.
One thing that I think speaks volumes about both our performance and our prospects as a company was our 2020 investment in innovation. In the midst of all the year’s uncertainty, Johnson & Johnson invested an all-time high of $12.2 billion in research and development (up $800 million from 2019) and more than $7 billion in acquisitions, as we continued to fortify our pipeline and ensure we will be able to continue changing the trajectory of human health long after this pandemic is over. Among the year’s highlights in science and innovation:
- Vaccine development was just one area where our world-class scientists utilized their expertise for our Pharmaceutical business. We initiated the U.S. FDA filing for our BCMA CAR-T therapy ciltacabtagene autoleucel (cilta-cel) for the treatment of relapsed or refractory multiple myeloma patients who have received three prior classes of therapies. We filed for approval of amivantamab for the treatment of patients with metastatic non-small cell lung cancer with epidermal growth factor receptor Exon 20 insertion mutations whose disease has progressed on or after platinum-based chemotherapy. Additionally, we filed for approval for UPTRAVI® (selexipag) injection for intravenous use to treat pulmonary arterial hypertension and DARZALEX FASPRO™ for the treatment of newly diagnosed patients with light chain for amyloidosis. We also hope to receive approval this year for ponesimod for multiple sclerosis, and PP6M for the treatment of schizophrenia. These developments will potentially change the lives of patients and their families in the years to come.
- Our Medical Devices business made strong progress achieving, and even accelerating, key pipeline milestones throughout the year. We continued to invest in innovation and advance critical programs across each franchise throughout 2020, including: further expansion of our Hip and Knee portfolios into high-growth market segments, enhancements to our industry-leading TECNIS™ family of intraocular lenses, the introduction of ECHELON ENDOPATH™ Staple Line Reinforcement, and the launch of CERENOVUS STROKE SOLUTIONS™. We remain incredibly excited about the great potential of the end-to-end digital surgery ecosystem and are simultaneously developing three differentiated robotic programs and recently achieved a significant milestone with the FDA clearance for our VELYS™ Robotic-Assisted Solution designed for use with the ATTUNE® Total Knee System. Our industry is just starting to unlock the full potential and benefits of these robotic and digital technologies—and it seems only fitting that the same company that helped pioneer sterile surgery 135 years ago is now poised to lead the way in bringing differentiated, cutting-edge new solutions to the 21st-century operating room.
- In Consumer Health, we displayed great agility in finding ways to ensure we could supply families worldwide with essential products throughout the pandemic. The innovation didn’t stop there: Our brands launched nearly 200 new products in 2020 and deepened our commitment to creating inclusive and sustainable health solutions that meet the needs of consumers. One timely example was the launch of NICORETTE® Quickmist SmartTrack in the United Kingdom. The world’s first digitally connected smoking cessation option, this tool was developed with top behavioral scientists to connect smokers to a support app and help them track against personalized programs.
- Because innovation doesn’t just happen in laboratories, I also want to recognize the impactful work of our Supply Chain colleagues in driving improvements and efficiencies over the past year. Gartner Research honored Johnson & Johnson with a number three ranking across all industries in its 2020 Supply Chain Top 25 Index, up five spots from our 2019 ranking, and the top ranking on its 2020 Healthcare Supply Chain Top 25, citing our commitment to continuous improvement while putting innovation into practice, particularly in our response to the COVID-19 pandemic.
Powered by Our People and Our Purpose
Meeting our commitments to all our stakeholders is a balancing act even in times of stability and prosperity. While the fierce headwinds we faced throughout 2020 sometimes put our most deeply held beliefs to the test—and dealing with constant disruption often felt like a full-time job—I’m incredibly proud of our 135,000 employees for truly living into Our Credo values even in the face of the most daunting challenges. After all, a once-in-a-century pandemic could have been an excuse for delay rather than a call to action. But that’s not what we do at Johnson & Johnson.
- Even during the pandemic’s toughest days, our employees around the globe worked tirelessly to provide uninterrupted access to our medicines and products and use the full spectrum of our expertise to support healthcare systems at risk of being overwhelmed by surges in cases and hospitalizations. For the billion lives we touch every day, they delivered again and again and again—even as their own professional and personal lives changed in ways that demanded unparalleled resilience and creativity.
- The Johnson & Johnson Family of Companies and the Johnson & Johnson Foundation rallied to support healthcare professionals, including a $50 million initiative to provide doctors and nurses working on the front lines of the pandemic with PPE, mental health resources, and other critical forms of support. For a select number of Johnson & Johnson employees, the call to serve was even stronger: Nearly 40 licensed healthcare professionals in our ranks took advantage of the company’s newly announced benefit of 14 weeks of paid leave to volunteer in the hardest-hit hospitals and community health centers.
- No look back at 2020 could possibly ignore the events of the last summer that forced us—as individuals, as a company, and as a country—to confront the reality of systemic racism in our society. The turmoil on the streets in cities across America and beyond brought to light an overdue recognition of the inequalities that were simultaneously being exacerbated by the disproportionate impact of COVID-19 on communities of color.
In this moment, we must ensure that the COVID-19 pandemic isn’t just a wakeup call about the critical importance of public health to our national, economic, and societal security: It must be a call to action. As we consider our post-pandemic future, we have the opportunity to decide what to bring with us into this new world, and what we should leave behind. We owe it to those whose lives and livelihoods have been ravaged by this virus, and those who have made enormous personal sacrifices for the greater good, to choose wisely.
Real change doesn’t happen in one galvanizing moment, or through dialogue alone: It requires a sustained, long-term commitment. Because we want to make an impact that is meaningful and lasting, we started from a place of recognition that racism is a public health crisis. This is why Johnson & Johnson chose to focus on eliminating health inequities for people of color with our $100 million Race to Health Equity platform launched in November. The dramatically higher mortality rate for communities of color in the COVID-19 pandemic is just the most recent example of the disparity in access to quality healthcare and the resultant outcomes for patients and their families in these communities. Our determination is to put better health within the reach of everyone. This work includes the use of data to better understand the root causes of inequalities and to encourage information sharing and effective training methods for medical centers and clinics on a local level. We are helping grassroots leaders and frontline workers to be better prepared and positioned to care for and lift up their own communities.
Achieving true diversity in clinical trials and hiring, in offices and boardrooms will take time, effort, and investment. But every day brings a new opportunity to be more inclusive, and we know from decades of experience in science and technology that innovation depends on collaboration driven by a diversity of ideas, approaches, opinions, and individuals. This will make us a better company and better citizens in the world community.
There’s an old saying: “Adversity doesn’t build character, it reveals it.” Without question, the COVID-19 pandemic has shown us just how much we can accomplish by following the moral compass of Our Credo.
The idea that companies could do right by their customers, patients, healthcare professionals, employees, and shareholders while also doing good in the world was a pretty revolutionary concept when General Robert Wood Johnson first put our values into words in 1943. But I have no doubt that the idea that we are all in this fight for the health of humanity together would be as resonant to him as it has been for all of us.
Since 1886, we’ve been showing the world what it looks like to lead with purpose—especially in moments of great crisis. And despite all the disruption that we’ve had to navigate over the last year, I have never been more confident about the future of our industry and our company.
Now is the time to shift the focus in healthcare away from just effectiveness and cost to sustainability, resiliency, and value. We have witnessed unprecedented levels of collaboration and public–private partnerships over the past 15 months—let’s use these new models to supercharge efforts to combat other urgent public health challenges. And we must do the hard work that’s required to turn our collective desire to address disparities in care that plague underserved communities into measurable, meaningful action.
As we forge onward, I’m filled with optimism that the lessons we’ve learned from COVID-19 will ultimately accelerate our progress to a healthier and more equitable future for all—and that Johnson & Johnson will continue to play a pivotal role in achieving it. And during this consequential moment in world history, I am profoundly grateful to have had the opportunity to lead this company and our exceptional employees.
Note Regarding Forward-Looking Statements
This letter contains forward-looking statements relating to, among other things, future operating and financial performance, product development, market position and business strategy. The reader is cautioned not to rely on these statements, which are based on current expectations of future events. For important information about these statements, including the risks, uncertainties and other factors that could cause actual results to vary materially from the assumptions, expectations and projections expressed in any forward-looking statements, the reader should review the enclosed Annual Report on Form 10-K for the fiscal year ended January 3, 2021, including in the sections captioned “Cautionary Note Regarding Forward Looking Statements” and “Item 1A. Risk Factors.” Johnson & Johnson does not undertake to update any forward-looking statement as a result of new information or future events or developments.